Global Climate Change Briefing Book
Congressional Research Service
Redistributed as a service of the National Library for the Environment

Economic Issues

Bernard A. Gelb

The possibility of climate change raises many economic issues. The potential for such change introduces uncertainty in long-term decisionmaking and results, first, in costs entailed in scientific investigation of the possibility, which may provide concomitant benefits, such as better understanding of the dynamics of climate or of biological responses to natural climate change.

Economic uncertainties include: (1) the costs (or benefits) that could arise if global climate change were to occur, for example through impacts on agriculture or on low-lying areas subject to flooding by sea-level rise; (2) the costs (or benefits) that could result from trying to mitigate climate change impacts, such as building dikes around communities that might be affected by sea-level rise; and (3) the costs (or benefits) that could result from policy decisions to minimize greenhouse gas concentrations, such as measures to curb greenhouse gas emissions (especially CO2) and to offset emissions, such as tree planting. The comparative costs (or benefits) of actions to curb emissions, such as emissions taxes, emissions permits, and technological fixes to reduce emissions of one or more gases, have received particular attention in economics circles.

Attempts to analyze these issues are complicated by disagreements on appropriate frames of reference and analytical methods. Disagreements are particularly acute on the probability of climate change and the possible rate and magnitude of change, on the development and adoption of energy-using technologies by businesses and households with respect to efficiency and alternative energy sources, on how to address inequalities among nations in resource endowment and economic development status, and on what the implications might be for future generations.

Many studies of costs (and benefits) relating to climate change have been prepared, with major differences in assumptions about specific impacts of climate change and measures to mitigate it, as well as those about the evolving impacts of such measures on social and political forces. These disparities result in a wide range of analytic results. The additional readings and the web sites that follow illustrate this wide array ­ some might say, disarray. Researchers and policymakers need to consider with care the assumptions and methods underlying the analyses found in the readings and accessible through the web sites.

CRS Products

CRS Report RL30285, Global Climate Change: Lowering Cost Estimates through Emissions Trading -- Some Dynamics and Pitfalls [8/20/99]

CRS Issue Brief IB97057, Global Climate Change: Market-Based Strategies to Reduce Greenhouse Gases. [pdf: 8/20/01] [html: 4/4/01]

CRS Report 98-235, Global Climate Change: Reducing Greenhouse Gases -- How Much from What Baseline? [pdf: 1/29/01] [html: 3/11/98

CRS Report 98-738, Global Climate Change: Three Policy Perspectives.[8/31/98]

CRS Report RL30155, Global Climate Change Policy: Domestic Early Action Credits.[7/23/99]

CRS Report 97-1017, Industrial Energy Intensiveness and Energy Costs in the Context of Climate Change Policy. [html: 11/21/97] [pdf: 11/21/97]

Additional Reading

Blackman, Allen. The Economics of Technology Diffusion: Implications for Climate Policy in Developing Nations (pdf). Resources for the Future Discussion Paper 99-42. June 1999.

Crookshank, Steven L. Carbon Sinks and the Kyoto Protocol American Petroleum Institute Discussion Paper #091, March 1999.

Energy Information Administration. Analysis of the Climate Change Technology Initiative, prepared at the request of the House Committee on Science. April 1999.

Energy Information Administration. What Does the Kyoto Protocol Mean to U.S. Energy Markets and the U.S. Economy? (A briefing paper on the report listed above.) U.S. Department of Energy: Washington, DC, October 1998.

Interlaboratory Working Group, 2000. Scenarios for a Clean Energy Future. ORNL/ CON-476 and LBNL-44029. November 2000.

Mendelson, Robert. The Greening of Global Warming. American Enterprise Institute. 1999

Sutherland, Ronald J. "No Cost" Efforts to Reduce Carbon Emissions in the U.S.: An Economic Perspective, The Energy Journal, Vol. 21, No. 3 (2000).

Toman, Michael, Editor. Climate Change Economics and Policy: An RFF Anthology. Resources for the Future, February 2001.

Union of Concerned Scientists and Tellus Institute. A Small Price to Pay, U.S. Action to Curb Global Warming is Feasible and Affordable. UCS Publications: Cambridge, MA, July 1998.

WEFA. Global Warming: The High Cost of the Kyoto Protocol, National and State Impacts (Executive Summary). Prepared for the American Petroleum Institute. WEFA, Inc.: Eddystone, PA, 1998.

Weyant, John. P., and Jennifer N. Hill. "Introduction and Overview," The Energy Journal, Special Issue, 1999.

Selected Web Sites

International Energy Agency

Organisation for Economic Co-operation and Development

Resources for the Future

Energy Information Administration
U.S. Department of Energy

U.S. Department of State

U.S. Environmental Protection Agency

World Resources Institute

Page last updated March 2, 2001. Updated by NCSE: September 6, 2001.

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