Economics of climate change mitigation

This article is about the economics of climate change mitigation. Mitigation of climate change involves actions that are designed to limit the amount of long-term climate change (Fisher et al.., 2007:225). Mitigation may be achieved through the reduction of greenhouse gas (GHG) emissions or through the enhancement of sinks that absorb GHGs, for example forests.

In this article, the phrase “climate change” is used to describe a change in the climate, measured in terms of its statistical properties, e.g., the global mean surface temperature. In this context, “climate” is taken to mean the average weather. Climate can change over period of time ranging from months to thousands or millions of years. The classical time period is 30 years, as defined by the World Meteorological Organization. The climate change referred to may be due to natural causes, e.g., changes in the sun's output, or due human activities, e.g., changing the composition of the atmosphere. Any human-induced changes in climate will occur against the “background” of natural climatic variations (see attribution of recent climate change for more information).

The atmosphere is an international public good and GHG emissions are an international externality (Goldemberg et al., 1996:,21, 28, 43). Each individual's or country's welfare, U^j, is a function of its own consumption, C^j, and the quality of the atmosphere, A, such that U^j(C^j,A). A change in the quality of the atmosphere, A, does not affect the welfare of all individuals and countries equally. In other words, some individuals and countries may benefit from climate change, but others may lose out.

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