The atmosphere can be characterized as an unmanaged commons in which pollution by greenhouse gases (GHGs) is unrestricted, and emissions by one party reduce the welfare of all other parties. Because of the cumulative rise of unassimilated concentrations of GHGs over time and the delay in the manifestation of their impact on climate, it is future generations who will pay the heavy price of unconstrained pollution. The need to rein in GHGs is an urgent one, and one that requires deep cuts to global emissions if serious economic and social costs of climate change are to be avoided.
The first part of this chapter is devoted to an exploration of the options available for controlling international and national GHGs with a focus on how markets work to lower the costs of compliance with emission targets.
The markets for carbon that ensue from cuts are in terms of carbon dioxide equivalent (CO2e) where the main greenhouse gases, listed in Annex B of the Kyoto Protocol (United Nations, 1998), are expressed in terms of their equivalence to CO2 in global warming potential.
The second part of the chapter takes a look at the potential role of forestry in the market mechanisms for mitigating climate change.
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