Introduction

Formulating a policy response to the threat of global climate change is one of the most complex public policy challenges of our time. At its core a classic public-good problem, mitigating anthropogenic greenhouse gas emissions is likely to be very costly to any nation that undertakes it, while all would share the benefits. This dynamic creates a temptation to free-ride on others' efforts. This will require coordination among nations and the development of new institutional capacities. The heterogeneity across nations adds complexity; the costs of reducing emissions will not be the same, nor will the benefits of avoiding climate change. Another troubling characteristic is the enormous uncertainty involved, both in the magnitude of future climate change, and therefore the value of avoiding it, and in the costs of reducing emissions. The long timescales of the climate system, decades to centuries, add a final dimension to the policy dilemma. Given the stock nature of greenhouse gases, which build slowly over time, should we delay mitigation activities until some of the uncertainties are reduced? Or wait until technology improves to the point that mitigation is less costly?

We need not decide today on the amount of emissions reductions for all time. Given the degree of uncertainty, it would not make sense. Over time, we will revise the level of policy activities to respond to new information and changing conditions. The relevant question is how much greenhouse gas emissions abatement should be undertaken today.