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1 Introduction.

There is a longstanding debate about how countries should manage their greenhouse gas emissions. And, for more than a decade, much effort has been given to reaching an agreement among countries that would coordinate their actions. This has had several practical consequences. For one, the broad process of debate has led to a large body of research and a specialized set of institutions that influence how the predictions of physical and social outcomes from climate change are assessed.

Additionally, an international treaty aimed at slowing global warming and a complex set of implementing rules are in place.

The influence institutions have on carbon policy and related markets is considerable and cascading. The special characteristics of the climate change--that the potential effects of climate change are global and that the greenhouse gas emissions that contribute to climate change matter in the aggregate irrespective of their source--creates a need for a coordinated international response, and new institutions have evolved to organize debate and establish a common set of objectives. At the same time, because of uncertainty about the natural, economic and social consequences of climate change, a widely-shared understanding of the science of climate change is needed as a starting point for a coordinated strategy. In response, organizations and procedures have been built up in recent years to develop informed judgments--for example, dedicated research centers, non-government organization and panels under United Nations sponsorship. Another key characteristic of the international policy framework currently in place is its reliance on markets, which is due in part to the scale of investment needed to significantly reduce global emissions. In turn, this has given rise to a related set of market institutions, including those that certify tradable permits and support private investment flows.

In this paper, we describe important institutions that shape climate change policies together with a set of key market-reliant instruments. We selectively review the related research, emphasizing empirical studies that assess the effects of current policies and that evaluate the markets upon which current policies depend. To date, much of the empirical analyses relating to climate change policies have been forward looking and anticipatory. This is changing as new markets emerge and as a history of project investment builds and we indicate areas where future work is anticipated.

Following this introduction, the remainder of the paper is organized as follows. Section 2 briefly describes the process by which scientific predictions of climate change are incorporated into policy and policy evaluations. The following section delineates key features of the climate change framework and the related debate over the framework's design, with special attention to the amendments and rules related to the Kyoto Protocol's flexibility mechanisms. Section 4 examines alternative evaluations of expected outcomes. Section 5 discusses market-based domestic policies in Australia, the European Union and the United States. Section 6 looks at the current state of carbon markets. Finally, Section 7 concludes and indicates areas for future research. (1)
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Title Annotation:Carbon Markets, Institutions, Policies, and Research
Publication:Carbon Markets, Institutions, Policies, and Research
Date:Oct 1, 2008
Next Article:2 Science and policy.

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