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Comparing Greenhouse Gases for Policy Purposes

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  • Richard Schmalensee

Abstract

In order to derive optimal policies for greenhouse gas emissions control, the discounted marginal damages of emissions from different gases must be compared. The greenhouse warming potential (GWP) index, which is most often used to compare greenhouse gases, is not based on such a damage comparison. This essay presents assumptions under which ratios of gas-specific discounted marginal damages reduce to ratios of discounted marginal contributions to radiative forcing, where the discount rate is the difference between the discount rate relevant to climate-related damages and the rate of growth of marginal climate-related damages over time. If there are important gas-specific costs or benefits not tied to radiative forcing, however, such as direct effects of carbon dioxide on plant growth, there is in general no shortcut around explicit comparison of discounted net marginal damages.

Suggested Citation

  • Richard Schmalensee, 1993. "Comparing Greenhouse Gases for Policy Purposes," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 245-256.
    • Handle: RePEc:aen:journl:1993v14-01-a10
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    1. William R. Cline, 1992. "Economics of Global Warming, The," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 39, April.
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