Greenhouse gas emissions trading among Pacific Rim countries: An analysis of policies to bring developing countries to the bargaining table

This paper examines the aggregate net costs and individual country cost savings of greenhouse gas emissions trading among Pacific Rim countries. We propose emission permit allocation rules designed to entice developing countries to participate. Absence of developing country involvement has served as an excuse for the lack by participation by the United States in the first compliance period of the Kyoto Protocol and may serve as a disincentive to even more countries in subsequent periods. Our analysis specifies permit allocation rules that could result in no net costs, and even cost-savings, to developing countries for their involvement in the emissions trading market, while at the same time providing extensive benefits to industrialized countries through access to lower-cost mitigation alternatives.