An alternative to Kyoto?

Without participation by the United States or developing countries, and with weak targets for those countries that do participate, the Kyoto Protocol does nothing more than postpone effective action on climate change for at least another decade. It is not a prudent way to address a potentially important global problem. By contrast, a hybrid climate change policy has much to offer. It is flexible enough to deal with the enormous uncertainties regarding climate change. It provides individual governments with an instrument to limit and channel the distributional effects of the policy, reducing the obstacles to ratification. Moreover, it creates incentives for governments to monitor and enforce the policy within their own borders. It is a practical policy that would reduce greenhouse gases in a cost-effective manner. Moving from the current policy deadlock to the hybrid approach will require foresight and leadership. However, rising world carbon dioxide emissions mean that some sort of climate policy must eventually be adopted. Issuing property rights as soon as possible would help economies adapt by allowing financial markets to help manage its risks.