Global Experiences and the Korean Perspective
KDI/EWC series on Economic Policy
Edited by Chin Hee Hahn, Sang-Hyop Lee and Kyoung-Soo Yoon
Chapter 1: Responding to Climate Change: Introduction and Overview
Chin Hee Hahn, Sang-Hyop Lee, and Kyoung-Soo Yoon Climate change is becoming widely recognized as one of the most important changes in the world economic environment. Taking action to mitigate it has already become an inevitable task for policymakers. According to a forecast of the Organisation for Economic Co-operation and Development (OECD 2009), under the business-as-usual scenario and in the absence of new policy action, the atmospheric concentrations of the world’s greenhouse gases (GHGs) will increase to about 650 parts per million (ppm) in 2050, which could cause the global average temperature to be at least 2o C higher than it was in preindustrial times. This in turn would impose a fundamental constraint on economic activities of mankind. Stern (2007) forecasts that the per capita loss from climate change could be about 14.4 percent of the world’s average per capita income. Based on this recognition, the World Bank (2008) notes that climate change is one of the “new global trends” that could threaten the sustained growth of the world economy and in particular the growth of developing countries. Climate change is regarded as a global trend, not only because of the threat it poses, but also because of the wide scope of its influence on economic activities. To mitigate and adapt to climate change, most countries will have to adopt new policy instruments, which may include a carbon tax, a cap-and-trade system, schemes to expand supplies of renewable energy, and tools for improving energy efficiency. In the course of implementing...