Transitions to a Sustainable Future
Edited by Valentina Bosetti, Reyer Gerlagh and Stefan P. Schleicher
Chapter 5: Interpreting Environmental Policy Cost Measures
Jean-Charles Hourcade and Frédéric Ghersi 5.1 INTRODUCTION Since the late 1980s, climate policy debates have been making extensive use of modelling results about the costs of meeting climate objectives. To what extent this use succeeded in rationalising discussions is not so obvious. From the Third Conference of the Parties (COP3) (Kyoto) to the semi-failure of COP6 (The Hague), despite the attempts of the second and third reports of the International Panel on Climate Change (IPCC) to clarify what ‘good use’ could be made of results discrepancies in designing a viable climate regime (Hourcade, 1996; Markandya and Halsnaes, 2001), it did not manage to create a common understanding between the optimists and the pessimists about the costs of Kyoto targets. It did not succeed either in delivering robust and consensual qualitative insights regarding the policy mix most likely to minimise welfare costs. Ultimately, negotiations were conducted under pure diplomatic rhetoric with almost no link to well-grounded, even though controversial, economic analysis.1 Reasons for this communication failure between scientific expertise and public decision-making are many, including the diplomatic cycles of the climate affairs, the political resistance to some recommendations, and the lack of convincing power of the modelling state of the art – due to some real weaknesses. However, this chapter starts from the idea that this failure is owed to a great extent to the confusion about the very concept of cost. The seemingly simple notion of ‘cost’ is indeed deeply polysemous: there is a significant distance between its meaning...
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