Difficulties of Benefit-Cost Analysis in Climate Negotiations

Neither the 1992 United Nations Framework Convention on Climate Change (FCCC) nor the 1997 Kyoto Protocol rest on a benefit cost (BC) foundation. The FCCC objective is to stabilize greenhouse gas concentrations “at a level that would prevent dangerous anthropogenic interference with the climate system.” Neither costs nor benefits are explicit in setting the objective, although members are admonished to take policies that are cost effective (i.e. least cost). The Kyoto Protocol established mandatory greenhouse gas emission targets for Annex I countries for the first commitment period (2008–2012). But there was no attempt to defend either the aggregate Annex I reduction target (averaging 5 per cent below 1990 levels), or the allocation of emission reductions among countries, on a benefit cost basis. ¹