ABSTRACT
Though currently excluded from controls under the FCCC, in the future developing countries (DCs) such as China and India will become the major emitters of greenhouse gases, and will therefore have to consider how to control their emissions (World Bank 1992). Surveys of the literature, such as Chapter 3, on the economics of controlling greenhouse gas emissions reveal that very few models assess the impact of policies to control green-house gas emissions on developing economies. Some global models (for example, OECD’s GREEN model and Manne and Richels’ Global 2100 model) do include developing regions, but these regions are mostly modelled with or based on data for developed countries. However, in the real world DCs have characteristics such as perpetual market disequilibria, large public sectors, restricted market entry (especially in the infrastructure related sectors) and lack of perfect information, which make them very different from industrialised countries. Additionally, in developing countries, many carbon abating technologies are available but are not exploited due to non-market reasons such as the lack of availability of capital. These technological options could be very important in the determination of costs of carbon abatement in DCs. Therefore, the economic costs of abating carbon emissions in a developing country have to be evaluated using a framework developed to study its specific features.
