ABSTRACT
In Chapter 2 we argued that explicit cost/benefit trade-offs are not currently written into the Framework Convention on Climate Change (FCCC), because current information about the impacts of potential climate change, and their economic valuation, is so uncertain. Under such large future uncertainties the ‘precautionary principle’1 was intended to drive international action, and this is compatible with emissions and/or concentration targets in the future, but not with welfare optimising taxes set to a notional marginal damage cost of CO2 emissions. In this chapter we expand on this simplification of the arguments surrounding optimisation, placing it inside both a political and a theoretical economic context.
