ABSTRACT
This chapter gives an overview of the economics of the Kyoto Protocol, the agreement that was adopted unanimously by government negotiators in December 1997 at the Third Conference of Parties (COP 3) to the UNFCCC. The Protocol was adopted against a background of hugely disparate perspectives on the issue of climate change concerning the urgency of action, the costs of limitations and the appropriate instruments. In the end, the view of the US administration prevailed that binding emission commitments for industrialized countries should be complemented by the use of a number of ‘economic instruments’ adopted for the first time at the international level.
