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100 percent effi cient policies with 100 percent participation of countries.
In addition to universal country participation, the minimum-cost curve
further assumes that interventions are effi ciently timed and universally
applied—no exemptions for farmers, exporters, or the politically con-
nected are allowed. Note that the costs are calculated as a percentage
of world income. (These results also use discounted costs, a concept
explained in Chapter 16.)
The utopian policy indicates that meeting the Copenhagen objec-
tive of 2°C would be modest if it is undertaken effi ciently. It would re-
quire spending about 1.5 percent of world income, or about one year's
growth in average income. However, to aim for a lower target (say 1°C)
would become much more expensive. So the important point is that the
world can meet ambitious temperature targets at low cost if it is done
effi ciently and with universal participation.
Next, move to limited participation. One of the fi rst insights from
the economic models is the importance of near-universal participation
in emissions reduction programs. Put differently, the cost of meeting
a climate objective depends greatly on how many countries partici-
pate. The reason is that effi ciency requires that all regions exploit their
negative-cost and low-cost reduction options. If, for example, India
makes no reductions, then other countries would have to adopt more
expensive reductions to meet a given global climate policy target.
We must be realistic about country behavior. Some countries will
refuse to join the effort. Moreover, only one-fi fth of global emissions
were covered by the Kyoto Protocol in 2012. So assume that countries
with only half of emissions participate, although they do so very soon.
These might be all the rich countries and some of the middle-income
countries but not the poor countries. The other countries would join
the plan in the next century. The right-hand curve in Figure 26 shows
the costs for this limited-participation case. This second case still has
an idealistic fl avor because it assumes that policies are implemented in
an effi cient manner—again, no exemptions for farmers, exporters, or
other groups.
The limited participation curve is sobering. It shows that meeting
any temperature target will be much more costly if only half the coun-
