Friday, May 15, 2009

Krugman on China and Climate Change

Krugman proposes a "Carbon Tariff" on imports from China, and presumably any other country that does not accept a cap on its emissions. This could be a good bargaining chip to encourage developing nations to join in climate change reduction initiatives, but as Lord Stern noted, it may amount to only 1-2% of the overall cost of any imported good, and may not achieve meaningful reduction in emissions or a difference in the sourcing strategies of companies. If that is the case, then it may marginally reduce consumer demand for goods without any additional impact on GHG emissions.

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