Mitigation Targets, Burden Sharing and the Role of Economic Modeling in Climate Policy

Abstract

Within Australian climate policy, the dominant framework for determining national emission reduction targets has been ‘burden sharing’. The prevailing view, both within and outside government, has been that there should be a rough equivalence in the costs that countries bear in mitigating greenhouse gas emissions, at least where countries share similar wealth and capacity traits. This article looks at the practical problems with this approach that stem from its reliance on economic modeling. It is contended that any principled approach to target setting should strive for objectivity but that burden sharing based on projected welfare losses cannot provide this. To illustrate the fallibility of the economic projections that are done for these purposes, the article reviews how one of the greenhouse reporting sectors, known as land use, land-use change and forestry, has been dealt with in the modelling exercises that have been done in Australia for climate policy purposes.