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Summary 4: Managing Economic Risk
Abstract
An Emissions Trading System helps reduce global climate change, lowers the risk of New Zealand non-compliance with Kyoto, and reduces the risk that controlling New Zealand’s emissions will be extremely expensive to the economy. It also introduces the risk that the price of emission units may be very high and volatile. This is a particular risk in the short run when international trade in emission units is new and trading rules are still being established in all countries; it is unclear how New Zealanders will be able to buy and sell in international markets and prices are likely to be very volatile.
Citation
Motu Research. 2007. "Managing Economic Risk," Summary 4 from the series Introduction to Emissions Trading, produced as part of the Climate Change Policy Dialogue.
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