Description: Publication date: September 2013 Source: Journal of Environmental Economics and Management, Volume 66, Issue 2 Author(s): Michael Finus , Christos Kotsogiannis , Steve McCorriston Given the current trend in global emissions, the latest round of climate change negotiations at the Durban meeting of December 2011 (for the adoption of a comprehensive global treaty on climate change mitigation as soon as possible—and no later than 2015—and to come into force in 2020) has hardly shown the results one would have hoped for. Even for the most optimistic, it remains unclear whether one can expect a successful negotiating outcome by 2015. There are inherent difficulties associated with climate change negotiations, ranging from which countries should bear most responsibility for a given emission reduction target to the assessment of a globally efficient time path for pricing harmful greenhouse gas emissions (GHGs). These difficulties become even more complex and challenging under the pervasive uncertainty of climate science and the uncertainty about the feedback loop between climate change damages and economic growth. During the past decades, the environmental economics literature has provided important insights regarding the design of environmental fiscal policies and treaties but there is a host of issues that remain relatively unexplored. For instance, we know little about the cooperative solution for carbon and trade policies when climate change affects the productive possibilities of countries. In this context, it is also not obvious whether observed policies could be improved upon in such a way that all countries gain in welfare. It remains also unclear what the carbon extraction path should be in the absence of a comprehensive treaty (such as, for example, if environmental policy is unilaterally chosen subject to an agreed ‘ceiling’ in global temperature). Though carbon pricing instruments like carbon taxes, cap-and-trade and hybrids have been well studied, not much is known about their properties in the presence of ‘offset’ schemes such as the Clean Development Mechanism. More work is also required to understand the strategic implications of the uncertainty surrounding climate change and how this affects, for example, the choice of climate change strategy (‘precautionary’ or ‘wait and see’), how uncertainty impacts the propensity of countries to sign a climate treaty, and the extent to which the possibility of a climate catastrophe fosters or hinders cooperation. Understanding political economy issues is also vital in tackling climate change because efficient climate policies stand little chance of being successfully negotiated and implemented if they do not receive the support of the electorate. The papers in the special issue of the Journal of Environmental Economics and Management are precisely devoted to this broad research agenda.