ISBN: 978-1-78643-507-1

Vally Koubi

ETH Zürich

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This book is written in a lecture note format with reading lists, exercises, and references to a website with extensive additional information. The first chapters describe the physical science of climate change including the inherent uncertainties in the projection of future emissions scenarios. Tol judges that climate change will likely have a limited impact on the economy and human welfare in this century. Initial impacts will be positive, but in the long-run the negative impacts dominate, particularly in poorer, hotter, and low-lying areas. Poverty reduction reduces climate change impacts. Economic development is therefore the best means of addressing climate issues since it best improves this capacity. An optimal climate policy involves modest emissions reductions combined with continued economic growth. This will probably be achieved by nationally based adaptations that do not require international agreements. The author dismisses 'climate alarmism' and views the climate issue as a relatively small problem that can be easily solved by implementing a modest carbon tax. The potential for international action is limited due to the free‐riding problem. However, given the high and sustainable public demand for climate policy and the fact that unilateral climate policy is expensive, abatement would be easier in collaboration with trade partners and by investing in abatement in other countries. Some of Tol's views on the economics of climate change are controversial and he is regarded by some as a 'climate sceptic'. Nevertheless, the book presents a concise but comprehensive analysis of the economics of climate change and climate policy. It will be particularly useful for advanced undergraduate and graduate classes on climate economics.