This paper uses the newly developed RICE-98 model to analyze the economics of the Kyoto Protocol. It analyzes versions of the Kyoto Protocol that have diﬀerent approaches to trading emissions rights and compares these with eﬀicient approaches. The major conclusions are: (a) the global cost of the Kyoto Protocol is $716 billion in present value, (b) the United States bears almost two-thirds of the global cost;and (c) the beneﬁt-cost ratio of the Kyoto Protocol is 1/7. Additionally, the emissions strategy is highly cost-ineﬀective, with the global temperature reduction achieved at a cost almost 8 times the cost of a strategy which is cost-eﬀective in terms of “where” and “when” eﬀiciency.
Nordhaus, William D. and Boyer, Joseph G., "Requiem for Kyoto: An Economic Analysis of the Kyoto Protocol" (1998). Cowles Foundation Discussion Papers. 1449.