11.4 Macro-economic effects

The main conclusions from the TAR on the macro-economic costs of mitigation can be summarized as follows. Mitigation costs can be substantially reduced through a portfolio of policy instruments, including those that help to overcome barriers, with emissions trading in particular expected to reduce the costs. However, mitigation costs may be significant for particular sectors and countries over some periods and the costs tend to rise with more stringent levels of atmospheric stabilization. Unplanned and unexpected policies with sudden short-term effects may cost much more for the same eventual results than planned and expected policies with gradual effects. Near-term anticipatory action in mitigation and adaptation would reduce risks and provide benefits because of the inertia in climate, ecological and socio-economic systems. The effectiveness of adaptation and mitigation is increased and costs are reduced if they are integrated with policies for sustainable development.

Since the TAR, the Kyoto Protocol has come into force and there has been a range of domestic initiatives in different countries. This has led to diverse modelling activities addressing the Kyoto Protocol as implemented (without the United States and Australia), post-Kyoto strategies, and more intricate domestic policies, providing more refined estimates of mitigation costs, through more accurate representation of policy implementation, improved modelling techniques, and improved meta-analysis of existing results.