2.4.2 Major cost determinants

A number of factors are critically important when determining costs, and it is important to understand their character and role when comparing mitigation costs across different studies, as occurs in Chapters 3-11 of this report, which compares costs across different models and which are based on different approaches.

The critical cost factors are based on different theoretical and methodological paradigms, as well as on specific applications of approaches. This section considers a number of factors including discounting, market efficiency assumptions, the treatment of externalities, valuation issues and techniques related to climate change damages^[8] and other policy impacts, as well as implementation and transactions costs, and gives guidance on how to understand and assess these aspects within the context of climate change mitigation costing studies. For a more in-depth review of these issues see IPCC, 2001, Chapters 7 and 8.