International environmental policy and global warming : what role for market solutions?

Nevertheless, the lessons of environmental policy at the national level apply in considering international environmental rules, particularly with respect to problems like global warming. Policies should provide opportunities for nations, firms, and individuals to trade off various types of emissions, on a global scale if possible, and to find cost-minimizing ways to achieve emission targets. More importantly, existing policies that subsidize resource use with substantial environmental costs, such as fossil fuel subsidies in Eastern Europe and deforestation in Amazonia, must be reconsidered. Modifying these policies could improve the efficiency of resource allocation and generate collateral environmental benefits, and through less formal means than that of an international treaty. (Author abstract)