Exercises

1. Suppose that under the terms of an international agreement, U.S. CO2 emissions are to be reduced by 200 million tons and those of Brazil by 50 million tons.

Here are the policy options that the United States and Brazil have to reduce their emissions:

United States: Policy Options A: Efficient machinery B: Reforestation C: Replace coal-fueled power plants Brazil: Policy Options A: Efficient machinery B: Protection of Amazon forest C: Replace coal-fueled power plants Carbon Reduction (million tons carbon) 60 40 120 Carbon Reduction (million tons carbon) 50 30 40 Cost ($ billion) 12 20 30 Cost ($ billion) 20 3 8