Publication

This paper discusses the arguments for and implications of the introduction of 'green tariffs' in international trade that might offset cost differences between countries with little or no climate policy and low energy costs and countries with a climate policy. It estimates how large such tariffs would be in practice and then examines their economic and environmental effects using G-Cubed, a detailed multisector, multicountry model of the world economy. The authors conclude that the benefits produced by border adjustments would be too small to justify their administrative complexity or their deleterious effects on international trade.