Sensitivity Study of Optimal CO2 Emission Paths Using a Simplified Structural Integrated Assessment Model (SIAM)

A structurally highly simplified, globally integrated coupled climate-economic costs model SIAM (Structural Integrated Assessment Model) is used to compute optimal paths of global CO₂ emissions that minimize the net sum of climate damage and mitigation costs. The model is used to study the sensitivity of the computed optimal emission paths with respect to various critical input assumptions. The climate module is represented by a linearized impulse-response model calibrated against a coupled ocean-atmosphere general circulation climate model and a three-dimensional global carbon-cycle model. The cost terms are represented by strongly simplified expressions designed for maximal transparency with respect to sensitive input assumptions. These include the discount rates for mitigation and damage costs, the inertia of the socio-economic system, and the dependence of climate damages on the change in temperature and the rate of change of temperature. Different assumptions regarding these parameters are believed to be the cause of the marked divergences of existing cost-benefit analyses based on more sophisticated economic models. The long memory of the climate system implies that very long time horizons of several hundred years need to be considered to optimize CO₂ emissions on time scales relevant for a policy of sustainable development. Cost-benefit analyses over shorter time scales of a century or two can lead to dangerous underestimates of the long term climatic impact of increasing greenhouse-gas emissions. To avert a major long term global warming, CO₂ emissions need to be reduced ultimately to very low levels. However, the draw-down can be realized as a gradual transition process over many decades and even centuries. This should nevertheless not be interpreted as providing a time cushion for inaction: the transition becomes more costly the longer the necessary mitigation policies are delayed. However, the long time horizon provides adequate flexibility for later adjustments. Short term energy conservation alone is insufficient and can be viewed only as a useful measure in support of the necessary long term transition to carbon-free energy technologies. For standard climate damage cost expressions, optimal emission paths limiting long term global warming to acceptable sustainable development levels are recovered only if climate damage costs are not significantly discounted. Discounting of climate damages at normal economic rates yields emission paths that are only weakly reduced relative to business as usual scenarios, resulting in high global warming levels that are incompatible with the generally accepted requirements of sustainable development. The solutions are nevertheless logically consistent with the underlying discounting assumption, namely that the occurrence of global warming damages in the distant future as a result of present human activities is of negligible concern today. It follows that a commitment to long term sustainable development, if it in fact exists, should be expressed by an intertemporal relation for the value of the earth's future climate which does not degrade significantly over the time horizon relevant for climate change. Since the future climate is a common assett whose value cannot be determined on the market, the appropriate discount rate for future climate damages should be determined by an assessment of the public willingness to pay today for the mitigation of future climate change. To translate our general conclusions into quantitative cost estimates required by decision makers, the present exploratory study needs to be extended using more detailed disaggregated climate damage and mitigation cost estimates and more realistic socio-economic models, including multi-actor interactions, inherent variability, the role of uncertainty and adaptive control strategies.     

Marginal abatement cost curves and the quality of emission reductions: a case study on Brazil

Decision makers facing emission-reduction targets need to decide which abatement measures to implement, and in which order. This article investigates how marginal abatement cost (MAC) curves can inform such a decision. We re-analyse a MAC curve built for Brazil by 2030, and show that misinterpreting MAC curves as abatement supply curves can lead to suboptimal strategies. It would lead to (1) under-investment in expensive, long-to-implement and large-potential options, such as clean transportation infrastructure, and (2) over-investment in cheap but limited-potential options such as energy-efficiency improvement in refineries. To mitigate this issue, the article proposes a new graphical representation of MAC curves that explicitly renders the time required to implement each measure.

Policy relevance

In addition to the cost and potential of available options, designing optimal short-term policies requires information on long-term targets (e.g. halving emissions by 2050) and on the speed at which measures can deliver emission reductions. Mitigation policies are thus best investigated in a dynamic framework, building on sector-scale pathways to long-term targets. Climate policies should seek both quantity and quality of abatement, by combining two approaches: a ‘synergy approach’ that focuses on the cheapest mitigation options and maximizes co-benefits, and an ‘urgency approach’ that starts from a long-term objective and works backward to identify actions that need to be implemented early. Accordingly, sector-specific policies may be used (1) to remove implementation barriers on negative- and low-cost options and (2) to ensure short-term targets are met with abatement of sufficient quality. Indeed, such policies can avoid under-investment in the long-to-implement options required to reach long-term targets, which are otherwise difficult to enforce.     

Climate change adaptation cost in the US: what do we know?

Researchers and policy makers increasingly recognize the need to adapt to future changes in climate, given that past emissions of greenhouse gases have already committed the world to some level of climate change. However, the current understanding of the costs and benefits of adaptation measures is still fairly rudimentary, and far from comprehensive. An assessment is presented of the current state of knowledge on the magnitude of adaptation costs in the United States. While incomplete, the studies suggest that adaptation cost could be as high as tens or hundreds of billions of dollars per year by the middle of this century. Key studies are identified in each sector, and the cost estimates and approaches to cost estimation are surveyed. Methodological issues are highlighted in interpreting, comparing, and aggregating adaptation cost estimates. Policy recommendations are made along with appropriate steps to make future adaptation cost studies more comparable within and across sectors and more accessible and relevant to policy and decision makers.

Policy relevance

Designing and implementing climate change adaptation policy requires good information about the effectiveness and cost of available adaptive options. The current state of knowledge on adaptation costs in the United States is assessed and significant gaps in the literature are highlighted – particularly in terms of sectoral and geographic coverage – as well as inconsistencies in methodologies and assumptions that hamper comparison across studies. Critical steps are identified that can be taken to make adaptation cost studies more accessible and useful to decision makers. The findings and recommendations are relevant to adaptation cost studies globally, not just in the United States.     

Testing 100-Year Global Warming Potentials: Impacts on Compliance Costs and Abatement Profile

The comprehensive approach adopted in the Kyoto Protocol relies on the use of 100-year Global Warming Potentials (GWPs) to convert emissions of various gases to `carbon dioxide (CO<sub>2</sub>) equivalents'. This particular set of weights, or metric, has a limited capacity to handle the large variations in atmospheric adjustment times, and emissions of various gases that are equal in terms of `CO₂ equivalents' will not result in equal climatic effects. In this study, the 100-year GWP metric is assessed in the context of implementing the Kyoto Protocol. Using data from Norway, we explore how abatement policy formulated on the basis of 100-year GWPs compares to policies based on other metrics in terms of compliance costs and abatement profile, that is, the composition of the basket of gases reduced. We found that the costs for Norway change significantly when other metrics are used, but changes in the composition of the basket of gases are moderate. However, since compliance costs can be controlled through other mechanisms for post-Kyoto Protocols, the use of 100-year GWPs versus other metrics has little impact on the general formulation of Norwegian climate policy.     

Delayed action and uncertain stabilisation targets. How much will the delay cost?

Despite the growing concern about actual on-going climate change, there is little consensus on the scale and timing of actions needed to stabilise the concentrations of greenhouse gases. Many countries are unwilling to implement mitigation strategies, at least in the short term, and no agreement on an ambitious global stabilisation target has yet been reached. It is thus likely that international climate policies will be characterized by a high degree of uncertainty over the stringency of the climate objective, and that some countries might delay their participation to global action. What additional economic costs will this delay in the adoption of mitigation measures imply? What would the optimal short-term strategy be given the uncertainty surrounding the climate policy to come? Is there a hedging strategy that decision makers can adopt to cope with delayed action and uncertain targets? This paper addresses these questions by quantifying the economic implications of delaying mitigation action, and by computing the optimal abatement strategy in the presence of uncertainty about a global stabilisation target (which will be agreed upon in future climate negotiations). Results point to short-term inaction as the key determinant for the economic costs of ambitious climate policies. They also indicate that there is an effective hedging strategy that could minimise the cost of climate policy uncertainty over the global stabilisation target: a short-term moderate climate policy would be a good strategy to reduce the costs of delayed action and to cope with uncertainty about the outcome of future climate negotiations. By contrast, failing to curb emissions in the short term imposes rapidly increasing additional costs of compliance.     

Incremental CH4 and N2O mitigation benefits consistent with the US Government's SC-CO2 estimates

Benefit–cost analysis can serve as an informative input into the policy-making process, but only to the degree it characterizes the major impacts of the regulation under consideration. Recently, the US, amongst other nations, has begun to use estimates of the social cost of CO₂ (SC-CO₂) to develop analyses that more fully capture the climate change impacts of GHG abatement. The SC-CO₂ represents the aggregate willingness to pay to avoid the damages associated with an additional tonne of CO₂ emissions. In comparison, the social costs of non-CO₂ GHGs have received little attention from researchers and policy analysts, despite their non-negligible climate impact. This article addresses this issue by developing a set of social cost estimates for two highly prevalent non-CO₂ GHGs, methane and nitrous oxide. By extending existing integrated assessment models, it is possible to develop a set of social cost estimates for these gases that are consistent with the SC-CO₂ estimates currently in use by the US federal government.Policy relevanceWithin the benefit–cost analyses that inform the design of major regulations, all Federal agencies within the US Government (USG) use a set of agreed upon SC-CO₂ estimates to value the impact of CO₂ emissions changes. However, the value of changes in non-CO₂ GHG emissions has not been included in USG policy analysis to date. This article addresses that omission by developing a set of social cost estimates for two highly prevalent non-CO₂ GHGs, methane and nitrous oxide. These new estimates are designed to be compatible with the USG SC-CO₂ estimates currently in use and may therefore be directly applied to value emissions changes for these non-CO₂ gases within the benefit–cost analyses used to evaluate future policies.     

Implications of alternative metrics for global mitigation costs and greenhouse gas emissions from agriculture

100-year Global Warming Potentials (GWPs) are used almost universally to compare emissions of greenhouse gases in national inventories and reduction targets. GWPs have been criticised on several grounds, but little work has been done to determine global mitigation costs under alternative physics-based metrics . We used the integrated assessment model MESSAGE to compare emission pathways and abatement costs for fixed and time-dependent variants of the Global Temperature Change Potential (GTP) with those based on GWPs, for a policy goal of limiting the radiative forcing to a specified level in the year 2100. We find that fixed 100-year GTPs would increase global abatement costs (discounted and aggregated over the 21^st century) under this policy goal by 5–20 % relative to 100-year GWPs, whereas time-varying GTPs would reduce costs by about 5 %. These cost differences are smaller than differences arising from alternative assumptions regarding agricultural mitigation potential and much smaller than those arising from alternative radiative forcing targets. Using the land-use model GLOBIOM, we show that alternative metrics affect food production differently in different world regions depending on regional characteristics of future land-use change to meet growing food demand. We conclude that under scenarios of complete participation, the choice of metric has a limited impact on global abatement costs but could be important for the political economy of regional and sectoral participation in collective mitigation efforts, in particular changing costs and gains over time for agriculture and energy-intensive sectors.     

The impact of potential abrupt climate changes on near-term policy choices

We investigate an important scientific uncertainty facing climate-change policymakers, namely, the impact of potential abrupt climatic change. We examine sequential decision strategies for abating climate change where near-term policies are viewed as the first of a series of decisions which adapt over the years to improving scientific information. We compare two illustrative near-term (1992–2002) policies - moderate and aggressive emission reductions - followed by a subsequent long-term policy chosen to limit global-mean temperature change to a specified ‘climate target’. We calculate the global-mean surface temperature change using a simple climate/ocean model and simple models of greenhouse-gas concentrations. We alter model parameters to examine the impact of abrupt changes in the sinks of carbon dioxide, the sources of methane, the circulation of the oceans, and the climate sensitivity, ΔT _2x. Although the abrupt changes increase the long-term costs of responding to climate change, they do not significantly affect the comparatively small cost difference between near-term strategies. Except for an abrupt increase in ΔT _2x, the investigated abrupt climate changes do not significantly alter the values of the climate target for which each near-term strategy is preferred. In contrast, innovations that reduce the cost of limiting greenhouse-gas emissions offer the potential for substantial abatement cost savings, regardless of which level of near-term abatement is selected.     

Global climate policy: will cities lead the way?

While the Conference of the Parties wrangle at an international scale with climate policy, a quiet set of policies and measures is being implemented at a local scale by municipalities across the globe. This study examines the motivation municipalities have for undertaking policies to reduce their greenhouse gas emissions, when the theory of free-riding would predict that local administrations should find it difficult to unilaterally reduce their emissions for the benefit of the global climate. Through interviews with officials and/or staff in 23 municipalities in the United States enacting climate policy, data are gathered that suggest local government abatement policies are primarily a top–down decision based on what officials or staff members believe to be “good business” or rational policy choices. They are primarily driven by the potential for realised or perceived cost savings and co-benefits rather than by public pressure. Economic data from some dozen municipal projects are analyzed, finding, while municipalities lack sophisticated accounting techniques, some justification for the often-disputed claim that at least initial reductions in emissions can be made at cost savings. In the United States, with the lack of national abatement policies, it is municipalities that are leading the way in beginning to implement mitigation strategies, even if only for initial reductions.     

The (ir)relevance of transaction costs in climate policy instrument choice: an analysis of the EU and the US

This article assesses the relevance of ex post transaction costs in the choice of climate policy instruments in the EU (focusing mainly on the example of Germany) and the US. It reviews all publicly available empirical ex post transaction cost studies of climate policy instruments broken down by the main private and public sector cost factors and offers hypotheses on how these factors may scale depending on instrument design and other contextual factors. The key finding from the evaluated schemes is that it is possible to reject the hypothesis that asymmetries in ex post transaction costs across instruments are large and, thus, play a pivotal role in climate policy instrument choice. Both total and relative ex post transaction costs can be considered low. This conjecture differs from the experience in other areas of environmental policy instruments where high total transaction costs are considered to be important factors in the overall assessment of optimal environmental policy choice. Against this background, the main claim of this article is that in climate policy instrument choice, ex post transaction cost considerations play a minor role in large countries that feature similar institutional characteristics as the EU and the US. Rather, the focus should be on the efficiency properties of instruments for incentivizing abatement, as well as equity and political economy considerations (and other societally relevant objectives). In order to inform transaction cost considerations in climate policy instrument choice in countries that adopt new climate policies, more data would be desirable in order to enable more robust estimates of design- and context-specific transaction-cost scaling factors.

Policy relevance

The findings of this study can help inform policy makers who plan to set up novel climate policy instruments. The results indicate that ex post transaction costs play a minor role for large countries that feature similar institutional characteristics as the EU and the US. For instrument design the focus should rather be on efficiency properties of instruments in incentivizing abatement, as well as equity and political economy considerations (and other societally relevant objectives).     

Safe climate policy is affordable—12 reasons

There is a widespread sense that a sufficiently stringent climate mitigation policy, that is, a considerable reduction of greenhouse gas emissions to avoid extreme climate change, will come with very high economic costs for society. This is supported by many cost–benefit analyses (CBA) and policy cost assessments of climate policy. All of these, nevertheless, are based on debatable assumptions. This paper will argue instead that safe climate policy is not excessively expensive and is indeed cheaper than suggested by most current studies. To this end, climate CBA and policy cost assessments are critically evaluated, and as a replacement twelve complementary perspectives on the cost of climate policy are offered.     

Harmonization vs. fragmentation: overview of climate policy scenarios in EMF27

This paper synthesizes results of the multi-model Energy Modeling Forum 27 (EMF27) with a focus on climate policy scenarios. The study included two harmonized long-term climate targets of 450 ppm CO₂-e (enforced in 2100) and 550 pm CO₂-e (not-to-exceed) as well as two more fragmented policies based on national and regional emissions targets. Stabilizing atmospheric GHG concentrations at 450 and 550 ppm CO₂-e requires a dramatic reduction of carbon emissions compared to baseline levels. Mitigation pathways for the 450 CO₂-e target are largely overlapping with the 550 CO₂-e pathways in the first half of the century, and the lower level is achieved through rapid reductions in atmospheric concentrations in the second half of the century aided by negative anthropogenic carbon flows. A fragmented scenario designed to extrapolate current levels of ambition into the future falls short of the emissions reductions required under the harmonized targets. In a more aggressive scenario intended to capture a break from observed levels of stringency, emissions are still somewhat higher in the second half due to unabated emissions from non-participating countries, emphasizing that a phase-out of global emissions in the long term can only be reached with full global participation. A key finding is that a large range of energy-related CO₂ emissions can be compatible with a given long-term target, depending on assumptions about carbon cycle response, non-CO₂ and land use CO₂ emissions abatement, partly explaining the spread in mitigation costs.     

Climate agreements based on responsibility for global warming: Periodic updating,policy choices,and regional costs

It has been suggested that calculations of historical responsibility for global warming should be used to distribute mitigation requirements in future climate agreements. For a medium-term mitigation scenario, we calculate regional mitigation costs resulting from global allocation schemes based on the Brazilian Proposal that solely incorporate historical responsibility as a burden sharing criterion. We find that they are likely to violate ability-to-pay principles. In spite of less stringent abatement requirements, developing country regions experience cost burdens (as a percentage of GDP) in the same range as those of developed countries. We also assess the policy options available for calculating historical responsibility. The periodic updating of responsibility calculations over time, concerns over the robustness and availability of emissions data, and the question of whether past emissions were knowingly harmful, may lead to policy choices that increase the relative historical responsibility attributed to developing countries. This, in turn, would increase their mitigation cost burden.     

US public opinion on climate change issues: implications for consensus-building and policymaking

While the Conference of the Parties wrangle at an international scale with climate policy, a quiet set of policies and measures is being implemented at a local scale by municipalities across the globe. This study examines the motivation municipalities have for undertaking policies to reduce their greenhouse gas emissions, when the theory of free-ridingwould predict that local administrations should find it difficult to unilaterally reduce their emissions for the benefit of the global climate. Through interviews with officials and/or staff in 23 municipalities in the United States enacting climate policy, data are gathered that suggest local government abatement policies are primarily a top—down decision based on what officials or staff members believe to be “good business” or rational policy choices. They are primarily driven by the potential for realised or perceived cost savings and co-benefits rather than by public pressure. Economic data from some dozen municipal projects are analyzed, finding, while municipalities lack sophisticated accounting techniques, some justification for the often-disputed claim that at least initial reductions in emissions can be made at cost savings. In the United States, with the lack of national abatement policies, it is municipalities that are leading the way in beginning to implement mitigation strategies, even if only for initial reductions.     

Sensitivity of multi-gas climate policy to emission metrics

The Global Warming Potential (GWP) index is currently used to create CO₂-equivalent emission totals for multi-gas greenhouse targets. While many alternatives have been proposed, it is not possible to uniquely define a metric that captures the different impacts of emissions of substances with widely disparate atmospheric lifetimes, which leads to a wide range of possible index values. We examine the sensitivity of emissions and climate outcomes to the value of the index used to aggregate methane emissions using a technologically detailed integrated assessment model. The methane index is varied between 4 and 70, with a central value of 21, which is the 100-year GWP value currently used in policy contexts. We find that the sensitivity to index value is, at most, 10–18 % in terms of methane emissions but only 2–3 % in terms of the maximum total radiative forcing change, with larger regional emissions differences in some cases. The choice of index also affects estimates of the cost of meeting a given end of century forcing target, with total two-gas mitigation cost increasing by 7–9 % if the index is increased, and increasing in most scenarios from 4 to 23 % if the index is lowered, with a slight (1 %) decrease in total cost in one case. We find that much of the methane abatement occurs as the induced effect of CO₂ abatement rather than explicit abatement, which is one reason why climate outcomes are relatively insensitive to the index value. We also find that the near-term climate benefit of increasing the methane index is small.     

The Impacts of Climate Variability on Near-Term Policy Choices and the Value of Information

Variability is one of the most salient features of the earth's climate, yet quantitative policy studies have generally ignored the impact of variability on society's best choice of climate-change policy. This omission is troubling because an adaptive emissions-reduction strategy, one that adjusts abatement rates over time based on observations of damages and abatement costs, should perform much better against extreme uncertainty than static, best-estimate policies. However, climate variability can strongly affect the success of adaptive-abatement strategies by masking adverse trends or fooling society into taking too strong an action. This study compares the performance of a wide variety of adaptive greenhouse-gas-abatement strategies against a broad range of plausible future climate-change scenarios. We find that: i) adaptive strategies remain preferable to static, best-estimate policies even with very large levels of climate variability; ii) the most robust strategies are innovation sensitive, that is, adjust future emissions reduction rates on the basis of small changes in observed abatement costs but only for large changes in observed damages; and iii) information about the size of the variability is about a third to an eighth as valuable as information determining the value of the key parameters that represent the long-term, future climate-change state-of-the-world.     

Estimated supply of RED credits 2011–2035

Previous attempts to estimate the supply of greenhouse gas emission reductions from reduced emissions from deforestation (RED) have generally failed to incorporate policy developments, country-specific abilities and political willingness to supply offsets for developed countries’ emissions. To address this, we estimate policy-appropriate projections of creditable emission reductions from RED. Two global forest carbon models are used to examine major assumptions affecting the generation of credits. The results show that the estimated feasible supply of RED credits is significantly below the biophysical mitigation potential from deforestation. A literature review identified an annual RED emission reduction potential between 1.6 and 4.3 Gt CO₂e. Feasible RED supply estimates applying the OSIRIS model were 1.74 Gt CO₂e annually between 2011 and 2020, with a cumulative supply of 17.4 Gt CO₂e under an ‘own-efforts’ scenario. Estimates from the Forest Carbon Index were very low at $5/t CO₂e with 8 million tonne CO₂e annually, rising to 1.8 Gt CO₂e at $20/t CO₂e. Cumulative abatement between 2011 and 2020 was 9 billion Gt CO₂e ($20/t CO₂e). These volumes were lower, sometimes dramatically, at prices of $5/t CO₂e suggesting a non-linear supply of credits in relation to price at a low payment level. For policy makers, the results suggest that inclusion of RED in a climate framework increases abatement potential, although significant constraints are imposed by political and technical issues.     

Credible commitment in carbon policy

In this article the problem of credible commitment in carbon policy is discussed. Investors favour long-term predictability of the policy, but without any external enforcement mechanisms a commitment made by a government can be withdrawn, leading to scepticism and lack of credibility. This results in increased market risks and investment hold-up. Regulatory uncertainty stems from (i) strategic interactions between government and firms, (ii) potential learning about climate damage and abatement cost and (iii) political volatility. Although commitment to future policy encourages private investment, it also imposes costs in the form of reduced flexibility to accommodate new information or preferences. The article reviews devices that may help policy makers raise the level of commitment while also leaving some room for flexible adjustments. In particular, legislation of a long-term governance framework, delegation to an independent carbon agency and securitization of investors' stakes in emission markets offer palliative approaches.     

Carbon co-benefits of tighter SO2 and NOx regulations in China

Air pollution has been recognized as a significant problem in China. In its Twelfth Five Year Plan, China proposes to reduce SO₂ and NO_x emissions significantly, and here we investigate the cost of achieving those reductions and the implications of doing so for CO₂ emissions. We extend the analysis through 2050, and either hold emissions policy targets at the level specified in the Plan, or continue to reduce them gradually. We apply a computable general equilibrium model of the Chinese economy that includes a representation of pollution abatement derived from detailed assessment of abatement technology and costs. We find that China's SO₂ and NO_x emissions control targets would have substantial effects on CO₂ emissions leading to emissions savings far beyond those we estimate would be needed to meet its CO₂ intensity targets. However, the cost of achieving and maintaining the pollution targets can be quite high given the growing economy. In fact, we find that the near term pollution targets can be met while still expanding the use of coal, but if they are, then there is a lock-in effect that makes it more costly to maintain or further reduce emissions. That is, if firms were to look ahead to tighter targets, they would make different technology choices in the near term, largely turning away from increased use of coal immediately.     

“A convenient truth”: air travel passengers’ willingness to pay to offset their CO<Subscript>2</Subscript> emissions

Several economic reviews demonstrate the substantial costs related to climate change and consequently call for early action. These reviews, however, have been limited to measuring ‘objective’ risks and expected material damage related to climate change. The ‘subjective’ perceived risk of climate change and society’s willingness to pay (WTP) to avoid these risks are expected to provide an important additional motivation for direct action. We investigate whether and why air travel passengers—an increasingly important source of greenhouse gas emissions—are supportive of measures that increase the cost of their travel based on the polluter pays principle and compensate the damage caused by their flight. Compared to the results of the few previous studies that have elicited WTP estimates for climate policy more generally, our results appear to be at the lower end of the scale, while a comparison to estimates of the social cost of carbon shows that the average WTP estimate in this study is close to the estimated marginal damage cost. Although significant differences are found between travellers from Europe, North America, Asia and the rest of the world, we show that there exists a substantial demand for climate change mitigation action. The positive risk premium over and above the expected property damage cost assessments should be accounted for more explicitly in economic reviews as it will add to the burden of proof of direct action. Measurements of passenger WTP will help policy makers to design effective financial instruments aimed at discouraging climate-unfriendly travel activities as well as to generate funds for the measures directed at climate change mitigation and adaptation. Based on stated WTP by travellers to offset their greenhouse gas emissions, funds in the order of magnitude of €23 billion could be generated annually to finance climate change mitigation activities.