Developing countries' greenhouse emissions: Uncertainty and implications for participation in the Kyoto Protocol

Developing countries can participate in the Kyoto Protocol to limit greenho use gas emissions by adopting national emissions limits. Such limits could offer economic gains to developing countries, cost savings to industrialize d countries, and environmental benefits. They could also address concerns o f the U.S. Senate. On the other hand, uncertainty about greenhouse gas emis sions in developing countries is so great that emissions limits may impose substantial costs if they rum our to be unexpectedly stringent. To manage r isks arising from emissions limits, developing countries should index any e missions limits to variables that predict emissions in the absence of limit s. This paper presents such an index-similar to one recently adopted by Arg entina-and develops estimates showing that it could lower the risk of econo mic losses to developing countries from about 40 percent to about 35 percen t.