Environmental Economics

http://www.msnbc.msn.com/id/16959623/site/newsweek/

This article explains the incentives for developed countries to reduce their own emissions as well as contribute to establishing sustainable processes in developing countries. Developing countries have the strongest incentive to protect their environment because they are going to be hit the hardest economically by global warming. This is why countries like Brazil and China are setting up a “leapfrog economy”. They are skipping over the decades of high-carbon industrialization and moving straight to modern, low-carbon technologies (ethanol, wind/solar power). The Kyoto Protocol in the European Union gives an incentive in carbon trading for developed countries to fund emission-reduction projects around the world. The emission-reduction commitments taken on by developed countries are being invested in the developing world, which has created a very large international market in carbon finance. The market is projected to be up to $40 billion annually by the end of the decade and could reasonably reach $100 billion annually. This money could be invested in the expensive up-front costs of low-carbon technologies for developing countries, which will end up being beneficial for both their economy and the environment.