Treaties and International Law

Kyoto Protocol to the UN Framework Convention on Climate Change - 13 February 2002

Part IV

• Scenarios modelled
• Scenario modelling results
• Discussion of macroeconomic results
• Discussion of international emissions price
• Sectoral output effects associated with these scenarios
• Effects of other countries’ participation or non-participation in the Protocol
• Business Opportunities
• Economic effects of other strategies that will also reduce emissions
• Economic effects relating to subsequent commitment periods
• Environmental effects of entry-into-force of the Protocol for New Zealand
• Social and cultural effects of entry-into-force of the Protocol for New Zealand
• Consistency with the Treaty of Waitangi
• Other social and cultural effects
• Effects if the Protocol does not enter into force for New Zealand
• Consultations that have been undertaken or are proposed with the community and interested parties in respect of the Protocol
• Summary: Advantages and disadvantages to New Zealand of the Protocol entering into force for New Zealand
• Assessment
• References
• Appendices
• The US National Academy of Sciences

Scenarios modelled

A “business as usual” baseline was projected for the New Zealand economy for the year 2010, and various “with Kyoto” scenarios were compared against that baseline.

Conditions held constant across all scenarios were that:

• the US does not ratify the Kyoto Protocol in any scenario
• all other Annex B countries ratify the Kyoto Protocol
• Russia and the Ukraine are eligible to take part in international emissions trading, and manage their supply of emission units to maximise their first commitment period revenue
• all participating Annex B countries apply an emissions pricing measure within their economies, but (with the exception of New Zealand in Scenario 7 only) exclude agricultural methane and nitrous oxide emissions from the scope of the measure.

The scenarios reported here were:

1. New Zealand applies no domestic emissions price measure to any sector, and accounts for excess emissions over 2008-12 by using removal units from forest sinks, with any surplus removal units sold on the international market
2. New Zealand applies no emissions price measure, and accounts for excess emissions over 2008-12 by purchasing emission units from the international market via an increase in GST, with all removal units sold on the international market
3. As per scenario 1 using removal units to account for excess emissions, but with New Zealand also applying a low-level emissions price measure, at 27% of the international emissions price, to all emissions other than agricultural methane and nitrous oxide
4. As per scenario 2 using GST to fund purchase of emission units, but with New Zealand also applying a low-level emissions price measure, at 27% of the international emissions price, to all emissions other than agricultural methane and nitrous oxide
5. New Zealand applies an emissions price measure at 100% of the international emissions price to all emissions other than methane and nitrous oxide from agriculture, process carbon dioxide from iron and steel manufacture, and process carbon dioxide from non-ferrous metals (principally aluminium), with surplus removal units sold on the international market
6. New Zealand applies an emissions price measure at 100% of the international emissions price to all emissions other than agricultural methane and nitrous oxide, with surplus removal units sold on the international market
7. New Zealand applies an emissions price measure at 100% of the international emissions price to all domestic greenhouse gas emissions, with all removal units sold on the international market.

Scenario modelling results

As noted above, the policies suggested by the Government’s principles for policy development would, if followed, mean that economic effects are more likely to lie within the range suggested by Scenarios 3-5 than outside that range.

The macroeconomic results generated for these scenarios are shown in Table 1.

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Table 1: Macroeconomic results under different domestic policy scenarios

Economic effect relative to “business as usual” in 2010 (% change)
Scenario	1	2	3	4	5	6	7
Approach to meeting emissions obligations	Removal units	GST	Removal units & 27% price (a)	GST & 27% price (a)	100% price & exemptions for metals, ag (b)	100% price & exemption for ag only (c)	100% price
Parameter
GNI (see footnote [1])	0.39	0.34	0.43	0.38	0.55	0.43	0.05
GDP	0.02	0.00	0.00	-0.02	-0.08	–0.10	–0.26
Exchange rate	0.00	0.71	0.01	0.65	0.25	0.03	–1.22
Exports	-0.55	-0.36	-0.72	-0.55	-1.10	–1.04	–2.60
Imports	0.35	0.26	0.30	0.22	0.28	0.16	–1.72
Savings	0.39	1.05	0.44	1.04	0.81	0.46	–1.15
Investment	0.11	0.09	0.08	0.06	-0.02	–0.05	–0.22
Export cost index	0.04	-0.01	0.06	0.02	0.13	0.08	–0.22
Import cost index	-0.03	-0.04	-0.03	-0.04	-0.03	–0.03	–0.03
Terms of trade	0.07	0.03	0.09	0.05	0.16	0.12	–0.19
Rate of return on capital	0.03	-0.83	-0.36	-1.14	-1.33	–1.85	–2.78
Real wage	0.00	-0.67	-0.39	-0.99	-1.36	–1.36	–2.36
GST rate	12.5%	13.46%	12.5%	13.36%	12.5%	12.5%	12.5%
The carbon market
Internat'l emissions price (2001 NZ$/tCO2)	71.9	72.1	71.6	71.8	71.1	71.2	70.4
Domestic emissions price (2001 NZ$/t CO2)	0	0	19.5	19.5	71.1	71.2	70.4
Net quota income (2001 NZ$m)	271.4	268.8	391.0	388.1	665.7	614.8	1,333.8
Net quota sales (Mt CO2 equiv)	3.8	3.7	5.5	5.4	9.4	8.6	19.0
Domestic abatement (d) (Mt CO2 equiv)	22.3	22.3	24.0	24.0	27.9	26.9	37.2

1. Price does not apply to agricultural methane and nitrous oxide emissions

2. Exemption is for CO2 process emissions from iron & steel and aluminium production, and agricultural methane and nitrous oxide emissions
3. Exemption is for agricultural methane and nitrous oxide emissions
4. Removal units (sink credits) are counted in the domestic abatement total

Discussion of macroeconomic results

It is important to note that these results are relative to what would have occurred in 2010 under “business as usual”. They are not relative to the present day. For example, New Zealand’s GDP was assumed in the model to grow at an average rate of 2.6% per year from 1995 to 2010. At 2010, New Zealand’s GDP would therefore be 147.0% of its 1995 level at that rate of growth. Under Scenarios 5 and 6, where the year 2010 GDP results are projected to be ‑0.08% and –0.10% lower than under business as usual, year 2010 GDP would instead be 146.8% of its 1995 level. This is approximately the level that would be reached if average annual growth were 2.59% over the 1995-2010 period rather than 2.60%.

The results in Table 1 show that New Zealand’s choice of domestic policy measures to meet Kyoto Protocol obligations can have a range of effects on the economic outcomes for New Zealand over the first commitment period.

The results also show that the aggregate macroeconomic effects would be relatively small for most foreseeable policy futures. As described, the rate of growth in gross domestic product (a measure of economic activity within New Zealand) generally remains steady or slows slightly in all scenarios. The decrease between scenarios 1 and 3 and between scenarios 3 and 5 occurs as production in energy intensive sectors, particularly iron and steel and nonferrous metals production, falls as a result of rising electricity costs, which, in turn, are caused by the rising domestic emissions price. This causes both real wages and the rate of return to capital in New Zealand to fall. As real wages and costs of capital fall in New Zealand, less energy intensive sectors, such as light manufacturing and services, are projected to experience small output rises and falling supply prices.

However, the rate of growth in gross national income (a measure of the income available to New Zealanders to spend or save, so a more complete measure of national welfare) rises in all scenarios for the first commitment period. This is because of the assumption that surplus removal units are sold on the international emissions market, with the income returned as a lump sum payment to households. Where scenarios show a domestic emissions price, the additional abatement within New Zealand frees up emission units for sale in the international market, increasing the GNI rise across scenarios. It should be noted that the income from removal unit sales is offsetting a fall in returns to capital and real wages from employment efforts. It should also be noted that if removal units are sold in the first commitment period, emission units might be required to account for harvest of the relevant Kyoto forests in a later period.

Total exports from New Zealand are projected to fall across scenarios 1-5 as rising real GNI leads consumers in New Zealand to demand a greater share of domestic production. This fall is augmented by the reduction in exports of iron and steel and nonferrous metal products across scenarios, which occurs as their supply prices rise above scenario 1 levels because of rising electricity costs, and production in both these sectors is reduced from scenarios 1 to 3 and from scenarios 3 to 5. In scenario 7 the emissions price applies to agricultural methane and nitrous oxide emissions also, which significantly reduces the competitiveness of those industries on world markets. This leads to significant falls in exports and the exchange rate, and hence imports.

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Discussion of international emissions price

In these scenarios, the ABARE model generates international emissions prices around NZ$70 per tonne of carbon dioxide equivalent emissions. The emissions price generated by the ABARE model is the price required to balance the Annex B emissions trading market under the economic and trade assumptions used in this model.

However, comparisons between models have shown that the ABARE model returns an emissions price that is at the high end of such prices returned by global models of this type. Examination of studies that have compared results from global models suggests that, under a set of constant modelling assumptions and ignoring extreme outliers, the emissions price excluding the US could range from NZ$5 to NZ$75 per tonne of carbon dioxide-equivalent, with a median around NZ$35-40[2].

Results also show that domestic policy decisions in New Zealand have a negligible effect on the international emissions price.

Sectoral output effects associated with these scenarios

The ABARE model provides a snapshot of possible sectoral effects under different policies in 2010.

Underlying the relatively small aggregate macroeconomic results are, in some cases, significant sectoral adjustments in some scenarios, as shown in Table 2.

Where there are significant sectoral adjustments, it is likely that they would result in transitional adjustment costs, which would have a negative influence on GNI and GDP, lowering the results relative to those reported. The extent to which this would occur depends on the magnitude of the sectoral changes and the ability of the economy to move to a new cost structure.

Table 2 shows that emissions-intensive sectors of the economy (for example, coal, iron & steel production) generally reduce output in response to a domestic emissions price measure, with the reductions getting larger with increasing price.

Table 2 also suggests that non-emissions-intensive sectors (for example, services, cropping and horticulture) would gain resources at the expense of emissions-intensive sectors. Service industries comprise the largest proportion of the New Zealand economy, accounting for about two-thirds of economic activity. Services show an increase in output under all scenarios.

This analysis suggests that some of the high emitting industries in the tradables sectors will be heavily affected if they are required to pay a high price for emissions and/or face increased costs as a result of a high emissions price on key inputs, to the point where they may become unviable in New Zealand. Any reduction or cessation of supply from New Zealand businesses in those industries would be made up by increases in supply from the developed countries that did not ratify the Protocol, or from developing countries that do not have targets under the Protocol. A decline in competitiveness of this nature could lead to some investment, which would otherwise have occurred in New Zealand, being re-directed to other countries.

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Table 2: Sectoral effects under different domestic policy scenarios

A separate report Assessment of the likely impacts on selected sectors of a domestic emissions trading regime, by PA Consulting Ltd, examines the effect of a domestic emissions trading scheme on oil/transport, coal/gas/geothermal (including electricity), industrial processes, agriculture, waste and forestry sectors. The study assumed that there would an international emissions price of NZ$20 per tonne CO2, which would be fully applied to the domestic economy. The findings of the study are expressed in qualitative terms but are broadly consistent with the findings of Scenario 7 in Table 2.

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Effects of other countries’ participation or non-participation in the Protocol

The ABARE modelling was also used to test the effects of participation or non-participation in the Protocol by Australia, the US and the “economies in transition”. The latter are former communist countries of eastern Europe, Russia and the Ukraine that are currently moving towards becoming market-based economies. Findings were as follows.

Non-ratification of the Protocol by Australia would result in a very small improvement in economic outcomes for New Zealand, primarily because Australia is New Zealand’s largest export market. Under the assumptions modelled here, ratification of the Protocol is projected to be negative for Australian national income. Therefore, non-ratification of the Protocol by Australia would lead to a higher demand for New Zealand’s exports to Australia than if Australia ratified the Protocol.

Ratification of the Protocol by the United States could have the effect of increasing the international emissions price by around 50% to 100% due to US demand for emission units. This would lead to a small reduction in New Zealand’s domestic economic activity as measured by GDP (mainly between –0.05% and –0.24%), outweighed by a larger increase in foreign income transfers from the sale internationally of removal units. The net effect is that New Zealand’s GNI increase would be around five times larger (~2%) with US ratification than it would be without US ratification (~0.4%).

Non-participation in the Protocol, or ineligibility to take part in international emissions trading under the Protocol, by countries in transition to a market economy (that is, Russia, Ukraine, and Eastern Europe) would significantly raise the international emissions price. This could be negative for New Zealand’s domestic economic activity, depending on New Zealand’s choice of domestic policy measures, but could significantly increase New Zealand’s national income if New Zealand were to export its surplus removal units.

It should be noted that tests of the effect of Australian and US ratification (or otherwise) of the Protocol assume that in the absence of ratification those countries would impose no domestic policies. This is unlikely to be the case in practice. For example, Australia is currently spending NZ$1 billion over four years for greenhouse gas management under its National Greenhouse Strategy, with goals that include limiting net emissions, in particular to meet Australia’s international obligations.

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Consistency with other New Zealand-specific general equilibrium studies

The ABARE results show patterns of sectoral and aggregate macroeconomic results that are broadly consistent with those identified in earlier general equilibrium modelling exercises specific to New Zealand[3].

A study prepared by the New Zealand Institute of Economic Research (NZIER) on behalf of the Petroleum Exploration Association of New Zealand and the Greenhouse Policy Coalition (a group of large companies with energy-intensive businesses) also showed, where their scenarios are broadly comparable, a similar pattern of macroeconomic and sectoral output effects for different mixes of emissions-pricing measures. Examination of the differing results and their magnitude by external consultants suggests that these are largely due to differences in modelling assumptions.

Business Opportunities

The adjustment of global and domestic markets during the commitment period in response to the policies of Annex B countries will also have implications for business opportunities. Business opportunities could arise from increased domestic and international demand for climate-friendly products and services and demand for methods to implement the Kyoto Protocol (e.g. improved means of monitoring emissions).

Potential opportunities identified include:

• the expansion of the market for a New Zealand developed gasifier that generates electricity from animal manure (currently being marketed in the United Kingdom, France and the United States).
• the development of a domestic and international market for a New Zealand designed wind turbine (a prototype is currently being completed and will be built on the Port Hills in Christchurch within the next year)
• the development of products to reduce methane emissions from agriculture (some products already on the market for improving dairy productivity could also reduce methane emissions by 20 per cent).

Some business opportunities will not depend on the Kyoto Protocol. These include opportunities arising from the demand for products and services to prepare for and/or mitigate the impact of climate change itself.
The Government and the New Zealand Business Council for Sustainable Development are cooperating on a climate change project to identify business opportunities from the Kyoto Protocol. Stage one of the project, to be completed by July 2002, will identify the business opportunities that will created from the ratification of the Kyoto Protocol. In stage two, beginning in August 2002, the business opportunities will be promoted and participating companies will begin reporting against emission reduction targets.

Economic effects of other strategies that will also reduce emissions

As described in the “Measures” section, the rate of increase in New Zealand’s greenhouse gas emissions is likely to be reduced by the National Energy Efficiency and Conservation Strategy, the New Zealand Transport Strategy, and the Waste Minimisation Strategy.

The Transport and Waste Strategies are still under development, and quantitative analyses are planned or under way to estimate the economic effects of those strategies and the emissions reductions that could be expected from them.

The National Energy Efficiency and Conservation Strategy was completed and launched in September 2001. The Strategy is expected to reduce New Zealand’s projected greenhouse gas emissions over the first commitment period by between 18 and 22.5 Mt relative to “business as usual” conditions. The Strategy is projected to have a net economic benefit, even without giving a value to avoided greenhouse gas emissions. Estimates have indicated that the Strategy's benefit cost ratio is between 1 and 2, and that the net national economic benefit over the period to 2012 could approach $1 billion. This indicates that between 24% and 45% of New Zealand's projected excess emissions between 2008 and 2012 could be avoided at no net economic cost or better.

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Economic effects relating to subsequent commitment periods

The economic effects of subsequent commitment periods for New Zealand cannot be estimated at present. Factors that would influence the economic effects of subsequent commitment periods include:

• the extent of emissions reductions accepted by Annex B countries
• extension of Annex I of the Framework Convention to include additional countries with Annex B emissions reduction and limitation commitments
• changes in technology, particularly emissions intensity of energy, industrial and agricultural production systems
• changes in economic structures over time as economies adjust to emissions limitations; and
• possible changes in rules for subsequent commitment periods, including rules in relation to sink activities.

These factors cannot be forecast with any certainty at present, but it is likely that the dynamic effect of first commitment period policies will affect the rate of change of all factors.

Environmental effects of entry-into-force of the Protocol for New Zealand

Entry-into-force of the Kyoto Protocol could lead to two types of environmental effect:

• effects on atmospheric greenhouse gas concentrations and hence climate change and global warming, and
• effects on local environments as a result of reductions in greenhouse gas emissions affecting emissions of other types of pollutants or altering patterns of use of natural resources

Again, these two types of effect are likely to occur on different timescales. Effects on climate change and global warming are likely to take place over a long period of time as a result of actions over a series of commitment periods. Effects on local environments are much more policy-specific and some effects will begin to occur as soon as policies are implemented.

Effects on climate change and global warming

There is a clear distinction between the effects on climate change and global warming that will be attributable to the Kyoto Protocol’s first commitment period, and those attributable to the Protocol over its full lifespan encompassing multiple commitment periods.

Effects of greenhouse gas emission reductions during the first commitment period

The effect of implementing the Kyoto Protocol on global atmospheric temperatures and sea level has been the subject of international scientific research. There is general agreement that the effect on temperatures and sea-level rise would be very small if only the Protocol’s first commitment period was implemented and greenhouse gas emissions reverted to business-as-usual levels afterwards.

Studies with one widely used climate model show that implementing only the first commitment period of the Protocol would reduce the expected temperature increase by 2100 by only 0.08 degrees Celsius.[4] Under this scenario, the temperature expected under “business-as-usual” in 2100 would be reached in about 2105.

Without actions by the United States during the Kyoto Protocol’s first commitment period, the effect of the required emissions reductions is likely to be even smaller, but quantitative results strongly depend on assumptions about future emissions from developed and developing countries.

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Longer-term effects from greenhouse gas emissions reductions beyond the first commitment period

The Kyoto Protocol’s first commitment period is the initial key step in a long-term process. Much more substantial reductions in greenhouse gas emissions beyond those in the first commitment period will be required to achieve the ultimate objective of the Framework Convention on Climate Change, which is the stabilisation of greenhouse gas concentrations.

IPCC projections show that a sustained reduction in global emissions would be required to achieve stabilisation of atmospheric CO2 concentrations at any level. For stabilisation at concentrations up to twice the pre-industrial revolution level (450-550 ppm[5]), global emissions would need to fall below current levels within the next 20 to 70 years. Stabilisation at higher concentrations (750–1000 ppm) would require emissions to drop below current levels within the next one to two centuries.

Stabilisation at higher levels would allow more time for emissions reductions, but would also lead to a greater temperature rise and greater and more sustained impacts of climate change than stabilisation at lower levels.

Eventually, global emissions will need to fall to very low levels, substantially below current emissions, to prevent further growth of CO2 concentrations and associated climate change.

Scientific climate models cannot apportion the required emission reductions between developed and developing countries, since only global emissions determine the rise in global temperatures. The global distribution of emissions reductions is therefore a social and political choice. Nonetheless, the current distribution of per-capita emissions and economic wealth between developed and developing countries suggests that a larger burden for reducing emissions may have to be carried by developed countries. That is, most or all countries will have to accept emissions obligations, but developed countries can expect to continue to lead in this regard.

Ancillary environmental effects

Ancillary environmental effects are incidental effects on the environment of reducing greenhouse gas emissions. The extent to which ancillary benefits or costs occur will be highly dependent on the choice of domestic policies used to meet obligations under the Protocol.

The most obvious possible benefit is improved human health as a result of air quality improvements, because burning fossil fuels often results in emissions of other air pollutants (such as volatile organic compounds, sulphur and nitrogen oxides, and particulates) apart from greenhouse gases. Such benefits may occur because reducing greenhouse gas emissions can also reduce emissions of other pollutants at the same time. While these benefits are dependent on domestic policy choices, the avoided health costs due to a reduction in greenhouse gas emissions have been shown in several overseas studies to be not insignificant.

Other possible environmental benefits include:

• reductions in erosion and improvements in water quality as a result of afforestation to create carbon sinks
• improvements in native ecosystems as a result of protection and restoration of regenerating indigenous forests
• improvements in building design and insulation, and associated health benefits, due to the need to improve energy efficiency and conservation
• less environmental impact from fossil fuel mining activities
• less congestion and noise from transport pattern changes and improvements to urban design and infrastructure.

An ancillary environmental benefit of global action with particular relevance to New Zealand is that the ozone layer is expected to recover earlier under reduced climate change, and that the extension of the Antarctic ozone hole is reduced by reduced global warming.

Ancillary environmental costs could also occur. For example, some of New Zealand’s modern sewage treatment plants avoid discharging high nitrogen levels into waterways by “stirring” the sewage mix to create nitrous oxide. This prevents the receiving waters from being overloaded with nutrients, but emits a nitrous oxide (N2O), which is a powerful greenhouse gas. Certain policy measures, such as application of an emissions price to nitrous oxide emissions, could conceivably create an incentive to reduce greenhouse gas emissions at the expense of receiving water quality. In such a case, both issues would need to be addressed concurrently.

Other possible ancillary environmental damages include:

• reduced aquatic habitat and water availability as a result of forest plantations reducing runoff volumes in water catchment areas
• increased risk and potential incidence of pest species from creation of additional forest habitat
• reduced indigenous biodiversity and nutrient balances if valuable ecosystems were replaced by exotic forests and crops for bio-fuel generation and the new systems were developed and managed improperly
• increased use of wood for home heating which could lead to increased emission of particulate matter with associated health risks.

Changes in land-use and farming systems to reduce greenhouse gas emissions could have both ancillary environmental benefits and risks.. Scientific and technical solutions to reduce methane emissions from livestock may or may not be compatible with organic farming principles.
In general, adopting environmentally sound technologies and practices can exploit synergies between greenhouse and environmental policies, while contributing to sustainable growth and resource use. However the degree to which individual policies make use of such synergies and avoid trade-offs depends on their specific implementation and links with other domestic environmental or socio-economic policies.

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Ancillary environmental effects in the first commitment period and beyond

Without knowing the detail of measures that would be used to manage greenhouse gas emissions under the Protocol, and consequently the local environmental outcomes of specific policy measures, it is not possible to quantify the ancillary effects that would arise from measures for managing greenhouse gas emissions during the first commitment period or in future periods. However, in the medium term it is expected that more of the ancillary benefits described above would occur as economic structures transition to a lower emissions future.

Social and cultural effects of entry-into-force of the Protocol for New Zealand

Because the Kyoto Protocol does not require New Zealand to take any specific policy measures, there would not be any direct social and cultural effects as a result of the entry-into-force of the Protocol for New Zealand.

However, there may be indirect social and cultural effects that result from the primary economic and environmental effects of the Kyoto Protocol, and policy measures introduced to meet the Protocol’s obligations, in both the short and long term.

Consistency with the Treaty of Waitangi

The Crown has a moral obligation to act in accordance with the principles of the Treaty of Waitangi. The Treaty does not create any formal or legal limit on the ability of the Crown to ratify an international agreement, but its principles do affect the context in which the Crown takes such a decision and are relevant to the ongoing development of the domestic policies.

The key Treaty concepts and principles relevant to the current discussion about the Kyoto Protocol are:

• Kawanatanga: The concept of kawanatanga describes the responsibility of the Crown to provide laws and make related decisions for the community as a whole. The actions that the executive takes for New Zealand in the international domain, including the ratification of international agreements, fall within the concept of kawanatanga.
• Rangatiratanga and taonga: The Treaty assured Maori that their rights, including rangatiratanga and taonga, would be protected. The effect of any regulatory regime on Maori land, forests and other interests will be a key issue as the domestic policy regime is developed.
• Partnership: The Treaty has been described as establishing a relationship akin to a partnership, in that the two parties have duties to act reasonably, honourably and in good faith towards one another.
• Duty of active protection: The Crown is required to take positive steps to recognise and protect Maori interests, and to ensure that it takes informed decisions on matters that affect Maori interests.

Over recent years, there has been a substantial amount of general debate and analysis on the Kyoto Protocol and of general consultation by government agencies with key groups, including Maori. A Maori working party was first formed on this issue in 1990. The Ministry for the Environment undertook two series of regional hui in November 2000 and November 2001, to inform Maori about the science of climate change and the implications of the Protocol, and to give an overview of the range of possible policy responses.

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The text of the Kyoto Protocol was finalised at the end of 2001. During November and December the Government also undertook a substantial process of consultation on the implications of ratification and on the directions that domestic policy might take in the future. As discussed in the section on consultation, below, this consultation process included consultation with Maori.

That consultation and initial analysis means that the Government is now able to identify key options and issues for New Zealand, as well as some key issues that are specific to Maori. These key issues include environmental and cultural issues that stem from the cultural significance of the natural environment for Maori, economic effects, the effect of any new regulatory mechanisms on Maori land and on Maori forests that were planted before 1990, and more general social and health effects.

There will be a further round of consultation on the proposed policy directions later this year, and the Government will be looking for comment on whether the policies as a whole adequately manage the key issues for Maori. This consultative and staged approach to policy development will enable the Government to ensure that the domestic policy mix that New Zealand eventually adopts is developed with full awareness of its implications for Maori, and that it is consistent with the principles of the Treaty of Waitangi.

The Government considers that the staged and consultative approach that has been taken means that it now has sufficient general understanding of the issues for Maori and how they might be managed. It is reasonable, and consistent with the Treaty of Waitangi, for the Government to proceed to ratification.

Effects on human rights

Entry-into-force of the Kyoto Protocol for New Zealand will have no effect on human rights.

Other social and cultural effects

Short-term

Because the degree of avoided climate change is expected to be small in the short term, there are not expected to be significant social and cultural effects in this regard (either as a result of climate change itself or as a result of climate change avoided).

However, there may be some social and cultural effects as a result of domestic policy measures and global economic changes resulting from the Kyoto Protocol’s first commitment period. These may include:

• possible effects on employment, particularly in regions outside major urban areas, which will be taken into account in the design of policies
• alterations to patterns of transport use and resulting changes in patterns of leisure and social activities
• changes in social acceptability and views on basic day-to-day behaviours such as energy use, disposal of organic waste and transport mode choice
• changes in the types of housing constructed and purchased and possible changes in urban form, leading to different patterns of interaction and patterns of social relationships within communities

Longer-term

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In the longer term, successful implementation of the Kyoto Protocol, including its extension through further commitment periods, will slow the rate and mitigate the effects of global climate change. This will reduce the risks to social and cultural systems that may be posed by the adverse environmental impacts of climate change, particularly impacts from sea level rise, establishment of new disease-carrying pest species and changes in agricultural viability and native ecosystems.

The other social changes described for “short-term effects” would almost certainly be gradual changes, but in the longer term would become more pronounced.

Effects if the Protocol does not enter into force for New Zealand

The Protocol does not receive sufficient ratifications to enter into force.

If the Protocol did not enter into force, neither New Zealand nor any other Annex B country would face binding emissions targets, and each would remain bound by the articles of the Framework Convention[1].

In the short term, it is unlikely that additional global policies would be implemented to limit or reduce greenhouse gas emissions, beyond those currently in place. This would avoid the economic adjustments described above, but would also mean a delay in action and would allow for continued emissions of greenhouse gases and increases in atmospheric concentrations, as described under the IPCC scenarios discussed in Appendix 3. This delay, until an agreement providing for effective action were negotiated, would commit New Zealand and other countries to additional future impacts of global warming and climate change.

In the longer term, if no further international agreement were made, greenhouse gas emissions and atmospheric concentrations would almost certainly increase. The effects of this cannot be predicted with certainty but increasing rates of climate change will incur increasing costs for adaptation and residual damage. The effects are likely to pose a substantial risk to the global economy and human welfare in the longer term.

New Zealand does not ratify the Protocol but the Protocol enters into force

If New Zealand does not ratify the Protocol but the Protocol receives sufficient ratifications to enter into force for the ratifying countries, New Zealand will not take on any obligations under the Protocol[2] but other ratifying Annex B countries will do so.

The effects for New Zealand would depend on:

• what measures, if any, New Zealand undertook to address its greenhouse gas emissions in order to comply with obligations under the Framework Convention
• the effects of New Zealand’s exclusion from the Clean Development Mechanism, Joint Implementation and from being able to access removal units for its post-1990 forests
• the effects on New Zealand’s rate of uptake of lower-emitting technologies in the possible absence of incentives to do so
• the response of other countries in terms of New Zealand’s trade and international relations, and
• the damage to New Zealand’s negotiating position and the relative loss of influence New Zealand has over future commitment periods if and when New Zealand does eventually join the Protocol

As described above, New Zealand’s economy would still be affected by economic adjustments occurring in Annex B economies. In some cases, this may give New Zealand a competitive advantage; in other cases, such as the forestry industry, it may have a negative effect on industry export prices without any corresponding benefit of access to removal units.

As described earlier, New Zealand could also run the risk of a decrease in its effectiveness and current level of influence in trade and other international negotiations.

Consultations that have been undertaken or are proposed with the community and interested parties in respect of the Protocol

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Consultation undertaken on ratification

Public consultation on ratification was carried out from 18 October to 21 December 2001. The consultation included presentation of information and public feedback on the science of climate change, possible effects on New Zealand of global warming, New Zealand’s greenhouse gas emissions profile, the history of the UN Framework Convention and the Kyoto Protocol, and the ways in which New Zealand could meet its obligations under the Protocol if it chose to ratify and the Protocol entered into force.

Initial public consultation was also carried out at the same time on policy objectives, existing/proposed measures in the areas of energy efficiency, transport and waste and research in agriculture, and the options for comprehensive market-based economic incentive policy measures.

The public consultation process included:

• Production and mail-out of the main consultation document, Kyoto Protocol: Ensuring our Future, of which 5,900 were initially mailed out and a further 3,250 handed out at public meetings
• Production of seven working papers to support the consultation document, 3,750 of which were sent out
• Release of two major economic studies by ABARE and PA Consulting Ltd into the possible effects on New Zealand of different domestic policies
• An initial Climate Change Forum in Wellington for all stakeholders
• 24 two-hour public meetings and 22 three-hour focus group meetings in urban centres around New Zealand, which were attended by 764 people
• Nine industry/stakeholder meetings, attended by 193 people
• 14 Maori focus forums in urban centres, attended by 136 people
• One national hui, attended by 20 people
• Six breakfast/lunch meetings attended by the Convenor of the Ministerial Group on Climate Change in each of Auckland, Hamilton, Rotorua, Wellington, Christchurch and Dunedin, which were attended by 500 people
• Three one-day climate change summits in Wellington, Auckland and Christchurch, attended by 170 people, at which interested parties made presentations to the chief executives or directors of the Treasury, Department of Prime Minister and Cabinet, Ministries of Transport and Environment, and the New Zealand Climate Change Project
• Calling for public submissions by 21 December 2001

Findings of public consultation

Preliminary consultation findings are available from an analysis of the raw data entered into the public submissions database.

Very preliminary figures suggest that approximately one-third of the submissions received expressed support for ratification, with around two-thirds opposed.

This may be compared with preliminary results from a public survey carried out by UMR from 19-20 January 2002, which showed:

• 47% of those surveyed favour the Government "signing up" to the Protocol
• 6% are opposed
• 42% "need to know more"

Views on the Government’s case for ratification

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Submissions opposing ratification

Many submitters opposing ratification of the Protocol expressed a view that climate change merited action.

An important issue for many submitters was whether the Protocol was the appropriate framework for action.

Some submitters suggested action to reduce greenhouse gas emissions could be taken outside the Protocol and therefore opposed it being ratified at any time.

A significant number, however, accepted that the Protocol should be ratified, but opposed ratification in September 2002, preferring the decision to be delayed.

Reasons for opposing ratification

The reasons for opposing ratification focused on concerns about the economic outcomes of ratifying.

The view mainly expressed by those who opposed ratification was that the Government should take time to assess the consequences of ratification, before committing to the Protocol.

Concerns about the economic outcomes

Concerns about the economic outcomes centred mainly on perceived consequences for New Zealand’s international trade, particularly if trade partners and competitors were not bound by the Protocol and were therefore not subject to a regime that would lead to production cost or price increases.

Mention was also made of the ability of some countries to offset increases in production costs through government subsidies or subsidy equivalents. New Zealand was described as being particularly “vulnerable” in the international trade arena.

A number of submitters expressed strong concern about the effects that policies implemented as a consequence of ratification would have on their particular businesses or industries.

Farmers in particular were concerned that emission charges should not be imposed on agricultural emissions, particularly methane and nitrous oxide.

Local authorities, particularly those responsible for areas heavily dependent on agriculture, were concerned about the impact that climate change policies would have on rural industries and hence on regional employment.

A number of submitters, mostly from the agriculture sector, expressed the view that the measurement and monitoring of emissions was not practical.

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Delay in ratifying the Protocol

A number of submitters expressed the view that ratification should wait until countries which competed with New Zealand had also ratified the Protocol.

A significant number of submitters who did not refer to international trade nevertheless also expressed a view that New Zealand should wait until other countries ratified the Protocol. The submitters specified countries such as India, China, Australia and the United States.

A significant number of submitters suggested ratification should be delayed until greenhouse gas emissions management policies had been developed.

A number of submitters also suggested that the need to obtain more information on climate change was a reason for delaying ratification. Doubts were expressed about the scientific conclusions supporting climate change, but more submitters saw a need for further information to be obtained on the consequences of climate change than expressed doubts about the science.

Submissions supporting ratification

A minority of submitters supported ratification.

These submitters focused on the environmental benefits expected to result from ratification of the Protocol and subsequent policy initiatives.

A few also mentioned economic benefits, particularly the importance of New Zealand maintaining a ‘clean, green’ brand image.

A number of submissions supporting ratification indicated their support without providing any outline of their views.

Other consultation matters

A very small minority of submitters indicating support for ratification, however, also suggested there was a need to take time to assess the consequences of ratification, to develop policies and to gather more information on climate change.

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Planned future consultation on policy measures

A second round of public consultation is expected to occur in April to June 2002 on the preferred mix of policies for meeting New Zealand’s obligations under the Protocol.

Summary: Advantages and disadvantages to New Zealand of the Protocol entering into force for New Zealand

Advantages

It establishes an effective and internationally agreed framework for international cooperation that will reduce (but not avoid) future increases in atmospheric greenhouse gas concentrations, and the associated impacts of global warming and climate change.

It will contribute to reducing the long-term risks of climate change for New Zealand’s climate-dependent economy and ecosystems.

It will avoid further delays in limiting and reducing greenhouse gas emissions, so avoiding committing New Zealand to even greater climate change impacts in the future.

It will allow New Zealand to influence the future shape of the Protocol, including the extent of, and rules for, future emissions reduction and limitation commitments.

It enables New Zealand to benefit from removal units generated by post-1990 forest plantings, which could lead to increases in New Zealand’s national income during the first commitment period. However, the amount of this benefit will depend on future new planting scenarios, whether forests are replanted, future harvesting scenarios and how much scrub has regenerated since 1990.

It will create incentives that will assist New Zealand to make a gradual transition toward becoming a low-emitting economy, rather than causing a sudden adjustment if action is delayed.

It avoids potential risks to New Zealand’s trade and other international relationships that could occur if the Protocol enters into force without New Zealand as a Party.

It will provide New Zealand businesses with access to Clean Development Mechanism and Joint Implementation projects internationally, and will enhance business opportunities in such areas as energy efficiency, emissions abatement and emissions monitoring domestically.

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Disadvantages

Policy measures to limit future greenhouse gas emissions will re-direct resources within the economy towards emissions limiting or emissions absorbing activities, which is likely to result in adjustment costs within the economy. Under some scenarios, these could be significant enough to negatively influence GNI and GDP.

Under some policy scenarios, New Zealand’s domestic production of goods and services (as measured by GDP) would grow more slowly than under business-as-usual conditions, potentially leading to associated income and/or employment effects. This may be offset by foreign income transfers gained from the international sale of removal units, although as noted above, the net effect of this is not yet clear.

Depending on domestic policy measures adopted in New Zealand and in other Annex B countries, there could be effects on the competitiveness of New Zealand businesses involved in the tradable goods sector, particularly where principal competitors are based in non-Annex B countries. This could result in costs to New Zealand without any environmental benefits being gained.

Depending on domestic policy measures adopted in New Zealand and other Annex B countries, some investment that would have occurred in New Zealand may instead be diverted to other countries.

Ratification could have a negative signalling effect on investment if there is uncertainty as to the domestic policies that New Zealand will use to help meet its commitments under the Protocol.

A significant proportion of submitters consider that New Zealand should delay ratification until further analysis of potential effects is carried out. Some consider that ratification should be delayed until the positions of trading partners and competitors are better understood with regard to ratification and related policy measures.

Some submitters are concerned that emissions reductions under the Protocol’s first commitment period will not themselves make a significant contribution to a reduction in global warming unless they are followed by further reductions in future commitment periods.

Assessment

Climate change has long-term implications and potentially substantial costs for New Zealand. As a climate-dependent, primary producing country with significant concentrations of population and infrastructure in coastal areas, climate change presents a significant risk to our way of life. The Kyoto Protocol provides a means by which, over the long term, those risks can be mitigated.

Implementation of the Protocol itself also has potential for economic and consequent social effects, which appear to be dependent on domestic policy choices. A majority of submitters have expressed concern about potential adverse effects, particularly on international competitiveness, and have submitted that ratification of the Protocol should be delayed.

The Government aims to minimise adverse effects and maximise positive effects through the design of domestic policy measures, and through maintaining a proactive stance at international negotiations for the second and subsequent commitment periods.

The Protocol will not enter into force for New Zealand until a large body of developed country emitters has ratified it, and binding emissions management commitments will not commence until 2008. Ratification by New Zealand would build momentum for international action to address greenhouse gas emissions and would enable New Zealand to take part in shaping the emerging international instrument under which the action would be taken.

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Therefore, the Government considers that it is in New Zealand’s national interest to ratify the Kyoto Protocol.

References

Australian Bureau of Agricultural and Resource Economics (ABARE), 2001: Economic outcomes of the Kyoto Protocol for New Zealand. Report to New Zealand Ministry of Agriculture and Forestry. ABARE. Canberra.

Australian Bureau of Agricultural and Resource Economics (ABARE), 2001: Economic impacts of selected climate change policy options for New Zealand. Report to New Zealand Ministry of Agriculture and Forestry. ABARE. Canberra.

Grubb M, Hourcade J-C, Oberthur S, 2001. Keeping Kyoto: a study of approaches to maintaining the Kyoto Protocol on climate change. Section 6, Appendix: Prices and investment flows under the Kyoto Protocol mechanisms. Climate Strategies.

Infometrics Consulting Ltd, 2001. The economic effects of low-level carbon charges. Report prepared for the Ministry for the Environment on behalf of the New Zealand Climate Change Programme. Ministry for the Environment, Wellington.

Intergovernmental Panel on Climate Change (IPCC), 2001(a). Climate Change 2001: Synthesis Report. IPCC.

Intergovernmental Panel on Climate Change (IPCC), 2001(b). Climate Change 2001: Mitigation. Contribution of Working Group III to the Third Assessment Report of the Intergovernmental Panel on Climate Change.

McKibbin W and Pearce D, 2000. Early action simulations: results from G-Cubed. Report prepared for New Zealand Ministry for the Environment. Centre for International Economics, Canberra & Sydney.

New Zealand Institute of Economic Research, 2001. The Economic Effects of Greenhouse Gas Emission Policies: a quantitative evaluation. Report to the Greenhouse Policy Coalition and the Petroleum Exploration Association of New Zealand. NZIER. Wellington.

New Zealand Climate Change Programme, 2001. Impacts Report: climate change impacts on New Zealand. Published by the Ministry for the Environment. Wellington.

New Zealand Climate Change Programme, 2001. Kyoto Protocol: Ensuring our Future. Published by the Ministry for the Environment. Wellington.

New Zealand Climate Change Programme, 2001. Assessment of Economic Modelling. Working paper published by the Department of Prime Minister and Cabinet. Wellington

Nordhaus W, 2001. “Global Warming Economics”. Science Vol 294 November 2001 pp1283-1284.

PA Consulting Group, 2001. Assessment of the likely impacts on selected sectors of a domestic emissions trading regime. Report to the Ministry of Economic Development. PA Consulting Group. Wellington.

Pezzey JCV and Lambie NR, 2001: Computable general equilibrium models for evaluating domestic greenhouse policies in Australia: A comparative analysis. Report to the Productivity Commission. AusInfo. Canberra.

Repetto R and Austin D, 1997: The costs of climate protection: A guide for the perplexed. World Resources Institute. Washington DC.

US National Academy of Sciences (Committee on the Science of Climate Change, Division of Earth and Life Studies, National Research Council), 2001. Climate Change Science: An analysis of some key questions. National Academy Press, Washington DC, USA.

Weyant J and Hill J, 1999: Costs of the Kyoto Protocol: A multi-model evaluation. Energy Journal, special edition.

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Appendix 1: Annex I and Annex B

* Countries that are undergoing the process of transition to a market economy.

Appendix 2: Obligations under the Kyoto Protocol

Binding emissions targets for developed countries

The most important obligation under the Protocol will be for the developed country Parties (that is countries listed in Annex I to the Framework Convention, including New Zealand) to meet targets for their emissions of greenhouse gases over the first commitment period, which extends from 2008 to 2012.

Each country’s target is specified in Annex B of the Protocol as a percentage of its 1990 level of emissions. Because the first commitment period is five years in duration, the target for each country is five times its 1990 level of emissions, multiplied by the Annex B percentage for that country.

Percentage targets for Annex B countries range from 92% of 1990 emissions for European Union countries, up to 110% of 1990 emissions for Iceland. New Zealand’s target is 100% of 1990 emissions. (This is described further below.) New Zealand is one of six countries for which targets of 100% or more were agreed at the negotiations; the others are Australia (108%), Norway (101%), Russia and Ukraine (100% each), and Iceland.

A list of Annex I countries, and their Annex B percentage targets where applicable (none is set for Belarus and Turkey), is shown at Appendix I of this NIA. The key rules outlining emissions accounting have already been outlined.

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Further obligations and commitments applying to Annex I countries

Each Annex I country for which the Protocol enters into force will be required to:

• make “demonstrable progress”, by 2005, toward achieving its commitments under the Protocol (Article 3.2)
• implement and/or further elaborate certain types of policies and measures in accordance with its national circumstances (Article 2.1(a))
• cooperate with other Annex I Parties to enhance the effectiveness of their policies and measures adopted under Article 2 (Article 2.1(b))
• pursue (through the International Civil Aviation Organisation and the International Maritime Organisation) limitation or reduction of emissions of greenhouse gases from aviation and marine bunker fuels, other than gases controlled by the Montreal Protocol on Substances that Deplete the Ozone Layer (Article 2.2)
• strive to implement policies and measures under Article 2 in a way that minimises certain adverse effects on other Parties, especially developing country parties (Article 2.3)
• provide data relating to its level of carbon stocks in 1990, for consideration by the Subsidiary Body for Scientific and Technological Advice (Article 3.4)
• strive to implement its Article 3.1 commitments in a way that minimises adverse effects on developing country Parties (Article 3.14)
• put in place, by 31 December 2006, a national system for estimating greenhouse gas emissions, and removals by sinks (Article 5.1)
• incorporate in its annual inventory of human-induced emissions and sources and removals by sinks supplementary information as necessary to ensure compliance with Article 3 of the Protocol and as determined under Article 7.4, with that inventory to be submitted annually once the Protocol has entered into force for New Zealand (Articles 7.1 and 7.3)
• incorporate in its national communication under Article 12 of the Framework Convention the supplementary information necessary to demonstrate compliance with its commitments under the Protocol, to be submitted as frequently as determined by the Conference of the Parties (Articles 7.2, 7.3 and 7.4)
• comply with review and compliance procedures developed under Articles 8 and 18
• together with other developed country Parties, in implementing their obligations under Article 4.1 of the Framework Convention (relating to the financial mechanism):
• provide new and additional financial resources to meet the agreed full costs incurred by developing country Parties in advancing the implementation of certain existing commitments (Article 11.2(a)); and
• provide such financial resources, including the transfer of technology, needed by developing country Parties to meet the agreed full incremental costs of advancing the implementation of certain existing commitments (Article 11.2(b))

These obligations also mean that Parties would be required to comply with rules agreed for the Protocol’s implementation. These would, in part, require each developed country Party to set up a register of assigned amount of emission units, which would keep a record of initial assigned amount and any additions and deductions that occurred through sink activities and use of flexibility mechanisms such as international emissions trading. The full text of the rules can be found on the UNFCCC and IPCC websites (www.unfccc.org and www.ipcc.org).

Obligations and commitments applying to all Parties

All Parties, Annex I or otherwise, will have to:

• formulate certain cost-effective national and regional programs to improve the quality of local emissions factors and activity data and/or models for the preparation and periodic updating of national inventories (Article 10(a))
• formulate, implement, publish and regularly update certain national and regional programmes containing measures to mitigate, and facilitate adequate adaptation to, climate change (Article 10(b))
• cooperate in the promotion and facilitation of the development and transfer of certain climate change technologies, in particular with respect to developing countries (Article 10(c))
• cooperate with other Parties in scientific and technical research and in the development of observation systems and data archives to reduce uncertainties related to the climate system (Article 10(d))
• cooperate in, and promote at the international level, the development and implementation of certain education and training programmes relating to climate change (Article 10(e))
• include in their national communications certain information on programmes and activities under Article 10 (Article 10(f))

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Appendix 3: What is climate change and why is it a problem?

Human activities are contributing to global warming and climate change
The Intergovernmental Panel on Climate Change (IPCC), the authoritative world scientific body established under the United Nations, has provided increasingly stronger and clearer messages about the need for global action to address atmospheric greenhouse gas concentrations. In its Third Assessment Report, released in January 2001, the IPCC stated that:

There is new and stronger evidence that most of the warming observed over the last 50 years is attributable to human activities … [and that] Anthropogenic [human-induced] climate change will persist for many centuries.[3]

The IPCC has estimated that the result of future greenhouse gas emissions will be an increase in globally averaged surface temperature of between 1.4 and 5.8°C over the period 1990 to 2100[4].

The projected warming range under the IPCC scenarios is about two to ten times larger than the central value of observed warming over the 20th century. The IPCC considers that the projected rate of warming would very likely be without precedent during the last 10,000 years, even for the lower end of the range. Along with a change in average climate conditions, climate models also project changes in the frequency, intensity, and duration of extreme events such as more hot days, heat waves and droughts, heavy precipitation events, and fewer cold days.

The global effects of climate change are likely to be negative

The IPCC considers that, at a global level, projected climate change will have both beneficial and adverse environmental and socio-economic effects, but the larger the changes and the higher the rate of climate change, the more the adverse effects will predominate. The IPCC has produced detailed reports of the likely physical, biological and social impacts of climate change at a global and regional level.

The few studies available of the potential economic impacts of climate change represent the best estimates available, but are still subject to significant uncertainty and their results depend on many modelling assumptions. From the studies available, aggregated market sector effects, measured as changes in gross domestic product (GDP), are estimated to be:

• mixed for developed countries for up to a few degrees of warming
• negative for developed countries for warming beyond a few degrees
• negative for many developing countries for all magnitudes of warming studied.

More people are projected to be harmed than benefited by climate change, even for global mean temperature increases of less than a few degrees.

At a global scale, world GDP would change by plus or minus a few percent for global mean temperature increases of up to a few degrees, with increasing net losses for larger increases in temperature. However, these estimates generally:

• exclude the effects of changes in climate variability and extremes
• do not account for the effects of different rates of climate change
• only partially account for impacts on goods and services that are not traded in markets .

Confidence in estimates of market effects for individual countries is generally low, and the omissions described above are likely to result in under-estimates of economic losses and over-estimates of economic gains.

Apart from economic losses arising from climate change and extreme events, a rapid change in climate poses risks to unique and threatened ecosystems, and an increasing potential for large-scale and possibly irreversible changes in Earth systems (such as major ice sheets, large terrestrial ecosystems, ocean circulation, and permafrost regions). The likelihood of major disruptions to such large-scale Earth systems, which would have widespread and sustained impacts, is not well known at present, but is probably very low. However, the likelihood of such disruptions occurring is expected to increase with increases in the rate, magnitude and duration of climate change.

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Climate inertia means that past and present emissions will still have effects centuries from now

Climate inertia means that some impacts of human-induced climate change may be slow to become apparent, and some could be irreversible if climate change is not limited in both rate and magnitude before critical thresholds, whose positions may be poorly known, are crossed. As a result, climate and climate-impacted systems (for example, temperature, sea level, ice sheets, rainfall patterns) will continue to change long after human-induced emissions of greenhouse gases have been reduced and atmospheric concentrations of greenhouse gases have stabilised.

For example, the effects on the oceans and atmosphere of carbon dioxide already emitted from human activities since 1750 will persist for centuries, because of the slow redistribution of carbon between large ocean and terrestrial reservoirs with slow turnover.

Although uptake by the biosphere and oceans moderates the effect of continued carbon dioxide emissions, even if emissions were to be kept constant the carbon dioxide concentration in the atmosphere would continue to increase for a long time. Continued emissions at today’s rates would lead to carbon dioxide increasing to more than three times today’s levels. Long term reduction of atmospheric carbon dioxide occurs only very slowly through geological processes.[5].

To illustrate these points, Figure 1 qualitatively illustrates that even if global greenhouse gas emissions were to peak in 2050 and then fall steadily towards a very low level:

• atmospheric greenhouse gas concentrations would not stabilise for 100 to 300 years
• temperatures would continue to increase slowly for several centuries beyond that before stabilising
• sea levels would continue to rise due to both thermal expansion and the melting of icecaps for hundreds or even thousands of years

[1] However, it should be noted that under Article 18 of the Vienna Convention on the Law of Treaties, New Zealand is obliged to refrain from acts which would defeat the object and purpose of the Protocol when (a) New Zealand has signed it and until it makes its intention clear not to become a Party or (b) has ratified the Protocol pending entry into force and providing this is not unduly delayed. New Zealand signed in May 1998.

[2] But would continue to be bound by its current obligation to refrain from acts which would defeat the object and purpose of the Protocol until New Zealand had made clear its intention not to become a Party.

[3] IPCC 2001(a)

[4] The wide range of projected warming is driven by uncertainty about the sensitivity of the world’s climate to future greenhouse gas emissions, and by uncertainty about future greenhouse gas emissions themselves. The underlying scenarios of future world development and associated greenhouse gas emissions assume that no specific climate policies are introduced, but the scenarios leading to the lower end of the warming range assume that clean energy technology will be developed and implemented on a global scale even for non-climate benefits.

[5] By contrast, stabilisation of emissions of shorter-lived greenhouse gases such as methane leads, within decades, to stabilisation of atmospheric concentrations.

Source: IPCC Climate Change 2001 Synthesis Report. It is important to note that the vertical axis on this graph is qualitative and separate lines cannot be compared with each other as they relate to different units (changes in CO2 emissions, CO2 concentration, temperature, and sea level).

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The US National Academy of Sciences concluded that

Even in the more conservative [IPCC] scenarios, the models project temperatures and sea levels that continue to increase well beyond the end of this century, suggesting that assessments that examine only the next 100 years may well underestimate the magnitude of the eventual impacts.

The IPCC believes that the magnitude and rate of unmitigated climate change over the next centuries will pose a major challenge for humanity, as:

• the time needed for socio-economic adaptation varies from years to decades, depending on the sector and the resources available to assist the transition, and
• there is inertia in decision making in the areas of adaptation and mitigation, and in implementing those decisions, in the order of decades

The IPCC has concluded that the pervasiveness of inertia and the possibility of irreversibility in the interacting climate, ecological, and socio-economic systems are major reasons why anticipatory adaptation and mitigation actions are beneficial. A number of opportunities to exercise adaptation and mitigation options may be lost if action is delayed.

Taking a wait-and-see approach commits us to even greater climate change effects downstream, even for very small time delays

The IPCC has concluded that:

• the projected rate and magnitude of warming and sea-level rise can be lessened by reducing greenhouse gas emissions
• the greater the reductions in emissions and the earlier they begin, the smaller and slower the warming and rise in sea levels are projected to be, and
• actions taken now would have a greater effect at the year 2100 than the same actions taken later

For example, a modelling analysis of the hypothetical effects on 21st century sea level rise of reducing greenhouse gas emissions showed that the sea-level rise that would inevitably occur due to human-induced warming would be:

• 5 to 12 cm if global greenhouse gas emissions arising from human activities had been (hypothetically) reduced to zero in 1995, but
• 14 to 32 cm if the same reduction were to occur in 2020, showing a two to three-fold increase after a delay of 25 years.[1]

In addition to inertia in physical systems, there is also inertia in the socio-economic systems that interact with them, as mentioned above. The IPCC notes that there is typically a delay of years to decades between perceiving a need to respond to a major challenge, planning, researching and developing a solution, and implementing it.

Adaptation is a necessary but insufficient response to climate change

Humans have shown a capacity to adapt to long-term changes in average climate conditions, but have had less success in adapting to rapid change, climate extremes and year-to-year variations in climatic conditions (such as severe droughts). Climatic changes in the next 100 years are expected to exceed any experienced by human societies over at least the past five millennia.

In this regard, rapid technological development has provided adaptation possibilities for developed countries that are considerably greater than those available in the past. Their implementation can reduce risks from climate change and increase benefits, and contribute to a more sustainable use of resources. However, adaptation will still impose costs and cannot avoid all damages, and it requires information and foresight to be implemented in the most cost-effective manner. Greater and more rapid climate change, in particular large-scale and abrupt changes to ecosystems, would pose greater challenges for adaptation and greater risks of damages than would lesser and slower change.

Because financial, political, social and technological resources are required to cope with rapid environmental change, the negative effects of climate change are also likely to be concentrated on developing countries, which have significantly less capacity to adapt. Regional differences in actual climate change and its impacts on temperate, subtropical and tropical regions further contribute to differences in how various regions and countries are expected to cope with the projected changes.

[1] (IPCC), 2001(a).

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