Climate Change Economics and Policy Forest Policy

Question: Discuss about theClimate Change Economics and Policy for Forest Policy. Answer: Introduction The carbon pricing mechanism of the Labor Government ran from the year 2012 to 2014 and it levied the largest carbon-emitting companies for each tonne of carbon they released. This in turn, created an inducement for them in order to reduce those emissions and resulting in a revenue increase for the government. The main objective of the government plan is to reduce the emission of carbon with the emission reduction fund. As a result, the government pays the companies for the projects that cut the quantity of greenhouse gases they generate. This in turn, creates a positive financial inducement for businesses to decrease their emission. The government also held public sales in order to purchase the contracts from companies that submit projects to diminish carbon releases. The carbon tax by the Labor Government will mainly act as revenue for the government that they will use to pay off their debt (Crowley 2013). The second problem that is associated with carbon tax was that it reallocated revenue raised for other purpose. On the other hand, ERF uses the proceeds from the government to pay the emitters (Taylor and Hoyle 2014). The key motivation for linking is that a linked system has the potential to be more cost-effectively efficient. The linking of two or more Emission Trading System (ETS) with diverse cost repression provision will have an effect on prices in all linked systems. The linking of an ETS will create a larger global market that will help a country to realize the benefits. However, linking ETS with diverse caps will pose a momentous political barrier to linking (Mller and Slominski 2013). An ETS in New Zealand is a comparatively small market with a restricted number of participants with unit compulsion. If EU ETS is linked with the NZ ETS then it will make sure a much desirable liquidity in the domestic market. This will in turn, help to ensure that prices on the domestic market are associated with global prices. The direct bilateral linkage will involve that the unit of trade in the two diverse schemes is completely fungible. Certain dissimilarities in the plan between the EU and New Zealand systems are probable to make direct two-sided linking demanding in the short term. A price cap will restrict the limit off emission units that are faced by New Zealand. The buyers will lose, as the government would purchase global emission components. However, the sellers will gain as they sell to global emission components to firms in New Zealand at the level of the price cap to meet demand (Adams and Turner 2012). References Adams, T. and Turner, J.A., 2012. An investigation into the effects of an emissions trading scheme on forest management and land use in New Zealand. Forest Policy and Economics, 15, pp.78-90. Crowley, K., 2013. Irresistible force? Achieving carbon pricing in Australia. Australian Journal of Politics History, 59(3), pp.368-381. Mller, P. and Slominski, P., 2013. Agree nowpay later: escaping the joint decision trap in the evolution of the EU emission trading system. Journal of European Public Policy, 20(10), pp.1425-1442. Taylor, R. and Hoyle, R., 2014. Australia becomes first developed nation to repeal carbon tax. Wall Street Journal. Retrieved from https://online. wsj. com/articles/australia-repeals-carbon-tax-1405560964.