ECONOMICS OF THE "CRITICAL USE" OF METHYL BROMIDE UNDER THE MONTREAL PROTOCOL
STEPHEN J. DECANIO
CATHERINE S. NORMAN
We analyze the economics of granting temporary exceptions to the phaseout of methyl bromide (MeBr) under the Montreal Protocol on Substances that Deplete the Ozone Layer. The protocol allows such exceptions based on technical or economic "feasibility" through a critical use exemption (CUE) process. Data compiled under the protocol make it possible to set forth criteria for the exceptions based on estimation of the benefits of compliance in terms of "willingness to pay" to abate the externality, as well as costs to the users creating the externality. We estimate a political willingness to pay and show that market and supply effects would reduce losses to MeBr users below estimates of such losses provided in CUE nominations. This suggests that the phaseout of MeBr can proceed with considerably fewer CUEs than requested by the parties. (JEL "Q1", "Q2", "Q3", "H8") Copyright 2005 Western Economic Association International.
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