Not all cost measures, however, arrive at the same ranking. Furthermore, cost measures can produce contradictory results for a specific policy. These problems make it difficult for a policymaker to determine the best policy. For a cost measures to be of value, one would like to be confident of two things. First one wants to be sure that the sign is correct. That is, one wants to know whether the policy results in a cost or a benefit to society. Second, one wants to be confident that a measure produces the correct policy ranking. That is, one wants to have confidence in a policy measures ability to correctly rank policies from most beneficial to most harmful. This paper analyzes empirically the:se two properties of different costs measures as they pertain to assessing the costs of the carbon abatement policies, especially the Kyoto Protocol, under alternative assumptions about implementation. The Kyoto Protocol signed in December 1997, established specific emission reduction targets for greenhouse gases that are to be achieved by 2OlO. While the agreement thus defines precise national objectives for reducing emissions, it leaves open the methodology by which such goals are to be reached.
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