Setting the global thermostat with an exhaustible tradeable permit system

The global warming policy debate has centered largely on near-term objectives such as freezing 1990 CO{sub 2} emissions without regard to long-run implications. A policy of freezing CO{sub 2} emissions is shown to slow but not halt global warming, while requiring expensive near-term adjustments. If the long-run temperature change outcome of the freeze policy is set as the goal of a more graduated control policy, one which allows the market to determine annual emissions, a more cost-effective solution is obtained that reduces the negative adjustment effects on the energy and other affected industries. The most cost-effective emissions time path of a graduated control policy could be achieved by an evaporative marketable CO{sub 2} emissions permit system. This paper provides a preliminary examination of an evaporative permit system used to achieve long-run stabilization of greenhouse-induced temperature change.