This article addresses the question of how Brazil, Costa Rica, and Colombia came to decide on their climate change mitigation strategies, which are based on market‐oriented policies. The analysis compares Brazilian bioethanol, Costa Rican renewable energy, and Colombia’s clean development...

The economic prescription for climate change is clear: price carbon dioxide (CO2) and other greenhouse gas emissions to internalize climate damages. In practice, a variety of political economy constraints prevent the introduction of a carbon price equal to the full social cost of emissions. This...

The paper collects comprehensive and detailed data on what 40 OECD and G20 economies do with the revenues from carbon taxes, emissions trading systems, and excise taxes on energy use. It notes that constraints – which can take the form of political commitments or legal earmarks – on revenue...