Delegates from 180 countries met in Bonn during July 2001 to substantiate the Kyoto Protocol signed in 1997 which imposes limits for greenhouse gases on industrialized countries. After the withdrawal of the USA in March 2001, the Protocol was only rescued in Bonn because the EU compromised on an implicit relaxation of emission constraints towards Japan, Canada, Australia and Russia. In this paper, we investigate the economic and environmental impacts of the US withdrawal and the amendments of the Bonn conference. We find that US withdrawal together with the new provisions of Bonn are likely to reduce environmental effectiveness to zero. Kyoto is reduced to a symbolic treaty. Once ratified, it may nevertheless facilitate future commitments for an effective reduction of greenhouse gas emissions that must aim at the incorporation of the United States as well as developing countries.


climate policy, emission trading, computable general equilibrium