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The urgency of dealing with climate change means that many countries are drawing up national policies to limit emissions. Yet in a globalised world, where production is increasingly mobile across national borders, some worry that there is a fundamental tension between the effectiveness of such policies and a commitment to open trade. These carbon-reduction policies, such as America’s proposed cap-and-trade scheme, typically put a price on carbon in the hope that this will force producers to bear the costs that their activities impose on the climate. But if different countries cut emissions by different amounts, as is likely, then the price of carbon will vary across nations. If so, manufacturers in countries with tighter environmental rules will face added costs which foreign competitors do not. This could in turn prompt them to relocate some of their production to “carbon havens”, where the cost of polluting is lower. If enough production emigrates, global emissions might even increase. The likely scale of relocations may be overstated. A new study* by economists at the World Bank and the Peterson Institute for International Economics, a think-tank in Washington, DC, finds that some production would migrate, but that the net increase in emissions in poor countries would be small. Read More at: http://www.wbcsd.org/ http://www.zerofootprintfoundation.org/75241/