Joint implementation, a key part of the provisions of the Kyoto Protocol, involves the trading of emissions between two parties. The idea is that if one party can reduce emissions more cheaply than another, or is already below allowable limits, then the party for whom it would be more expensive could simply purchase emissions reductions. This avoids the added expense involved when all polluters must reduce their own emissions. Thus, in theory, by relying on "market principles," society would achieve emission reduction targets at the lowest cost.

This theory has been tried out with some success in the United States for reducing sulfur dioxide (SO₂) emissions from industrial sources. These sources, such as many coal burning power plants, are large emitters of SO₂, and their emissions are relatively well known. It has enabled industries that might otherwise face a shutdown to prolong their timetables for achieving compliance.

The following conditions appear to be required for emissions trading to be successful:

• The implicit price of a unit of pollution should be high enough to provide a substantial incentive to all polluters to reduce emissions.

• There should be a progressive tightening of targets towards the desired levels, so that the desired reductions are actually achieved in a reasonable time.

• The sources of emissions should be well characterized, so that the progress in emissions reductions can be measured with confidence. This is a key requirement, since without it, enforcement would be impossible and questionable schemes would flourish.

• Price negotiations should be between parties of comparable economic power, so that trading is equitable.

These conditions were all met in the US experience with SO₂trading, and generally hold in the case of emissions from large industries within countries. They may also be roughly fulfilled when large industries in different countries negotiate across borders, although factors such as differences in currency convertibility and inequitable exchange rates must be taken into account.

In the case of CO₂emissions regulated under the Kyoto Protocol, the units of account are countries themselves, so that domestic trading is not at issue. (Each country may, of course opt to have CO₂trading permits within its boundaries to achieve its Kyoto Protocol targets, but that is within the province of that country's government and not the Protocol itself.) Trading of emissions between large industries, such as power plants, located in most countries listed in Annex I (or Annex B) may be appropriate, provided the pricing arrangements are worked out. (See table for list of Annex I and Annex B countries.) However, since there are many economically weak countries with weak currencies on the Annex I list (such as the former Soviet Union and eastern European countries), trading may become inequitable. Moreover, the pre-1990 records of emissions from large industrial plants in the FSU and eastern Europe are likely to be poor or incomplete in many cases. Finally, the relevance of these records for the next decade is highly questionable, given the huge changes that have taken place since 1990.

If trading between Annex I countries for the purposes of joint implementation appears to be problematic, it will be even more so between Annex I countries and developing countries. Besides the measurement and enforcement questions, the equity issue is particularly serious here. The CO₂problem has been caused primarily by emissions from the industrialized countries. But emissions rights are being allocated on the basis of 1990 levels, giving the lion's share of the value of emissions credits that could be traded to those who created the problem. The countries with lowest fossil fuel consumption would hold the lowest emissions credits and hence derive the least benefit, though they have contributed least to the problem. This is a central reason that these countries did not agree to emission limits for themselves in the Kyoto Protocol. This keeps open until a later date (presumably the meeting in Argentina in November 1998 ), the question of what level of emissions trading rights developing countries will have.,

If the emissions rights were on a per capita basis, as many people in the developing countries are demanding, then the feasibility of joint implementation would be considerably expanded, as would the economic benefits to be derived from it.

Proposals for joint implementation involving sectors other than industry involve additional problems. Examples include planting forests in developing countries, and using agricultural residues in power plants to offset CO₂emissions in industrialized countries. Such proposals are ill-suited to joint implementation, as they do not meet several of the conditions set forth above. First, the inequality of the negotiating parties in such arrangements is evident, and is exacerbated by the fact that upper classes in highly class-divided societies do the negotiating on behalf of farmers and the poor.

The technical issues are equally daunting. In the simplest instance, a tree would contribute to CO₂reductions only during the growth period. After that there may be a net increase or decrease in CO₂, depending on the specific circumstances. Further, emissions of greenhouse gases such as nitrous oxide and methane would need to be taken into consideration. Would replanting be required? How would one account for natural changes in the forest area over time? It is quite unclear how such complex processes would be factored into greenhouse gas accounting.

There is also the question of land. Developing countries do not have much idle productive land.. Common land and partly forested land is often used by the poor for grazing draft animals, as a source of fuelwood and construction wood, andfor other uses.. Monetizing this land by making it a part of joint implementation projects could deprive millions of poor people access to basic resources, even though they did not create the present greenhouse gas problem.

Even many projects that appear attractive on the surface do not stand up to scrutiny. For instance, a project that might use bagasse (left over organic matter after the juice is crushed out of sugarcane stalks) for generating electricity in India could have disastrous consequences of large numbers of people. Bagasse is already used for a variety of purposes, including electricity generation. The pressure to get more bagasse for such generating plants could wind up increasing sugarcane cultivation, displacing food crops. Further, many places in India use bagasse in traditional furnaces to make raw brown sugar, known as "gurdh." (It's quite delicious.) Joint implementation might kill such traditional industries, which employ large numbers of people, and create even more unemployment in already distressed rural areas.

In sum, there are limited prospects for joint implementation and these could perhaps be pursued with some economic benefit to the global community. However, they would have to be carefully thought through in a way that has not yet been done to ensure that they are equitable, that their results are measurable, and that the poorest populations of the world are not adversely affected.