Introduction The international community met in Kyoto@ Japan during December 1997 and produced an agreement to reduce Greenhouse Gas@ (GHG) emissions. The agreement@ termed the Kyoto Protocol@ requires the U.s. to reduce the rate of emissions of six greenhouse gases to 93 percent of their 1990 rate and to achieve this target by the 2008 to 2012 commitment period. Other developed countries made similar commitments. Although not explicit in the Protocol@ the expectation is that emissions would be at least stabilized at this rate@ and probably reduced even further eventually. The costs and effectiveness of reducing GHG emissions on a global scale depend on international cooperation. The Kyoto Protocol requires the developed countries to achieve emissions targets@ but the developing countries are not required to reduce their emissions.2 During the summer of 1997@ the U.s. Senate passed Senate Resolution 98@ which states that the Senate would ratify a treaty only if it included participation by the developing countries. This type of international cooperation did not occur. The implication is that the effectiveness of an international effort to reduce emissions is less than if developing countries had agreed to the Protocol. The Administration is attempting to achieve a different type of international cooperation@ where the U.s. could meet its emissions target by reducing emissions in other countries. For example@ international emissions trading programs or Joint Implementation could reduce the cost of achieving the Kyoto target. This type of cooperation may occur@ but it is currently not part of the Kyoto Protocol and it is unclear at this point when@ or if@ it will be negotiated. This study assumes that international cooperation does not occur and the U.s. economy will bear the full costs of meeting its Kyoto commitments. 2 Sutherland et. al (1997)@ assessed the economic and envIronmental implications of failing to achieve thIS cooperation.