The global climate is changing, and the release of greenhouse gases (GHGs) from human activity has contributed to global warming. While there is significant uncertainty about the costs of inaction, it is generally agreed that failing to tackle climate change will have significant implications for the world economy, especially in developing countries, where reduced agricultural yields, sea level rise, extreme weather events and the greater prevalence of some infectious diseases are likely to be particularly disruptive (OECD, 2008a). Furthermore, there are significant risks of unpredictable, potentially large and irreversible, damage worldwide. The exact economic and welfare costs of policy inaction could equate to as much as a permanent 14.4% loss in average world consumption per capita (Stern, 2007), when both market and non-market impacts are included.