[en] Ratification of the Kyoto Protocol will have significant medium and long term implications for the economies of Annex B and non-Annex B countries. It is shown that the adoption of a system of internationally tradable emission quotas would result in three 'dividends' compared with an outcome where Article 17 trading - relating to emissions trading - is prohibited. First, trading would improve the environmental effectiveness of the protocol because the extent of carbon dioxide equivalent leakage would be reduced. Second, the overall cost of meeting the agreed Annex B targets would be reduced thus leading to greater certainty that the protocol will be implemented in full. Third, a disparity in the differential impacts of Annex B abatement policies on different developing countries would be reduced under emissions trading, leading to a more equitable outcome for these countries