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Benefits and costs to China of a climate policy

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Author Info

  • AUNAN, KRISTIN
  • BERNTSEN, TERJE
  • O'CONNOR, DAVID
  • PERSSON, THERESE HINDMAN
  • VENNEMO, HAAKON
  • ZHAI, FAN
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Abstract

In future agreements to cut greenhouse gases, a Chinese commitment will probably be essential. Committing for China is easier if the cost is low and the benefit to China is high. Using a new CGE-model of the Chinese economy we discuss the cost and benefit to China of taking on a climate commitment. We argue that a climate commitment gives significant ancillary benefits to China since associated particle and NOx-reductions improve public health and increase agricultural yields. The model of impact on agricultural yields is a novel feature of CGE-models. Comparing benefits to economic costs produces striking results. We find that China may reduce its CO2-emissions by 17.5 per cent without suffering a welfare loss. Half of the benefit originates in the novel agricultural model. We also discuss the distributional impact of a climate commitment. In general the distributional impact is not averse.

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Bibliographic Info

Article provided by Cambridge University Press in its journal Environment and Development Economics.

Volume (Year): 12 (2007)
Issue (Month): 03 (June)
Pages: 471-497

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Handle: RePEc:cup:endeec:v:12:y:2007:i:03:p:471-497_00

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Cited by:
  1. Vennemo, Haakon & Aunan, Kristin & He, Jianwu & Hu, Tao & Li, Shantong & Rypd3al, Kristin, 2008. "Environmental impacts of China's WTO-accession," Ecological Economics, Elsevier, vol. 64(4), pages 893-911, February.
  2. Michael Finus & Dirk Rübbelke, 2013. "Public Good Provision and Ancillary Benefits: The Case of Climate Agreements," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 56(2), pages 211-226, October.
  3. Michael Finus & Dirk T.G. Rübbelke, 2008. "Coalition Formation and the Ancillary Benefits of Climate Policy," Working Papers 2008.62, Fondazione Eni Enrico Mattei.
  4. Anping Chen & Nicolaas Groenewold, 2013. "Regional Effects in China of an Emissions-Reduction Policy: Tax v. Subsidy," ERSA conference papers ersa13p1275, European Regional Science Association.
  5. Pittel, Karen & Rübbelke, Dirk T. G., 2008. "Climate policy and ancillary benefits: A survey and integration into the modelling of international negotiations on climate change," Munich Reprints in Economics 19350, University of Munich, Department of Economics.
  6. Vennemo, Haakon & Aunan, Kristin & Jianwu, He & Tao, Hu & Shantong, Li, 2009. "Benefits and costs to China of three different climate treaties," Resource and Energy Economics, Elsevier, vol. 31(3), pages 139-160, August.
  7. Anping Chen & Nicolaas Groenewold, 2012. "The Regional Economic Effects of a Reduction in Carbon Emissions and An Evaluation of Offsetting Policies in China," Economics Discussion / Working Papers 12-14, The University of Western Australia, Department of Economics.

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