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On the fair division of greenhouse gas abatement cost

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  • Böhringer, Christoph
  • Helm, Carsten

Abstract

This paper introduces a solution for the fair division of emission reduction costs in the climate change regime. Our primary focus is on the fair division of efficiency gains that arise from exchanging the initial allocation of emission entitlements, rather than the initial allocation itself. We propose to complement the competitive Walrasian solution with welfare bounds, the ethical justification of which rests on commonality of ownership. Simulations with an intertemporal computable general equilibrium model illustrate the relevance of such welfare bounds. For a wide range of initial allocations of emission entitlements - including an equal per capita allocation - we find that developing countries should be fully compensated for their emission abatement efforts, but should not receive any further transfers.

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Bibliographic Info

Article provided by Elsevier in its journal Resource and Energy Economics.

Volume (Year): 30 (2008)
Issue (Month): 2 (May)
Pages: 260-276

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Handle: RePEc:eee:resene:v:30:y:2008:i:2:p:260-276

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Web page: http://www.elsevier.com/locate/inca/505569

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  1. Moulin, Herve, 1992. "An Application of the Shapley Value to Fair Division with Money," Econometrica, Econometric Society, Econometric Society, vol. 60(6), pages 1331-49, November.
  2. Alan Manne & Richard Richels, 1992. "Buying Greenhouse Insurance: The Economic Costs of CO2 Emission Limits," MIT Press Books, The MIT Press, edition 1, volume 1, number 026213280x, December.
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  5. Barrett, Scott, 2001. "International cooperation for sale," European Economic Review, Elsevier, vol. 45(10), pages 1835-1850, December.
  6. Aldy, Joseph & Barrett, Scott & Stavins, Robert, 2003. "Thirteen Plus One: A Comparison of Global Climate Policy Architectures," Working Paper Series rwp03-012, Harvard University, John F. Kennedy School of Government.
  7. Rose, Adam, 1998. "Burden-sharing and climate change policy beyond Kyoto: implications for developing countries," Environment and Development Economics, Cambridge University Press, vol. 3(03), pages 347-409, July.
  8. Adam Rose & Brandt Stevens & Jae Edmonds & Marshall Wise, 1998. "International Equity and Differentiation in Global Warming Policy," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 12(1), pages 25-51, July.
  9. Lau, Morten I. & Pahlke, Andreas & Rutherford, Thomas F., 2002. "Approximating infinite-horizon models in a complementarity format: A primer in dynamic general equilibrium analysis," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 26(4), pages 577-609, April.
  10. Welsch, Heinz, 1993. "A CO2 agreement proposal with flexible quotas," Energy Policy, Elsevier, vol. 21(7), pages 748-756, July.
  11. Chichilnisky, Graciela & Thomson, William, 1987. "The walrasian mechanism from equal division is not monotonic with respect to variations in the number of consumers," Journal of Public Economics, Elsevier, vol. 32(1), pages 119-124, February.
  12. Rose, Adam & Zhang, ZhongXiang, 2003. "Interregional burden-sharing of greenhouse gas mitigation in the United States," MPRA Paper 12893, University Library of Munich, Germany.
  13. Richard Tol, 2002. "Estimates of the Damage Costs of Climate Change, Part II. Dynamic Estimates," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 21(2), pages 135-160, February.
  14. Christoph Böhringer & Thomas Rutherford, 2002. "Carbon Abatement and International Spillovers," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 22(3), pages 391-417, July.
  15. Bohringer, Christoph & Welsch, Heinz, 2004. "Contraction and Convergence of carbon emissions: an intertemporal multi-region CGE analysis," Journal of Policy Modeling, Elsevier, Elsevier, vol. 26(1), pages 21-39, January.
  16. Edmonds, Jae & Wise, Marshall & Barns, David W, 1995. "Carbon coalitions : The cost and effectiveness of energy agreements to alter trajectories of atmospheric carbon dioxide emissions," Energy Policy, Elsevier, vol. 23(4-5), pages 309-335.
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Citations

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Cited by:
  1. Frédéric Babonneau & Alain Haurie & Marc Vielle, 2013. "A robust meta-game for climate negotiations," Computational Management Science, Springer, vol. 10(4), pages 299-329, December.
  2. DAUBANES Julien, 2009. "Changement climatique, instruments économiques et propositions pour un accord post-Kyoto : une synthèse," LERNA Working Papers, LERNA, University of Toulouse 09.19.295, LERNA, University of Toulouse.
  3. Christoph Böhringer & Nicholas Rivers & Tom F. Rutherford & Randall Wigle, 2014. "Sharing the burden for climate change mitigation in the Canadian federation," Working Papers V-362-14, University of Oldenburg, Department of Economics, revised Jan 2014.
  4. Lange, Andreas & Löschel, Andreas & Vogt, Carsten & Ziegler, Andreas, 2010. "On the self-interested use of equity in international climate negotiations," European Economic Review, Elsevier, vol. 54(3), pages 359-375, April.
  5. Thomas Bernauer & Lena Maria Schaffer, 2010. "Climate Change Governance," IED Working paper, IED Institute for Environmental Decisions, ETH Zurich 10-12, IED Institute for Environmental Decisions, ETH Zurich.
  6. Andries Hof & Michel Elzen & Detlef Vuuren, 2009. "Environmental effectiveness and economic consequences of fragmented versus universal regimes: what can we learn from model studies?," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 9(1), pages 39-62, February.
  7. Carlsson, Fredrik & Kataria, Mitesh & Krupnick, Alan & Lampi, Elina & Löfgren, Åsa & Qin, Ping & Sterner, Thomas & Chung, Susie, 2010. "A Fair Share : Burden-Sharing Preferences in the United States and China," Working Papers in Economics 471, University of Gothenburg, Department of Economics.
  8. Kverndokk, Snorre & Rose, Adam, 2008. "Equity and justice in global warming policy," MPRA Paper 24272, University Library of Munich, Germany.
  9. Anthoff, David, 2009. "Optimal Global Dynamic Carbon Taxation," Papers, Economic and Social Research Institute (ESRI) WP278, Economic and Social Research Institute (ESRI).

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