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Valuing Equally the Environmental Goods in Rich and Poor Countries in a Post-Kyoto World

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  • Dritan Osmani

    ()
    (Hamburg University and Center for Atmospheric Science, Hamburg, Germany)

Abstract

The optimal pollution abatement levels are found by maximizing global social welfare in a permits trade system under the constraint that environmental goods are evaluated equally in rich and poor countries. Evaluating equally environmental goods in poor and rich countries makes possible to build a relation between the income elasticity of marginal utility e and the inequality aversion parameter gamma (Fankhauser et al. 1997; Johansson-Stenman 2000), which narrows the variation of e for a particular value of gamma. As a result, smaller variation for optimal abatement levels is obtained, which allows to inspect what Post-Kyoto abatement levels for poor and rich countries respect the requirement of evaluating equally the environmental goods in rich and poor countries. One finding is that in a Post-Kyoto world, the optimal abatement levels of poor countries are always different from zero, if we aim to evaluate equally the environmental goods in poor and rich countries. Furthermore, in a permits trade sy stem, if we increase abatement levels continually, it can happen that poor countries have to carry out higher emission reductions than rich ones.

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Bibliographic Info

Article provided by Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies in its journal Czech Economic Review.

Volume (Year): 7 (2013)
Issue (Month): 2 (July)
Pages: 073-099

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Handle: RePEc:fau:aucocz:au2013_073

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Related research

Keywords: Cost-benefit analysis; distributional weights; global warming; welfare theory; integrated assessment modeling;

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References

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  1. Flores, Nicholas E. & Carson, Richard T., 1997. "The Relationship between the Income Elasticities of Demand and Willingness to Pay," Journal of Environmental Economics and Management, Elsevier, vol. 33(3), pages 287-295, July.
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