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Constraining Equitable Allocations of Tradable CO 2 Emission Quotas by Acceptability

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  • M. Germain

    ()

  • V. van Steenberghe

    ()

Abstract

Since the signing of the Kyoto Protocol, future commitments are likely to beframed in terms of tradable quotas. The discussions on the allocation of thequotas among countries will be based – at least partly – on rulescorresponding to a certain conception of equity. For instance, allocatingquotas in direct proportion to population, in relation to GDP or accordingto past emissions has been advocated. Taking a long term perspective, wecompute such allocations of tradable quotas with a dynamic (closed-loop)model. The total amount of quotas to be distributed at each periodcorresponds to the world optimal amount of emissions to be realized at eachperiod. We observe that most “equitable” allocation rules do not make theagreement individually rational for every country along the entire timepath. We then propose a mechanism which determines allocations of quotasthat are as close as possible to any “equitable” allocation while satisfyingindividual rationality. Copyright Kluwer Academic Publishers 2003

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Bibliographic Info

Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 26 (2003)
Issue (Month): 3 (November)
Pages: 469-492

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Handle: RePEc:kap:enreec:v:26:y:2003:i:3:p:469-492

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Web page: http://www.springerlink.com/link.asp?id=100263

Related research

Keywords: acceptability; climate change; dynamic games; equity; tradable quotas;

References

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  1. CHANDER, Parkash & TULKENS, Henry, 1995. "The Core of an Economy with Multilateral Environmental Externalities," CORE Discussion Papers 1995050, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  3. Germain, Marc & Toint, Philippe & Tulkens, Henry & de Zeeuw, Aart, 2003. "Transfers to sustain dynamic core-theoretic cooperation in international stock pollutant control," Journal of Economic Dynamics and Control, Elsevier, vol. 28(1), pages 79-99, October.
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  9. 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, vol. 12(1), pages 25-51, July.
  10. GERMAIN, Marc & TULKENS, Philippe & TULKENS , Henry & van YPERSELE, Jean-Pascal, 2002. "Side payments and international cooperation in a regionalised integrated assessment model for climate change," CORE Discussion Papers 2002019, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  11. Cropper, Maureen L & Aydede, Sema K & Portney, Paul R, 1994. "Preferences for Life Saving Programs: How the Public Discounts Time and Age," Journal of Risk and Uncertainty, Springer, vol. 8(3), pages 243-65, May.
  12. William R. Cline, 1992. "Economics of Global Warming, The," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 39.
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