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Fairness in a tradeable-permit treaty for carbon emissions reductions in Europe and the former Soviet Union

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  • Peter Bohm
  • Bjorn Larsen
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    Abstract

    This paper evaluates the distributional implications of alternative permit allocations in a tradeable permit regime for carbon emissions reductions (20% below baseline) in 2010 for a region consisting of Europe and the states of the former Soviet Union (FSU). Participation in such a regime is expected to hinge on the “fairness” of the distributional consequences. We find that initial permit allocations by populationand/or GDP are unlikely to induce participation by most countries of Eastern Europe and FSU because of the net costs involved. We identify a set of initial allocations that would at least compensate these countries. A fair treatment of the countries in Western Europe (WE) is here one which equalizes net costs perGDP. For a wide set of cost functions for carbon emission reductions, the cost gains that WE would reap from a tradeable permit system relative to unilateral reductions by WE as a group are found to be on the order of 85 percent. This would imply, among other things, a significant increase in WE'scapacity to make further emissions reductions. Copyright Kluwer Academic Publishers 1994

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    Bibliographic Info

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

    Volume (Year): 4 (1994)
    Issue (Month): 3 (June)
    Pages: 219-239

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    Handle: RePEc:kap:enreec:v:4:y:1994:i:3:p:219-239

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

    Related research

    Keywords: Carbon emissions reductions; tradeable permits; equity;

    References

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    1. Michael Hoel, 1991. "Efficient International Agreements for Reducing Emissions of CO2," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 93-108.
    2. Anwar Shah & Bjorn Larsen, 2014. "Carbon taxes, the greenhouse effect, and developing countries," Annals of Economics and Finance, Society for AEF, vol. 15(1), pages 353-402, May.
    3. Larsen, Bjorn & Shah, Anwar & DEC, 1992. "World fossil fuel subsidies and global carbon emissions," Policy Research Working Paper Series 1002, The World Bank.
    4. Peter Hoeller & Markku Wallin, 1991. "Energy Prices, Taxes and Carbon Dioxide Emissions," OECD Economics Department Working Papers 106, OECD Publishing.
    5. Peter Hoeller & Jonathan Coppel, 1992. "Energy Taxation and Price Distortions in Fossil Fuel Markets: Some Implications for Climate Change Policy," OECD Economics Department Working Papers 110, OECD Publishing.
    6. James M. Poterba, 1991. "Tax Policy to Combat Global Warming: On Designing a Carbon Tax," NBER Working Papers 3649, National Bureau of Economic Research, Inc.
    7. William D. Nordhaus, 1991. "The Cost of Slowing Climate Change: a Survey," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 37-66.
    8. Pearce, David W, 1991. "The Role of Carbon Taxes in Adjusting to Global Warming," Economic Journal, Royal Economic Society, vol. 101(407), pages 938-48, July.
    9. Peter Bohm, 1992. "Distributional Implications of Allowing International Trade in CO, Emission Quotas," The World Economy, Wiley Blackwell, vol. 15(1), pages 107-114, 01.
    10. Alan S. Manne & Richard G. Richels, 1991. "Global CO2 Emission Reductions - the Impacts of Rising Energy Costs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 87-108.
    11. Hoel, Michael, 1991. "Global environmental problems: The effects of unilateral actions taken by one country," Journal of Environmental Economics and Management, Elsevier, vol. 20(1), pages 55-70, January.
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    Cited by:
    1. Kampas, Athanasios & Mamalis, Spyridon, 2006. "Assessing the Distributional Impacts of Transferable Pollution Permits: The Case of Phosphorus Pollution Management at a River Basin Scale," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 7(2), August.
    2. Karp, Larry & Liu, Xuemei, 1999. "Valuing Tradeable CO2 Permits for OECD Countries," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt5dv5c8hr, Department of Agricultural & Resource Economics, UC Berkeley.
    3. Kampas, Athanasios & White, Ben, 2003. "Selecting permit allocation rules for agricultural pollution control: a bargaining solution," Ecological Economics, Elsevier, vol. 47(2-3), pages 135-147, December.
    4. Peter Bohm & Björn Carlén, 2002. "A Cost-effective Approach to Attracting Low-income Countries to International Emissions Trading: Theory and Experiments," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 23(2), pages 187-211, October.
    5. Böhringer, Christoph & Welsch, Heinz, 1999. "C & C - contraction and convergence of carbon emissions: the economic implications of permit trading," ZEW Discussion Papers 99-13, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    6. Josef Sejak & Martin Kupka, 2003. "Can the Czech Republic Participate in Greenhouse Gas Emission Trading?," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 3(3), pages 269-292, September.
    7. Olivier Godard, 2011. "Climate justice, between global and international justice -Insights from justification theory," RSCAS Working Papers 2011/56, European University Institute.
    8. GERMAIN, Marc & VAN STEENBERGHE, Vincent, 2001. "Constraining equitable allocations of tradable greenhouse gases emission quotas by acceptability," CORE Discussion Papers 2001005, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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