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Persistent inequality in economically optimal climate policies

Author

Listed:
  • Paolo Gazzotti

    (Politecnico di Milano)

  • Johannes Emmerling

    (Centro Euro-Mediterraneo sui Cambiamenti Climatici)

  • Giacomo Marangoni

    (Politecnico di Milano
    Centro Euro-Mediterraneo sui Cambiamenti Climatici)

  • Andrea Castelletti

    (Politecnico di Milano)

  • Kaj-Ivar van der Wijst

    (PBL Netherlands Environmental Assessment Agency)

  • Andries Hof

    (PBL Netherlands Environmental Assessment Agency)

  • Massimo Tavoni

    (Politecnico di Milano
    Centro Euro-Mediterraneo sui Cambiamenti Climatici)

Abstract

Benefit-cost analyses of climate policies by integrated assessment models have generated conflicting assessments. Two critical issues affecting social welfare are regional heterogeneity and inequality. These have only partly been accounted for in existing frameworks. Here, we present a benefit-cost model with more than 50 regions, calibrated upon emissions and mitigation cost data from detailed-process IAMs, and featuring country-level economic damages. We compare countries’ self-interested and cooperative behaviour under a range of assumptions about socioeconomic development, climate impacts, and preferences over time and inequality. Results indicate that without international cooperation, global temperature rises, though less than in commonly-used reference scenarios. Cooperation stabilizes temperature within the Paris goals (1.80∘C [1.53∘C–2.31∘C] in 2100). Nevertheless, economic inequality persists: the ratio between top and bottom income deciles is 117% higher than without climate change impacts, even for economically optimal pathways.

Suggested Citation

  • Paolo Gazzotti & Johannes Emmerling & Giacomo Marangoni & Andrea Castelletti & Kaj-Ivar van der Wijst & Andries Hof & Massimo Tavoni, 2021. "Persistent inequality in economically optimal climate policies," Nature Communications, Nature, vol. 12(1), pages 1-10, December.
    • Handle: RePEc:nat:natcom:v:12:y:2021:i:1:d:10.1038_s41467-021-23613-y
    DOI: 10.1038/s41467-021-23613-y
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    Cited by:

    1. Brown, Zachary Steven, 2022. "Distributional policy impacts, WTP-WTA disparities, and the Kaldor-Hicks tests in benefit-cost analysis," Journal of Environmental Economics and Management, Elsevier, vol. 113(C).
    2. Cuixia Gao & Ying Zhong & Isaac Adjei Mensah & Simin Tao & Yuyang He, 2022. "Spatio-Temporal Impact of Global Migration on Carbon Transfers Based on Complex Network and Stepwise Regression Analysis," Sustainability, MDPI, vol. 14(2), pages 1-19, January.
    3. Zhang, Junlai & Prettner, Klaus & Chen, Simiao & Bloom, David E., 2023. "Beyond GDP: Using healthy lifetime income to trace well-being over time with estimates for 193 countries," Social Science & Medicine, Elsevier, vol. 320(C).
    4. Peter von zur Muehlen, 2022. "Prices and Taxes in a Ramsey Climate Policy Model under Heterogeneous Beliefs and Ambiguity," Economies, MDPI, vol. 10(10), pages 1-56, October.
    5. Piergiuseppe Pezzoli & Johannes Emmerling & Massimo Tavoni, 2023. "SRM on the table: the role of geoengineering for the stability and effectiveness of climate coalitions," Climatic Change, Springer, vol. 176(10), pages 1-21, October.
    6. Biying Yu & Zihao Zhao & Yi-Ming Wei & Lan-Cui Liu & Qingyu Zhao & Shuo Xu & Jia-Ning Kang & Hua Liao, 2023. "Approaching national climate targets in China considering the challenge of regional inequality," Nature Communications, Nature, vol. 14(1), pages 1-12, December.
    7. Stavros A. Zenios, 2022. "The risks from climate change to sovereign debt," Climatic Change, Springer, vol. 172(3), pages 1-19, June.
    8. Marco Rogna & Carla J. Vogt, 2022. "Optimal climate policies under fairness preferences," Climatic Change, Springer, vol. 174(3), pages 1-20, October.

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