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Interregional burden-sharing of greenhouse gas mitigation in the United States

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  • Adam Rose
  • Zhong Zhang

Abstract

Emissions trading is an attractive candidate for implementing greenhouse gas mitigation, because it can promote both efficiency and equity. This paper analyzes the interregional impacts of alternative allocations of carbon dioxide emission permits within the U.S. The analysis is performed with the aid of a nonlinear programming model for ten EPA Regions and for six alternative permit distribution formulas. The reason that various alternatives need to be considered is that there is no universal consensus on the best definition of equity. Advance knowledge of absolute and relative regional economic impacts provides policy-makers with a stronger basis for making the choice. The analysis yields several useful results. First, the simulations indicate that no matter how permits are allocated, this policy instrument can substantially reduce the cost of greenhouse gas mitigation for the U.S. in comparison to a system of fixed quotas for each of its regions. Interestingly, the welfare impacts of several of the allocation formulas differ only slightly despite the large differences in their philosophical underpinnings. Also, the results for some equity criteria differ greatly from their application in the international domain. For example, the Egalitarian (per capita) criterion results in the relatively greatest cost burden being incurred by one of the regions of the U.S. with the lowest per capita income.
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Suggested Citation

  • Adam Rose & Zhong Zhang, 2004. "Interregional burden-sharing of greenhouse gas mitigation in the United States," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 9(4), pages 477-500, October.
  • Handle: RePEc:spr:masfgc:v:9:y:2004:i:4:p:477-500
    DOI: 10.1023/B:MITI.0000038850.72913.8e
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    References listed on IDEAS

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    1. ZhongXiang Zhang, 2000. "Estimating the size of the potential market for the Kyoto flexibility mechanisms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 136(3), pages 491-521, September.
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    4. Stevens, Brandt & Rose, Adam, 2002. "A Dynamic Analysis of the Marketable Permits Approach to Global Warming Policy: A Comparison of Spatial and Temporal Flexibility," Journal of Environmental Economics and Management, Elsevier, vol. 44(1), pages 45-69, July.
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    More about this item

    Keywords

    climate policy; interregional equity; tradeable emission permits;
    All these keywords.

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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