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Compensations and contributions under an international carbon treaty

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  • Kenneth A. Lewis

    ()
    (Department of Economics,University of Delaware)

  • Laurence S. Seidman

    ()
    (Department of Economics,University of Delaware)

Abstract

The simulations in this paper use actual 2004 data on carbon emissions and per capita GDP from 178 countries to provide a rough estimate of how much better off high-income countries might be by compensating low-income countries to help reduce carbon emissions rather than doing it without their help; and a rough estimate of the per capita compensation to each low-income country and the per capita contribution from each high-income country under several alternative formulas that might be adopted under an international carbon treaty. The study focuses special attention on the per capita compensations to India, China, and Russia, and the per capita contributions from the United States, Japan, Germany, United Kingdom, Italy, and France, under alternative formulas. In our initial simulation, if the 46 countries with per capita GDP above $12,000 want to reduce world emissions by 1.095 billion metric tons (15% of world emissions), we calculate that the total cost of their emissions reduction would be $108 billion if they do it without help. But if they get optimal help from the 132 low-income countries, the total cost of reducing world emissions 1.095 billion would be only $55 billion-- $27 billion for the low-income countries and $28 billion for the high-income countries-- so the world cost saving would be $53 billion and the cost saving for the high-income countries would be $80 billion. Thus, if the high-income countries compensate the low-income countries 100% of their cost ($27 billion), the high-income countries would still be $53 billion better off than if they had done it alone. Under the formula used in this initial simulation, China’s per capita compensation would be $7 and the U.S.’s per capita contribution would be $40.

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Bibliographic Info

Paper provided by University of Delaware, Department of Economics in its series Working Papers with number 08-03.

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Length: 40 pages
Date of creation: 2008
Date of revision:
Publication status: Forthcoming in Journal of Policy Modeling
Handle: RePEc:dlw:wpaper:08-03.

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Web page: http://www.lerner.udel.edu/departments/economics/department-economics/
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Keywords: International Carbon Treaty;

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References

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  1. Liang, Qiao-Mei & Fan, Ying & Wei, Yi-Ming, 2007. "Carbon taxation policy in China: How to protect energy- and trade-intensive sectors?," Journal of Policy Modeling, Elsevier, vol. 29(2), pages 311-333.
  2. William A. Pizer, 2006. "The Evolution of a Global Climate Change Agreement," American Economic Review, American Economic Association, vol. 96(2), pages 26-30, May.
  3. Sheila M. Olmstead & Robert N. Stavins, 2006. "An International Policy Architecture for the Post-Kyoto Era," American Economic Review, American Economic Association, vol. 96(2), pages 35-38, May.
  4. William D. Nordhaus, 2006. "After Kyoto: Alternative Mechanisms to Control Global Warming," American Economic Review, American Economic Association, vol. 96(2), pages 31-34, May.
  5. Onishi, Akira, 2007. "The impact of CO2 emissions on the world economy: Policy simulations of FUGI global model," Journal of Policy Modeling, Elsevier, vol. 29(6), pages 797-819.
  6. Frankel, Jeffrey, 2007. "Formulas for Quantitative Emission Targets," Working Paper Series rwp07-011, Harvard University, John F. Kennedy School of Government.
  7. Zhang, Zhong Xiang, 2000. "Meeting the Kyoto Targets: the importance of developing country participation," CCSO Working Papers 200013, University of Groningen, CCSO Centre for Economic Research.
  8. Aldy, Joseph & Barrett, Scott & Stavins, Robert, 2003. "Thirteen Plus One: A Comparison of Global Climate Policy Architectures," Working Paper Series rwp03-012, Harvard University, John F. Kennedy School of Government.
  9. Lawrence H. Goulder, 1992. "Carbon Tax Design and U.S. Industry Performance," NBER Chapters, in: Tax Policy and the Economy, Volume 6, pages 59-104 National Bureau of Economic Research, Inc.
  10. Barrett, Scott & Stavins, Robert, 2002. "Increasing Participation and Compliance in International Climate Change Agreements," Working Paper Series rwp02-031, Harvard University, John F. Kennedy School of Government.
  11. 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.
  12. Stavins, Robert, 2007. "A U.S. Cap-and-Trade System to Address Global Climate Change," Working Paper Series rwp07-052, Harvard University, John F. Kennedy School of Government.
  13. Pizer, William A., 2002. "Combining price and quantity controls to mitigate global climate change," Journal of Public Economics, Elsevier, vol. 85(3), pages 409-434, September.
  14. repec:reg:rpubli:353 is not listed on IDEAS
  15. Cooper, Richard N, 2000. "International Approaches to Global Climate Change," World Bank Research Observer, World Bank Group, vol. 15(2), pages 145-72, August.
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Cited by:
  1. Valentina Bosetti & Jeffrey A. Frankel, 2011. "Sustainable Cooperation in Global Climate Policy: Specific Formulas and Emission Targets to Build on Copenhagen and Cancun," NBER Working Papers 17669, National Bureau of Economic Research, Inc.
  2. Frankel, Jeffrey A., 2009. "Environmental Effects of International Trade," Scholarly Articles 4481652, Harvard Kennedy School of Government.
  3. Frankel, Jeffrey, 2008. "Global Environmental Policy and Global Trade Policy," Working Paper Series rwp08-058, Harvard University, John F. Kennedy School of Government.
  4. Bosetti, Valentina & Frankel, Jeffrey A., 2012. "Sustainable Cooperation in Global Climate Policy: Specific Formulas and Emission Targets," Scholarly Articles 8694933, Harvard Kennedy School of Government.
  5. Bosetti, Valentina & Frankel, Jeffrey A., 2012. "Sustainable Cooperation in Global Climate Policy: Specific Formulas and Emission Targets," Working Paper Series rwp12-012, Harvard University, John F. Kennedy School of Government.

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