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International and Intergenerational Dimensions of Climate Change: North-South Cooperation in an Overlapping Generations Framework

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  • Escapa García, Marta
  • Ansuategui Cobo, José Alberto
  • Pérez, Azucena

Abstract

Global environmental problems such as climate change have both an international and an intertemporal dimension. Recently, some papers have used an overlapping generations framework to analyze the climate change problem taking into account jointly the issues of intergenerational equity and intertemporal efficiency but without considering the international aspect of the problem. In this paper, we extend such approach by considering an overlapping generations model of climate-economy interactions where the world is split into two regions: North and South. We resort to numerical simulations of the calibrated model to analyze the effect of cooperation over economic and climate variables under two different scenarios: long-lived and short-lived governments. The main aim of our analysis is to test numrically whether John and Pecchenino´s (1997) theoretical result, which states that international agreements with transfers that lack an intergenerational perspective could actually harm the environment, applies low us to conclude that when we consider short lived governments: (1) the lack of cooperation always leads to higher environmental degradation, (2) the higher the welfare weight attached to the North under cooperation, the lower the environmental degradation in the long run, and (3) some cooperative scenarios may lead in the short run to higher environmental degradation than what it would arise in the non cooperative scenario.

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Paper provided by Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I in its series IKERLANAK with number 2003-06.

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Date of creation: Dec 2003
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Handle: RePEc:ehu:ikerla:200306

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Postal: Dpto. de Fundamentos del Análisis Económico I, Facultad de CC. Económicas y Empresariales, Universidad del País Vasco, Avda. Lehendakari Aguirre 83, 48015 Bilbao, Spain
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Keywords: international environmental agreements; intergenerational externality; climate change;

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References

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  1. Gerlagh, Reyer & van der Zwaan, B. C. C., 2001. "The effects of ageing and an environmental trust fund in an overlapping generations model on carbon emission reductions," Ecological Economics, Elsevier, vol. 36(2), pages 311-326, February.
  2. John, A Andrew & Pecchenino, Rowena A, 1997. " International and Intergenerational Environmental Externalities," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(3), pages 371-87, September.
  3. Richard Howarth, 2000. "Climate Change and the Representative Agent," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 15(2), pages 135-148, February.
  4. Nordhaus, William D & Yang, Zili, 1996. "A Regional Dynamic General-Equilibrium Model of Alternative Climate-Change Strategies," American Economic Review, American Economic Association, vol. 86(4), pages 741-65, September.
  5. Howarth, Richard B, 1998. " An Overlapping Generations Model of Climate-Economy Interactions," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(3), pages 575-91, September.
  6. Schelling, Thomas C, 1995. "Intergenerational discounting," Energy Policy, Elsevier, vol. 23(4-5), pages 395-401.
  7. 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.
  8. Marini Giancarlo & Scaramozzino Pasquale, 1995. "Overlapping Generations and Environmental Control," Journal of Environmental Economics and Management, Elsevier, vol. 29(1), pages 64-77, July.
  9. Eyckmans, Johan & Tulkens, Henry, 2003. "Simulating coalitionally stable burden sharing agreements for the climate change problem," Resource and Energy Economics, Elsevier, vol. 25(4), pages 299-327, October.
  10. Richard B. Howarth, 1996. "Climate Change And Overlapping Generations," Contemporary Economic Policy, Western Economic Association International, vol. 14(4), pages 100-111, October.
  11. Yang, Zili, 1999. "Should the north make unilateral technology transfers to the south?: North-South cooperation and conflicts in responses to global climate change," Resource and Energy Economics, Elsevier, vol. 21(1), pages 67-87, January.
  12. GERMAIN , Marc & TOINT , Philippe & TULKENS, Henry, 1997. "Financial transfers to ensure cooperative international optimality in stock pollutant abatement," CORE Discussion Papers 1997001, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  13. Ansuategi, Alberto & Escapa, Marta, 2002. "Economic growth and greenhouse gas emissions," Ecological Economics, Elsevier, vol. 40(1), pages 23-37, January.
  14. GUNTER Stephan & GEORG MÜLLER-FÜRSTENBERGER & PASCAL Previdoli, 1997. "Overlapping Generations or Infinitely-Lived Agents: Intergenerational Altruism and the Economics of Global Warming," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 10(1), pages 27-40, July.
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Cited by:
  1. repec:ebl:ecbull:v:17:y:2004:i:7:p:1-11 is not listed on IDEAS
  2. Alberto Ansuategi & Marta Escapa, 2004. "Is international cooperation on climate change good for the environment?," Economics Bulletin, AccessEcon, vol. 17(7), pages 1-11.

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