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Climate Change Mitigation Strategies in Fast-Growing Countries: The Benefits of Early Action

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Author Info

  • Massimo Tavoni

    (Fondazione Eni Enrico Mattei)

  • Valentina Bosetti

    (Princeton University, Fondazione Eni Enrico Mattei and CMCC)

  • Carlo Carraro

    (University of Venice, Fondazione Eni Enrico Mattei, CEPR, CESifo and CMCC)

Abstract

This paper builds on the assumption that OECD countries are (or will soon be) taking actions to reduce their greenhouse gas emissions. These actions, however, will not be sufficient to control global warming, unless developing countries also get involved in the cooperative effort to reduce GHG emissions. This paper investigates the best short-term strategies that emerging economies can adopt in reacting to OECD countries’ mitigation effort, given the common long-term goal to prevent excessive warming without hampering economic growth. Results indicate that developing countries would incur substantial economic losses by following a myopic strategy that disregards climate in the short-run, and that their optimal investment behaviour is to anticipate the implementation of a climate policy by roughly 10 years. Investing in innovation ahead of time is also found to be advantageous. The degree of policy anticipation is shown to be important in determining the financial transfers of an international carbon market meant to provide incentives for the participation of developing countries. This is especially relevant for China, whose recent and foreseeable trends of investments in innovation are consistent with the adoption of domestic emission reduction obligations in 2030.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2009.53.

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Date of creation: Jul 2009
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Handle: RePEc:fem:femwpa:2009.53

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Keywords: Energy-economy Modeling; Climate Policy; Developing Countries;

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References

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  1. Bosetti, Valentina & Carraro, Carlo & Tavoni, Massimo, 2008. "Delayed Participation of Developing Countries to Climate Agreements: Should Action in the EU and US be Postponed?," CEPR Discussion Papers 6967, C.E.P.R. Discussion Papers.
  2. Carlo Carraro & Valentina Bosetti & Emanuele Massetti & Massimo Tavoni, 2007. "Optimal Energy Investment and R&D Strategies to Stabilise Greenhouse Gas Atmospheric Concentrations," Working Papers 2007_22, Department of Economics, University of Venice "Ca' Foscari".
  3. Richard Tol, 1999. "Spatial and Temporal Efficiency in Climate Policy: Applications of FUND," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 14(1), pages 33-49, July.
  4. Bosetti, Valentina & Carraro, Carlo & Massetti, Emanuele & Sgobbi, Alessandra & Tavoni, Massimo, 2009. "Optimal energy investment and R&D strategies to stabilize atmospheric greenhouse gas concentrations," Resource and Energy Economics, Elsevier, vol. 31(2), pages 123-137, May.
  5. Valentina Bosetti, Carlo Carraro, Marzio Galeotti, Emanuele Massetti, Massimo Tavoni, 2006. "A World induced Technical Change Hybrid Model," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 13-38.
  6. Valentina Bosetti & David Tomberlin, 2004. "Fondazione Eni Enrico Mattei," Working Papers 2004.102, Fondazione Eni Enrico Mattei.
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Citations

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Cited by:
  1. Elisabeth Gsottbauer & Jeroen den Bergh, 2013. "Bounded rationality and social interaction in negotiating a climate agreement," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 13(3), pages 225-249, September.
  2. Valentine, Scott Victor, 2011. "Emerging symbiosis: Renewable energy and energy security," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(9), pages 4572-4578.
  3. Yu-Fu Chen & Michael Funke, 2009. "Booms, Recessions and Financial Turmoil: A Fresh Look at Investment Decisions under Cyclical Uncertainty," CESifo Working Paper Series 2759, CESifo Group Munich.
  4. Emanuele Massetti, 2011. "Carbon tax scenarios for China and India: exploring politically feasible mitigation goals," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 11(3), pages 209-227, September.
  5. Valentina Bosetti & David G. Victor, 2010. "Politics and Economics of Second-Best Regulation of Greenhouse Gases: The Importance of Regulatory Credibility," Working Papers 2010.29, Fondazione Eni Enrico Mattei.
  6. Stephen Howes & Paul Wyrwoll, 2012. "Climate Change Mitigation and Green Growth in Developing Asia," Working Papers id:5059, eSocialSciences.
  7. Alice Favero & Enrica De Cian, 2010. "Fairness, Credibility and Effectiveness in the Copenhagen Accord: An Economic Assessment," Working Papers 2010.21, Fondazione Eni Enrico Mattei.
  8. Nordhaus, William, 2013. "Integrated Economic and Climate Modeling," Handbook of Computable General Equilibrium Modeling, Elsevier.
  9. Valentina Bosetti & Carlo Carraro & Massimo Tavoni, 2012. "Timing of Mitigation and Technology Availability in Achieving a Low-Carbon World," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 51(3), pages 353-369, March.
  10. Howes, Stephen & Wyrwoll, Paul, 2012. "Climate Change Mitigation and Green Growth in Developing Asia," ADBI Working Papers 369, Asian Development Bank Institute.

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