Spatial Climate-Economic Models in the Design of Optimal Climate Policies Across Locations
AbstractWe couple a one-dimensional energy balance climate model with heat transportation across latitudes, with an economic growth model. We derive temperature and damage distributions across locations and optimal taxes on fossil fuels which, in contrast to zero-dimensional Integrated Assessment Models, account for cross latitude externalities. We analyse the impact of welfare weights on the spatial structure of optimal carbon taxes and identify conditions under which these taxes are spatially nonhomogeneous and are lower in latitudes with relatively lower per capita income populations. We show the way that heat transportation affects local economic variables and taxes, and locate sufficient conditions for optimal mitigation policies to have rapid ramp-up initially and then decrease over time.
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Bibliographic InfoPaper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2012.74.
Date of creation: Oct 2012
Date of revision:
One-dimensional Energy Balance Model; Heat Transport; Latitudes; Temperature Distribution; Damage Distribution; Social Planner; Competitive Equilibrium; Local Welfare Weights; Optimal Taxes;
Other versions of this item:
- Gustav Engstrom & William Brock & Anastasios Xepapadeas, . "Spatial Climate-Economic Models in the Design of Optimal Climate Policies across Locations," DEOS Working Papers 1224, Athens University of Economics and Business.
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-24 (All new papers)
- NEP-ENE-2012-11-24 (Energy Economics)
- NEP-ENV-2012-11-24 (Environmental Economics)
- NEP-GEO-2012-11-24 (Economic Geography)
- NEP-PBE-2012-11-24 (Public Economics)
- NEP-RES-2012-11-24 (Resource Economics)
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