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

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  • Rose, Adam
  • Zhang, ZhongXiang

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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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 12893.

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Date of creation: Jul 2003
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Handle: RePEc:pra:mprapa:12893

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Keywords: Tradeable emission permits; climate policy; interregional equity;

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References

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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, vol. 136(3), pages 491-521, 09.
  2. 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.
  3. Zhang, ZhongXiang, 2000. "An assessment of the EU proposal for ceilings on the use of Kyoto flexibility mechanisms," MPRA Paper 13151, University Library of Munich, Germany.
  4. Adam Rose & Gbadebo Oladosu, 2002. "Greenhouse Gas Reduction Policy in the United States: Identifying Winners and Losers in an Expanded Permit Trading System," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 1-18.
  5. Rose, Adam & Stevens, Brandt, 1993. "The efficiency and equity of marketable permits for CO2 emissions," Resource and Energy Economics, Elsevier, vol. 15(1), pages 117-146, March.
  6. Fukuda, Shin-ichi & Hoshi, Takeo & Ito, Takatoshi & Rose, Andrew, 2006. "International Finance," Journal of the Japanese and International Economies, Elsevier, vol. 20(4), pages 455-458, December.
  7. Adam Rose & Brandt Stevens, 2001. "An Economic Analysis of Flexible Permit Trading in the Kyoto Protocol," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 1(2), pages 219-242, April.
  8. Adam Rose & Brandt Stevens & Jae Edmonds & Marshall Wise, 1998. "International Equity and Differentiation in Global Warming Policy," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 12(1), pages 25-51, July.
  9. Zhang, ZhongXiang, 1999. "The design and implementation of an international greenhouse gas emissions trading scheme," MPRA Paper 13046, University Library of Munich, Germany.
  10. Toman, Michael & Shogren, Jason, 2000. "Climate Change Policy," Discussion Papers dp-00-22, Resources For the Future.
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Citations

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Cited by:
  1. Rose, Adam & Peterson, Thomas D. & Zhang, ZhongXiang, 2006. "Regional carbon dioxide permit trading in the United States: coalition choices for Pennsylvania," MPRA Paper 13547, University Library of Munich, Germany.
  2. Kampas, Athanasios & Mamalis, Spyridon, 2006. "Assessing the Distributional Impacts of Transferable Pollution Permits: The Case of Phosphorus Pollution Management at a River Basin Scale," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 7(2), August.
  3. Christoph Böhringer & Nicholas Rivers & Thomas F. Rutherford & Randall Wigle, 2013. "Sharing the burden for climate change mitigation in the Canadian federation," ZenTra Working Papers in Transnational Studies 30 / 2014, ZenTra - Center for Transnational Studies, revised Jan 2014.
  4. Zhang, ZhongXiang, 2008. "How far can developing country commitments go in an immediate post-2012 climate regime?," MPRA Paper 12441, University Library of Munich, Germany, revised 10 Dec 2008.
  5. Böhringer, Christoph & Helm, Carsten, 2008. "On the fair division of greenhouse gas abatement cost," Resource and Energy Economics, Elsevier, vol. 30(2), pages 260-276, May.
  6. Kverndokk, Snorre & Rose , Adam, 2008. "Equity and Justice in Global Warming Policy," Memorandum 21/2008, Oslo University, Department of Economics.
  7. Zhou, P. & Zhang, L. & Zhou, D.Q. & Xia, W.J., 2013. "Modeling economic performance of interprovincial CO2 emission reduction quota trading in China," Applied Energy, Elsevier, vol. 112(C), pages 1518-1528.
  8. Zhang, Zhong Xiang, 2012. "Competitiveness and Leakage Concerns and Border Carbon Adjustments," International Review of Environmental and Resource Economics, now publishers, vol. 6(3), pages 225-287, December.
  9. Peterson, Thomas D. & Rose, Adam Z., 2006. "Reducing conflicts between climate policy and energy policy in the US: The important role of the states," Energy Policy, Elsevier, vol. 34(5), pages 619-631, March.
  10. Rose, Adam & Wei, Dan, 2008. "Greenhouse gas emissions trading among Pacific Rim countries: An analysis of policies to bring developing countries to the bargaining table," Energy Policy, Elsevier, vol. 36(4), pages 1420-1429, April.
  11. Jiusto, Scott, 2008. "An indicator framework for assessing US state carbon emissions reduction efforts (with baseline trends from 1990 to 2001)," Energy Policy, Elsevier, vol. 36(6), pages 2234-2252, June.

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