Think Globally, Act Locally? Stock vs Flow Regulation of a Fossil Fuel
AbstractRegulation of environmental externalities like global warming from the burning of fossil fuels (e.g., coal and oil) is often done by capping both emission flows and stocks. For example, the European Union and states in the Northeastern United States have introduced caps on flows of carbon emissions while the stated goal of the Intergovernmental Panel on Climate Change (IPCC) which provides the science behind the current global climate negotiations is to stabilize the atmospheric stock of carbon. Flow regulation is often local or regional in nature, while stock regulation is global. How do these multiple pollution control efforts interact when a nonrenewable resource creates pollution? In this paper we show that local and global pollution control efforts, if uncoordinated, may exacerbate environmental externalities. For example, a stricter cap on emission flows may actually increase the global pollution stock and hasten the date when the global pollution cap is reached.
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Bibliographic InfoPaper provided by Toulouse School of Economics (TSE) in its series TSE Working Papers with number 09-115.
Date of creation: Nov 2009
Date of revision:
Other versions of this item:
- Amigues, Jean-Pierre & Chakravorty, Ujjayant & Moreaux, Michel, 2009. "Think Globally, Act Locally? Stock vs Flow Regulation of a Fossil Fuel," IDEI Working Papers 584, Institut d'Économie Industrielle (IDEI), Toulouse.
- Jean-Pierre Amigues & Ujjayant Chakravorty & Michel Moreaux, 2009. "Think Globally, Act Locally? Stock vs Flow Regulation of a Fossil Fuel," LERNA Working Papers 09.30.306, LERNA, University of Toulouse.
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
- Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
- Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-22 (All new papers)
- NEP-ENE-2010-05-22 (Energy Economics)
- NEP-ENV-2010-05-22 (Environmental Economics)
- NEP-REG-2010-05-22 (Regulation)
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