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Fair division theory and climate change policy




This paper analyzes the fair division of common property resources when monetary compensations are feasible. A prominent example is the fair division of the atmosphere's limited absorptive capacity for greenhouse gases. I propose a solution that is Pareto efficient and satisfies the axiomatic fair division criteria of individual rationality, stand-alone upper bound, and a version of envy-freeness. The latter criterion is adapted to problems where monetary compensations can be used to facilitate the fair division of the common resource. Applied to climate change, the solution implies that developing countries should participate in emission reduction efforts, but should be fully compensated for their incremental abatement costs.

Suggested Citation

  • Helm, Carsten, 2008. "Fair division theory and climate change policy," Environment and Development Economics, Cambridge University Press, vol. 13(04), pages 441-455, August.
  • Handle: RePEc:cup:endeec:v:13:y:2008:i:04:p:441-455_00

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