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The climate rent curse: new challenges for burden sharing

Author

Listed:
  • Ulrike Kornek

    () (Mercator Research Institute on Global Commons and Climate Change
    Potsdam Institute for Climate Impact Research)

  • Jan Christoph Steckel

    () (Mercator Research Institute on Global Commons and Climate Change
    Potsdam Institute for Climate Impact Research
    Technische Universität Berlin)

  • Kai Lessmann

    (Mercator Research Institute on Global Commons and Climate Change
    Potsdam Institute for Climate Impact Research)

  • Ottmar Edenhofer

    (Mercator Research Institute on Global Commons and Climate Change
    Potsdam Institute for Climate Impact Research
    Technische Universität Berlin)

Abstract

Abstract The literature on the “resource curse” has strongly emphasized that large incomes from resource endowments may have adverse effects on the growth prospects of a country. Conceivably the income generated from emission permit allocations, as suggested in the context of international climate policy, could have a comparable impact. Effects of a “climate rent curse” have so far not been considered in the design of permit allocation schemes. In this study, we first determine when to expect a climate rent curse conceptually by analyzing its potential channels. We then use a numerical model to explore the extent of consequences that a climate rent curse would have on international climate agreements. We show that given the susceptibility to a curse, permit allocation schemes may fail to encourage the participation of recipient countries in an international mitigation effort. We present transfer schemes that enhance cooperation and limit adverse effects on recipients.

Suggested Citation

  • Ulrike Kornek & Jan Christoph Steckel & Kai Lessmann & Ottmar Edenhofer, 2017. "The climate rent curse: new challenges for burden sharing," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 17(6), pages 855-882, December.
  • Handle: RePEc:spr:ieaple:v:17:y:2017:i:6:d:10.1007_s10784-017-9352-2
    DOI: 10.1007/s10784-017-9352-2
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    Keywords

    Climate finance; International environmental agreements; Resource curse; Coalition formation; Numerical modeling;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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