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Population under a Cap on Greenhouse Gas Emissions

Author

Listed:
  • Henning Bohn
  • Charles Stuart

Abstract

A cap on greenhouse gas emissions makes total emissions a fixed common-property resource. Population increases under a cap are therefore self-limiting: a population increase raises labor and reduces emissions per unit of labor, which lowers incomes and fertility. Because a marginal birth under a cap lowers all incomes, a cap induces a negative population externality. The externality is substantial in calibrations, about 20 percent of income in steady state and 5 percent of income immediately after imposition, or more, per child. Similarly, the optimal population may be one-quarter of the natural population in steady state.

Suggested Citation

  • Henning Bohn & Charles Stuart, 2010. "Population under a Cap on Greenhouse Gas Emissions," CESifo Working Paper Series 3046, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_3046
    as

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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp3046.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    population externality; Pigovian tax; emissions cap; endogenous fertility; economic growth; optimal population; calibrated optimal child tax;

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • 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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