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On the fair division of greenhouse gas abatement cost

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  • Bähringer, Christoph
  • Helm, Carsten

Abstract

This paper introduces a solution for the fair division of emission reduction costs in the climate change regime. Our primary focus is on the fair division of efficiency gains that arise from exchanging the initial allocation of emission entitlements, rather than the initial allocation itself. We propose to complement the competitive Walrasian solution with welfare bounds, the ethical justification of which rests on commonality of ownership. Simulations with an intertemporal computable general equilibrium model illustrate the relevance of such welfare bounds. For a wide range of initial allocations of emission entitlements - including an equal per capita allocation - we find that developing countries should be fully compensated for their emission abatement efforts, but should not receive any further transfers.
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Suggested Citation

  • Bähringer, Christoph & Helm, Carsten, 2008. "On the fair division of greenhouse gas abatement cost," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 33627, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    • Handle: RePEc:dar:wpaper:33627
    Note: for complete metadata visit http://tubiblio.ulb.tu-darmstadt.de/33627/
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    Cited by:

    1. Christoph Böhringer & Nicholas Rivers & Thomas Rutherford & Randall Wigle, 2015. "Sharing the burden for climate change mitigation in the Canadian federation," Canadian Journal of Economics, Canadian Economics Association, vol. 48(4), pages 1350-1380, November.
    2. Zhou, P. & Wang, M., 2016. "Carbon dioxide emissions allocation: A review," Ecological Economics, Elsevier, vol. 125(C), pages 47-59.
    3. Andries Hof & Michel Elzen & Detlef Vuuren, 2009. "Environmental effectiveness and economic consequences of fragmented versus universal regimes: what can we learn from model studies?," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 9(1), pages 39-62, February.
    4. Moritz A. Drupp & Ulrike Kornek & Jasper N. Meya & Lutz Sager, 2021. "Inequality and the Environment: The Economics of a Two-Headed Hydra," CESifo Working Paper Series 9447, CESifo.
    5. Kverndokk, Snorre & Rose, Adam, 2008. "Equity and Justice in Global Warming Policy," International Review of Environmental and Resource Economics, now publishers, vol. 2(2), pages 135-176, October.
    6. Lange, Andreas & Löschel, Andreas & Vogt, Carsten & Ziegler, Andreas, 2010. "On the self-interested use of equity in international climate negotiations," European Economic Review, Elsevier, vol. 54(3), pages 359-375, April.
    7. Daubanes, Julien, 2009. "Changement climatique, instruments économiques et propositions pour un accord post-Kyoto: une synthèse," TSE Working Papers 09-006, Toulouse School of Economics (TSE).
    8. Carlsson, Fredrik & Kataria, Mitesh & Krupnick, Alan & Lampi, Elina & Löfgren, Åsa & Qin, Ping & Sterner, Thomas, 2013. "A fair share: Burden-sharing preferences in the United States and China," Resource and Energy Economics, Elsevier, vol. 35(1), pages 1-17.
    9. Frédéric Babonneau & Alain Haurie & Marc Vielle, 2013. "A robust meta-game for climate negotiations," Computational Management Science, Springer, vol. 10(4), pages 299-329, December.
    10. Thomas Bernauer & Lena Maria Schaffer, 2010. "Climate Change Governance," IED Working paper 10-12, IED Institute for Environmental Decisions, ETH Zurich.
    11. Marian Leimbach & Anastasis Giannousakis, 2019. "Burden sharing of climate change mitigation: global and regional challenges under shared socio-economic pathways," Climatic Change, Springer, vol. 155(2), pages 273-291, July.
    12. Anthoff, David, 2009. "Optimal Global Dynamic Carbon Taxation," Papers WP278, Economic and Social Research Institute (ESRI).
    13. van Ruijven, Bas J. & Weitzel, Matthias & den Elzen, Michel G.J. & Hof, Andries F. & van Vuuren, Detlef P. & Peterson, Sonja & Narita, Daiju, 2012. "Emission allowances and mitigation costs of China and India resulting from different effort-sharing approaches," Energy Policy, Elsevier, vol. 46(C), pages 116-134.

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