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Compensations and contributions under an international carbon treaty

Author

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  • Kenneth A. Lewis

    () (Department of Economics,University of Delaware)

  • Laurence S. Seidman

    () (Department of Economics,University of Delaware)

Abstract

The simulations in this paper use actual 2004 data on carbon emissions and per capita GDP from 178 countries to provide a rough estimate of how much better off high-income countries might be by compensating low-income countries to help reduce carbon emissions rather than doing it without their help; and a rough estimate of the per capita compensation to each low-income country and the per capita contribution from each high-income country under several alternative formulas that might be adopted under an international carbon treaty. The study focuses special attention on the per capita compensations to India, China, and Russia, and the per capita contributions from the United States, Japan, Germany, United Kingdom, Italy, and France, under alternative formulas. In our initial simulation, if the 46 countries with per capita GDP above $12,000 want to reduce world emissions by 1.095 billion metric tons (15% of world emissions), we calculate that the total cost of their emissions reduction would be $108 billion if they do it without help. But if they get optimal help from the 132 low-income countries, the total cost of reducing world emissions 1.095 billion would be only $55 billion-- $27 billion for the low-income countries and $28 billion for the high-income countries-- so the world cost saving would be $53 billion and the cost saving for the high-income countries would be $80 billion. Thus, if the high-income countries compensate the low-income countries 100% of their cost ($27 billion), the high-income countries would still be $53 billion better off than if they had done it alone. Under the formula used in this initial simulation, China’s per capita compensation would be $7 and the U.S.’s per capita contribution would be $40.

Suggested Citation

  • Kenneth A. Lewis & Laurence S. Seidman, 2008. "Compensations and contributions under an international carbon treaty," Working Papers 08-03, University of Delaware, Department of Economics.
  • Handle: RePEc:dlw:wpaper:08-03.
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    References listed on IDEAS

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    Cited by:

    1. Jeffrey A. Frankel, 2009. "An Elaborated Global Climate Policy Architecture: Specific Formulas and Emission Targets for All Countries in All Decades," NBER Working Papers 14876, National Bureau of Economic Research, Inc.
    2. Valentina Bosetti & Jeffrey Frankel, 2014. "Sustainable Cooperation In Global Climate Policy: Specific Formulas And Emission Targets," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 5(03), pages 1-34.
    3. Frankel, Jeffrey A., 2009. "Environmental Effects of International Trade," Scholarly Articles 4481652, Harvard Kennedy School of Government.
    4. Valentina Bosetti & Jeffrey A. Frankel, 2011. "Sustainable Cooperation in Global Climate Policy: Specific Formulas and Emission Targets to Build on Copenhagen and Cancun," NBER Working Papers 17669, National Bureau of Economic Research, Inc.
    5. Frankel, Jeffrey, 2008. "Global Environmental Policy and Global Trade Policy," Working Paper Series rwp08-058, Harvard University, John F. Kennedy School of Government.

    More about this item

    Keywords

    International Carbon Treaty;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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