Optimal Global Dynamic Carbon Taxation
A necessary condition of an efficient global climate change mitigation policy is to equate marginal abatement costs across world regions to ensure use of the cheapest abatement options available. The welfare economic justification for such an approach rests on lump sum transfers between regions to compensate for any unwanted distributional consequences of such a policy. I contrast this efficient solution with a second best situation in which lump sum transfers between regions are impossible. I derive that in a dynamic setting optimal taxes are different in such a case for regions with different per capita consumption. I estimate the optimal tax rates with the integrated assessment model FUND and find that optimal mitigation is less stringent when equity is explicitly considered for widely used parameter choices of a utilitarian social welfare function.
|Date of creation:||Feb 2009|
|Date of revision:|
|Contact details of provider:|| Postal: Whitaker Square, Sir John Rogerson's Quay, Dublin 2|
Phone: (353-1) 863 2000
Fax: (353-1) 863 2100
Web page: http://www.esri.ie
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Shiell, Leslie, 2003. "Descriptive, prescriptive and second-best approaches to the control of global greenhouse gas emissions," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1431-1452, August.
- Chichilnisky, Graciela & Heal, Geoffrey, 1994.
"Who should abate carbon emissions? : An international viewpoint,"
Elsevier, vol. 44(4), pages 443-449, April.
- Graciela Chichilnisky & Geoffrey Heal, 1993. "Who Should Abate Carbon Emissions? An International Viewpoint," NBER Working Papers 4425, National Bureau of Economic Research, Inc.
- David Pearce, 2003. "The Social Cost of Carbon and its Policy Implications," Oxford Review of Economic Policy, Oxford University Press, vol. 19(3), pages 362-384.
- David Anthoff & Cameron Hepburn & Richard S.J. Tol, 2007.
"Equity Weighting and the Marginal Damage Costs of Climate Change,"
2007.43, Fondazione Eni Enrico Mattei.
- Anthoff, David & Hepburn, Cameron & Tol, Richard S.J., 2009. "Equity weighting and the marginal damage costs of climate change," Ecological Economics, Elsevier, vol. 68(3), pages 836-849, January.
- David Anthoff & Cameron Hepburn & Richard S.J. Tol, 2006. "Equity weighting and the marginal damage costs of climate change," Working Papers FNU-121, Research unit Sustainability and Global Change, Hamburg University, revised Dec 2006.
- Shiell, Leslie, 2003. "Equity and efficiency in international markets for pollution permits," Journal of Environmental Economics and Management, Elsevier, vol. 46(1), pages 38-51, July.
- P. Michael Link & Richard S.J. Tol, 2004. "Possible Economic Impacts of a Shutdown of the Thermohaline Circulation: an Application of FUND," Working Papers FNU-42, Research unit Sustainability and Global Change, Hamburg University, revised Apr 2004.
- Partha Dasgupta, 2008. "Discounting climate change," Journal of Risk and Uncertainty, Springer, vol. 37(2), pages 141-169, December.
- William R. Cline, 1992. "Economics of Global Warming, The," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 39, January.
- Böhringer, Christoph & Helm, Carsten, 2008. "On the fair division of greenhouse gas abatement cost," Resource and Energy Economics, Elsevier, vol. 30(2), pages 260-276, May.
- Tol, Richard S. J., 1996. "The damage costs of climate change towards a dynamic representation," Ecological Economics, Elsevier, vol. 19(1), pages 67-90, October.
- Richard Tol, 2002. "Estimates of the Damage Costs of Climate Change. Part 1: Benchmark Estimates," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 21(1), pages 47-73, January.
- Eyckmans, Johan & Proost, Stef & Schokkaert, Erik, 1993. "Efficiency and Distribution in Greenhouse Negotiations," Kyklos, Wiley Blackwell, vol. 46(3), pages 363-97.
- Tol, Richard S. J., 2002. "Welfare specifications and optimal control of climate change: an application of fund," Energy Economics, Elsevier, vol. 24(4), pages 367-376, July.
- Richard S.J. Tol, 2004.
"Multi-Gas Emission Reduction For Climate Change Policy: An Application Of Fund,"
FNU-46, Research unit Sustainability and Global Change, Hamburg University, revised Jun 2004.
- Richard S.J. Tol, 2006. "Multi-Gas Emission Reduction for Climate Change Policy: An Application of Fund," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 235-250.
- Tol, Richard S. J., 2001. "Equitable cost-benefit analysis of climate change policies," Ecological Economics, Elsevier, vol. 36(1), pages 71-85, January.
- Cameron Hepburn & Hakon SÃƒÂƒÃ‚Â¦len & Giles Atkinson, 2008. "Risk, inequality and time in the welfare economics of climate change: is the workhorse model underspecified?," Economics Series Working Papers 400, University of Oxford, Department of Economics.
- Kristen A. Sheeran, 2006. "Who Should Abate Carbon Emissions? A Note," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 35(2), pages 89-98, October.
- J.K. Horowitz, 2002. "Preferences in the Future," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 21(3), pages 241-258, March.
- Samuel Fankhauser & Richard Tol & DAVID Pearce, 1997. "The Aggregation of Climate Change Damages: a Welfare Theoretic Approach," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 10(3), pages 249-266, October.
When requesting a correction, please mention this item's handle: RePEc:esr:wpaper:wp278. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sarah Burns)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.