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Wide and Narrow Approaches in Climate Change Policies: The Case of Spain

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  • Miguel Rodríguez
  • Xavier Labandeira

Abstract

This paper deals with the effects of emissions trading, a standard economic instrument to control greenhouse gas emissions, in a particular country. After distributing the Kyoto-mandated allocation among member states, the European Commission introduced a rather conventional emissions trading scheme in 2005. The extent of application of the market is limited, with only certain sectors being subject to it (mostly industries), and tradable permits are freely allocated. Both facts have important consequences in efficiency and distributional terms, also raising (normative) concerns on the actual and desirable regulatory approximation. The paper mainly focuses on the (positive) efficiency and distributional effects of the EU emissions trading system, with the use of a static general equilibrium model for the Spanish economy, also incorporating some hypothetical simulations (broader scope of the market, carbon taxation). The results indicate that the narrow scope of the EU emission trading market generates efficiency costs and relevant distributional effects.

Suggested Citation

  • Miguel Rodríguez & Xavier Labandeira, 2007. "Wide and Narrow Approaches in Climate Change Policies: The Case of Spain," Working Papers 2007-39, FEDEA.
  • Handle: RePEc:fda:fdaddt:2007-39
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    File URL: http://documentos.fedea.net/pubs/dt/2007/dt-2007-39.pdf
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    References listed on IDEAS

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    1. Bovenberg, A. Lans & Goulder, Lawrence H., 2002. "Environmental taxation and regulation," Handbook of Public Economics,in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 23, pages 1471-1545 Elsevier.
    2. Fullerton, Don & Metcalf, Gilbert E., 2001. "Environmental controls, scarcity rents, and pre-existing distortions," Journal of Public Economics, Elsevier, vol. 80(2), pages 249-267, May.
    3. Melchor Fernandez & Casiano Manrique de Lara, 2004. "La matriz de contabilidad nacional: Un método alternativo de presentación de las cuentas nacionales," Documentos de trabajo - Analise Economica 0030, IDEGA - Instituto Universitario de Estudios e Desenvolvemento de Galicia.
    4. A. Lans Bovenberg & Lawrence H. Goulder & Derek J. Gurney, 2005. "Efficiency Costs of Meeting Industry-Distributional Constraints Under Environmental Permits and Taxes," RAND Journal of Economics, The RAND Corporation, vol. 36(4), pages 950-970, Winter.
    5. Faehn, Taran & Holmoy, Erling, 2003. "Trade liberalisation and effects on pollutive emissions to air and deposits of solid waste. A general equilibrium assessment for Norway," Economic Modelling, Elsevier, vol. 20(4), pages 703-727, July.
    6. Löschel, Andreas & Lange, Andreas & Hoffmann, Tim & Böhringer, Christoph & Moslener, Ulf, 2004. "Assessing Emission Allocation in Europe: An Interactive Simulation Approach," ZEW Discussion Papers 04-40, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    7. Bohringer, Christoph & Rutherford, Thomas F., 1997. "Carbon Taxes with Exemptions in an Open Economy: A General Equilibrium Analysis of the German Tax Initiative," Journal of Environmental Economics and Management, Elsevier, vol. 32(2), pages 189-203, February.
    8. Ballard, Charles L & Shoven, John B & Whalley, John, 1985. "General Equilibrium Computations of the Marginal Welfare Costs of Taxes in the United States," American Economic Review, American Economic Association, vol. 75(1), pages 128-138, March.
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    Cited by:

    1. Xavier Labandeira & José María Labeaga & Miguel Rodríguez, 2008. "The Costs of Kyoto Adjustments for Spanish Households," Working Papers 2008-02, FEDEA.

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