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Can Climate Policy Enhance Sustainability?

Author

Listed:
  • Lorenza Campagnolo

    (Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change and Advanced School of Economics)

  • Carlo Carraro

    (Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change and Ca’ Foscari University of Venice)

  • Marinella Davide

    (Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change)

  • Fabio Eboli

    (Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change)

  • Elisa Lanzi

    (Fondazione Eni Enrico Mattei and Advanced School of Economics)

  • Ramiro Parrado

    (Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change)

Abstract

Implementing an effective climate policy is one of the main challenges for our future. Even though ambitious mitigation targets are necessarily costly, curbing GHG emissions can prevent future irreversible impacts of climate change on human kind and the environment. Climate policy is therefore crucial for present and future generations. Nonetheless, one may wonder whether the economic and social dimensions of future global development could be harmed by climate policy. This paper addresses this question by examining some recent developments in international climate policy and considering different levels of cooperation that may arise in light of the outcomes of the Conference of the Parties recently held in Doha. Then it explores whether the implementation of various climate policy scenarios would help enhancing sustainability or rather whether there is a trade-off between climate policy and economic development and/or social cohesion. This is done by using a new comprehensive indicator, the FEEM Sustainability Index (FEEM SI), which aggregates several economic, social, and environmental indicators. The FEEM SI index is built into a recursive-dynamic Computable General Equilibrium (CGE) model of the world economy, thus offering the possibility of projecting all indicators into the future, and therefore delivering a perspective assessment of sustainability under different future climate policy scenarios. We find that the environmental component of sustainability improves at the regional and world level thanks to the GHG emission reductions achieved through climate policy. However, the economic and social components are affected negatively yet marginally. Hence, overall sustainability increases in all scenarios. If the USA, Canada, Japan and Russia would not contribute to mitigating future GHG emissions, as envisioned in one of our scenarios, sustainability in these countries would decrease and the overall effectiveness of climate policy in enhancing global sustainability would be offset.

Suggested Citation

  • Lorenza Campagnolo & Carlo Carraro & Marinella Davide & Fabio Eboli & Elisa Lanzi & Ramiro Parrado, 2013. "Can Climate Policy Enhance Sustainability?," Working Papers 2013.10, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2013.10
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    References listed on IDEAS

    as
    1. Carlo Carraro & Valentina Bosetti & Alessandra Sgobbi & Massimo Tavoni, 2008. "Delayed Action and Uncertain Targets. How Much Will Climate Policy Cost?," Working Papers 2008_27, Department of Economics, University of Venice "Ca' Foscari".
    2. Eboli, Fabio & Parrado, Ramiro & Roson, Roberto, 2010. "Climate-change feedback on economic growth: explorations with a dynamic general equilibrium model," Environment and Development Economics, Cambridge University Press, vol. 15(05), pages 515-533, October.
    3. Caterina Cruciani & Silvio Giove & Mehmet Pinar & Matteo Sostero, 2012. "Constructing the FEEM Sustainability Index: A Choquet-Integral Application," Working Papers 2012.50, Fondazione Eni Enrico Mattei.
    4. Parrado, Ramiro & De Cian, Enrica, 2014. "Technology spillovers embodied in international trade: Intertemporal, regional and sectoral effects in a global CGE framework," Energy Economics, Elsevier, vol. 41(C), pages 76-89.
    5. Burniaux, Jean-Marc & Truong Truong, 2002. "GTAP-E: An Energy-Environmental Version of the GTAP Model," GTAP Technical Papers 923, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    6. Riahi, Keywan & Kriegler, Elmar & Johnson, Nils & Bertram, Christoph & den Elzen, Michel & Eom, Jiyong & Schaeffer, Michiel & Edmonds, Jae & Isaac, Morna & Krey, Volker & Longden, Thomas & Luderer, Gu, 2015. "Locked into Copenhagen pledges — Implications of short-term emission targets for the cost and feasibility of long-term climate goals," Technological Forecasting and Social Change, Elsevier, vol. 90(PA), pages 8-23.
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    8. Böhringer, Christoph & Löschel, Andreas, 2004. "Measuring Sustainable Development: The Use of Computable General Equilibrium Models," ZEW Discussion Papers 04-14, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    9. Francesco Bosello & Ramiro Parrado, 2014. "Climate Change Impacts and Market Driven Adaptation: the Costs of Inaction Including Market Rigidities," Working Papers 2014.64, Fondazione Eni Enrico Mattei.
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    More about this item

    Keywords

    Climate policy; Computable General Equilibrium (CGE) Models; Sustainability; Indicators;

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • 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
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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