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Spatial Heat Transport, Polar Amplification and Climate Change Policy

Author

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  • W. Brock

    (Economics Department, University of Wisconsin and University of Missouri)

  • A. Xepapadeas

    (Athens University of Economics and Business)

Abstract

This paper is, to our knowledge, the first paper in climate economics to consider the combination of spatial heat transport and polar amplification. We simplified the problem by stratifying the Earth into latitude belts and assuming, as in North et al. (1981), that the two hemispheres were symmetric. Our results suggest that it is possible to build climate economic models that include the very real climatic phenomena of heat transport and polar amplification and still maintain analytical tractability. We derive optimal fossil fuel paths under heat transport with and without polar amplification. We show that the optimal tax function depends not only on the distribution of welfare weights but also on the distribution of population across latitudes, the distribution of marginal damages across latitudes and cross latitude in- teractions of marginal damages, and climate dynamics. We also determine optimal taxes per unit of emission and show that, in contrast to the standard results suggesting spatially uniform emission taxes, poorer latitudes should be taxed less per unit emissions than richer latitudes.

Suggested Citation

  • W. Brock & A. Xepapadeas, 2016. "Spatial Heat Transport, Polar Amplification and Climate Change Policy," Working Papers 2016.03, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2016.03
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    References listed on IDEAS

    as
    1. Boucekkine, R. & Camacho, C. & Fabbri, G., 2013. "Spatial dynamics and convergence: The spatial AK model," Journal of Economic Theory, Elsevier, vol. 148(6), pages 2719-2736.
    2. Boucekkine, Raouf & Camacho, Carmen & Zou, Benteng, 2009. "Bridging The Gap Between Growth Theory And The New Economic Geography: The Spatial Ramsey Model," Macroeconomic Dynamics, Cambridge University Press, vol. 13(01), pages 20-45, February.
    3. Ian Parry & Chandara Veung & Dirk Heine, 2015. "How Much Carbon Pricing Is In Countries’ Own Interests? The Critical Role Of Co-Benefits," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 6(04), pages 1-26, November.
    4. Klaus Desmet & Esteban Rossi-Hansberg, 2010. "On Spatial Dynamics," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 43-63.
    5. Desmet, Klaus & Rossi-Hansberg, Esteban, 2015. "On the spatial economic impact of global warming," Journal of Urban Economics, Elsevier, vol. 88(C), pages 16-37.
    6. Brock, William & Engström, Gustav & Xepapadeas, Anastasios, 2014. "Spatial climate-economic models in the design of optimal climate policies across locations," European Economic Review, Elsevier, vol. 69(C), pages 78-103.
    7. William Brock & Anastasios Xepapadeas, 2015. "Spatial Heat Transport, Polar Amplification and Climate Change Policy," DEOS Working Papers 1515, Athens University of Economics and Business.
    8. Simon Dietz & Nicholas Stern, 2015. "Endogenous Growth, Convexity of Damage and Climate Risk: How Nordhaus' Framework Supports Deep Cuts in Carbon Emissions," Economic Journal, Royal Economic Society, vol. 0(583), pages 574-620, March.
    9. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2012. "Temperature Shocks and Economic Growth: Evidence from the Last Half Century," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(3), pages 66-95, July.
    10. Yongyang Cai & Kenneth L. Judd & Thomas S. Lontzek, 2015. "The Social Cost of Carbon with Economic and Climate Risks," Papers 1504.06909, arXiv.org, revised Apr 2015.
    11. Mendelsohn, Robert & Dinar, Ariel & Williams, Larry, 2006. "The distributional impact of climate change on rich and poor countries," Environment and Development Economics, Cambridge University Press, vol. 11(02), pages 159-178, April.
    12. Brock, William A. & Engström, Gustav & Grass, Dieter & Xepapadeas, Anastasios, 2013. "Energy balance climate models and general equilibrium optimal mitigation policies," Journal of Economic Dynamics and Control, Elsevier, vol. 37(12), pages 2371-2396.
    13. Dietz, Simon & Stern, Nicholas, 2015. "Endogenous growth, convexity of damage and climate risk: how Nordhaus’ framework supports deep cuts in carbon emissions," LSE Research Online Documents on Economics 58406, London School of Economics and Political Science, LSE Library.
    14. Elisabeth J. Moyer & Mark D. Woolley & Nathan J. Matteson & Michael J. Glotter & David A. Weisbach, 2014. "Climate Impacts on Economic Growth as Drivers of Uncertainty in the Social Cost of Carbon," The Journal of Legal Studies, University of Chicago Press, vol. 43(2), pages 401-425.
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    Cited by:

    1. Brock, W. & Xepapadeas, A., 2017. "Climate change policy under polar amplification," European Economic Review, Elsevier, vol. 99(C), pages 93-112.
    2. William Brock & Anastasios Xepapadeas, 2015. "Spatial Heat Transport, Polar Amplification and Climate Change Policy," DEOS Working Papers 1515, Athens University of Economics and Business.

    More about this item

    Keywords

    Climate Change; Heat Transport; Polar Amplification; Welfare Maximization; Fossil Fuels; Optimal Taxation;

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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