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Deforestation as an externality problem to be solved efficiently and fairly

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  • Charles Figuières
  • Estelle Midler

Abstract

The international community recently agreed on a mechanism called REDD+ to reduce deforestation in tropical countries. However the mechanism, by its very nature, has no reason to induce a Pareto optimal reduction of deforestation. The aim of this article is to propose an alternative class of mechanisms for negative externalities that implements Pareto optimal outcomes as Nash Subgame Perfect Equilibria, and that satisfies some fairness properties, in particular two original axioms of environmental responsibility. Outcomes are individually rational and the scheme does take into account environmental responsibility in the sense of our two axioms. However, envy freeness, even in a weak form adapted to the deforestation problem, turns out to be hard to achieve without dropping the other properties.

Suggested Citation

  • Charles Figuières & Estelle Midler, 2011. "Deforestation as an externality problem to be solved efficiently and fairly," Working Papers 11-17, LAMETA, Universtiy of Montpellier, revised Aug 2011.
  • Handle: RePEc:lam:wpaper:11-17
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    File URL: http://www.lameta.univ-montp1.fr/Documents/DR2011-17.pdf
    File Function: First version, 2011
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    References listed on IDEAS

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    1. Marc Fleurbaey & François Maniquet, 2006. "Compensation and responsibility," Working Papers halshs-00121367, HAL.
    2. Danziger, Leif & Schnytzer, Adi, 1991. "Implementing the Lindahl voluntary-exchange mechanism," European Journal of Political Economy, Elsevier, vol. 7(1), pages 55-64, April.
    3. Yan Chen & Robert Gazzale, 2004. "When Does Learning in Games Generate Convergence to Nash Equilibria? The Role of Supermodularity in an Experimental Setting," American Economic Review, American Economic Association, pages 1505-1535.
    4. Fleurbaey, Marc, 2012. "Fairness, Responsibility, and Welfare," OUP Catalogue, Oxford University Press, number 9780199653591.
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    Cited by:

    1. Mireille Chiroleu-Assouline & Jean-Christophe Poudou & Sébastien Roussel, 2012. "North / South Contractual Design through the REDD+ Scheme," Working Papers 12-31, LAMETA, Universtiy of Montpellier, revised Oct 2012.

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