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Regional Market-Based Climate Policy in North America: Efficient, Effective, Fair?


  • Sven Rudolph

    () (University of Kassel)

  • Takeshi Kawakatsu

    (University of Kyoto)

  • Achim Lerch

    (Hessian University of Cooperative Education)


Despite President Obama’s current interest in climate policy, market-based climate policy on the US federal level still appears to be deadlocked. The same is true for Canada, which has aligned its climate policy to the US. However, regional activities are more promising as British Columbia and California have started using market-based approaches recently. Against this background, the paper asks: Can state level market-based climate policy be a sustainable alternative or sup-plement to federal action? Which of the two programs does better in terms of fulfilling ambitious sustainability criteria? How can the programs be improved? In order to answer these questions, in a comparative fashion, the paper analyzes the design and the results of the British Columbia Carbon Tax and the California Cap-and-Trade Program and evaluates them based on sustainability criteria. By doing so, the paper provides a comparative evaluation of two North American sub-national level market-based climate policy programs, shows the significance and the challenges of such regional initiatives, identifies best-practice design elements, and provides recommendations for regional market-based climate policy design.

Suggested Citation

  • Sven Rudolph & Takeshi Kawakatsu & Achim Lerch, 2013. "Regional Market-Based Climate Policy in North America: Efficient, Effective, Fair?," MAGKS Papers on Economics 201345, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  • Handle: RePEc:mar:magkse:201345

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    Climate Policy Instruments; Emissions Trading; Carbon Tax; USA; Canada; California; British Columbia;

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • 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

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