The Polluter Pays Principle And Cost-Benefit Analysis Of Climate Change: An Application Of Fund
I compare and contrast five climate scenarios: (1) no climate policy; (2) non-cooperative cost-benefit analysis (NC CBA); (3) NC CBA with international permit trade; (4) NC CBA with joint and several liability for climate change damages; and (5) NC CBA with liability proportional to a country’s share in cumulative emissions. As estimates of the marginal damage costs are low, standard NC CBA implies only limited emission abatement. With international permit trade, emission abatement is even less, as the carbon tax is reduced in countries with fast-growing emissions, and because a permit market ignores the positive, dynamic externalities of abatement. Proportional liability shifts abatement effort towards the richer countries, but away from the fast-growing economies; again, long-term, global emission abatement is reduced. Joint and several liability would lead to more stringent climate policy. These findings are qualitatively robust to the size and accounting of climate change impacts, to the definition of liability, and to the baseline scenario.
|Date of creation:||Feb 2006|
|Date of revision:||Feb 2006|
|Contact details of provider:|| Postal: |
Phone: +49 40 42838 6593
Fax: +49 40 42838 7009
Web page: http://www.fnu.zmaw.de/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Farrow, Scott, 1998. "Environmental equity and sustainability: rejecting the Kaldor-Hicks criteria," Ecological Economics, Elsevier, vol. 27(2), pages 183-188, November.
- Richard Tol, 2002. "Estimates of the Damage Costs of Climate Change, Part II. Dynamic Estimates," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 21(2), pages 135-160, February.
- Sugiyama, Taishi & Deshun, Liu, 2004. "Must developing countries commit quantified targets? Time flexibility and equity in climate change mitigation," Energy Policy, Elsevier, vol. 32(5), pages 697-704, March.
- Ridgley, Mark A, 1996. "Fair sharing of greenhouse gas burdens," Energy Policy, Elsevier, vol. 24(6), pages 517-529, June.
- Byrne, John & Wang, Young-Doo & Lee, Hoesung & Kim, Jong-dall, 1998. "An equity- and sustainability-based policy response to global climate change," Energy Policy, Elsevier, vol. 26(4), pages 335-343, March.
- Tol, Richard S. J., 2002. "Welfare specifications and optimal control of climate change: an application of fund," Energy Economics, Elsevier, vol. 24(4), pages 367-376, July.
- Jean-Charles Hourcade & Philippe Ambrosi & Stéphane Hallegatte & Franck Lecocq & Patrice Dumas & Minh Ha-Duong, 2003. "Optimal control models and elicitation of attitudes towards climate damages," Post-Print halshs-00000966, HAL.
- Richard S.J. Tol, 1999. "Kyoto, Efficiency, and Cost-Effectiveness: Applications of FUND," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 131-156.
- Manne, Alan & Mendelsohn, Robert & Richels, Richard, 1995. "MERGE : A model for evaluating regional and global effects of GHG reduction policies," Energy Policy, Elsevier, vol. 23(1), pages 17-34, January.
- P. Michael Link & Richard S.J. Tol, 2004. "Possible Economic Impacts of a Shutdown of the Thermohaline Circulation: an Application of FUND," Working Papers FNU-42, Research unit Sustainability and Global Change, Hamburg University, revised Apr 2004.
- Whitmore, Adam, 2000. "Compulsory environmental liability insurance as a means of dealing with climate change risk," Energy Policy, Elsevier, vol. 28(11), pages 739-741, September.
- Nordhaus, William D, 1991. "To Slow or Not to Slow: The Economics of the Greenhouse Effect," Economic Journal, Royal Economic Society, vol. 101(407), pages 920-37, July.
- Pearce, David, 1976. "The Limits of Cost-Benefit Analysis as a Guide to Environmental Policy," Kyklos, Wiley Blackwell, vol. 29(1), pages 97-112.
- Tol, Richard S. J., 1996. "The damage costs of climate change towards a dynamic representation," Ecological Economics, Elsevier, vol. 19(1), pages 67-90, October.
- Stephen C Peck & Thomas J. Teisberg, 1992. "CETA: A Model for Carbon Emissions Trajectory Assessment," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 55-78.
- Richard Tol, 2002. "Estimates of the Damage Costs of Climate Change. Part 1: Benchmark Estimates," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 21(1), pages 47-73, January.
- Nordhaus, William D., 1993.
"Rolling the 'DICE': an optimal transition path for controlling greenhouse gases,"
Resource and Energy Economics,
Elsevier, vol. 15(1), pages 27-50, March.
- William D. Nordhaus, 1992. "Rolling the 'Dice': An Optimal Transition Path for Controlling Greenhouse Gases," Cowles Foundation Discussion Papers 1019, Cowles Foundation for Research in Economics, Yale University.
- Richard S.J. Tol, 2004.
"Multi-Gas Emission Reduction For Climate Change Policy: An Application Of Fund,"
FNU-46, Research unit Sustainability and Global Change, Hamburg University, revised Jun 2004.
- Richard S.J. Tol, 2006. "Multi-Gas Emission Reduction for Climate Change Policy: An Application of Fund," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 235-250.
- Adam Rose & Brandt Stevens & Jae Edmonds & Marshall Wise, 1998. "International Equity and Differentiation in Global Warming Policy," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 12(1), pages 25-51, July.
- Tol, Richard S. J. & Verheyen, Roda, 2004. "State responsibility and compensation for climate change damages--a legal and economic assessment," Energy Policy, Elsevier, vol. 32(9), pages 1109-1130, June.
- Maddison, David, 1995. "A cost-benefit analysis of slowing climate change," Energy Policy, Elsevier, vol. 23(4-5), pages 337-346.
- Claudia Kemfert & Richard S.J. Tol, 2001.
"Equity, International Trade and Climate Policy,"
FNU-5, Research unit Sustainability and Global Change, Hamburg University, revised Jan 2001.
- Claudia Kemfert & Richard Tol, 2002. "Equity, international trade and climate policy," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 2(1), pages 23-48, March.
- Azar, Christian & Sterner, Thomas, 1996. "Discounting and distributional considerations in the context of global warming," Ecological Economics, Elsevier, vol. 19(2), pages 169-184, November.
- Goulder, Lawrence H. & Mathai, Koshy, 2000. "Optimal CO2 Abatement in the Presence of Induced Technological Change," Journal of Environmental Economics and Management, Elsevier, vol. 39(1), pages 1-38, January.
- Gerlagh, Reyer & Keyzer, Michiel A., 2001. "Sustainability and the intergenerational distribution of natural resource entitlements," Journal of Public Economics, Elsevier, vol. 79(2), pages 315-341, February.
- Minh Ha-Duong & Michael Grubb & Jean-Charles Hourcade, 1997. "Influence of socioeconomic inertia and uncertainty on optimal CO2-emission abatement," Post-Print halshs-00002452, HAL.
When requesting a correction, please mention this item's handle: RePEc:sgc:wpaper:98. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Uwe Schneider)
If references are entirely missing, you can add them using this form.