Global Climate Change and the Equity-Efficiency Puzzle
There is a broad consensus that the costs of abatement of global climate change can be reduced efficiently through the assignment of quota rights, and through international trade in these rights. But there is no consensus on whether the initial assignment of emission permits can affect the Pareto-optimal global level of abatement. This paper provides some insight into the equity-efficiency puzzle. Qualitative results are obtained from a small-scale model, and then quantitative evidence of separability is obtained from MERGE, a multi-region integrated assessment model. It is shown that if all the costs of climate change can be expressed in terms of GDP losses, Pareto-efficient abatement strategies are independent of the initial allocation of emission rights. This is the case sometimes described as "market damages". If, however, different regions assign different values to non-market damages such as species losses, different sharing rules may affect the Pareto-optimal level of greenhouse gas abatement. Separability may then be demonstrated only in specific cases (e.g. identical welfare functions or quasi-linearity of preferences or small shares of wealth devoted to abatement)
|Date of creation:||Apr 2003|
|Contact details of provider:|| Postal: Schanzeneckstr. 1, PF 8573, CH-3001 Bern|
Phone: 0041 31 631 45 06
Fax: 41 31 631 37 83
Web page: http://www.vwi.unibe.ch/content/publikationen/index_eng.html
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.:
- Copeland, Brian R. & Taylor, M. Scott, 2005.
"Free trade and global warming: a trade theory view of the Kyoto protocol,"
Journal of Environmental Economics and Management,
Elsevier, vol. 49(2), pages 205-234, March.
- Copeland,B.R. & Taylor,M.S., 2000. "Free trade and global warming : a trade theory view of the Kyoto protocol," Working papers 4, Wisconsin Madison - Social Systems.
- Brian R. Copeland & M. Scott Taylor, 2000. "Free Trade and Global Warming: A Trade Theory View of the Kyoto Protocol," NBER Working Papers 7657, National Bureau of Economic Research, Inc.
- McKibbin, Warwick J. & Shackleton, Robert & Wilcoxen, Peter J., 1999.
"What to expect from an international system of tradable permits for carbon emissions,"
Resource and Energy Economics,
Elsevier, vol. 21(3-4), pages 319-346, August.
- Warwick J. McKibbin & Robert Shackleton & Peter J. Wilcoxen, 1998. "What to Expect from an International System of Tradable Permits for Carbon Emmisions," Economics and Environment Network Working Papers 9804, Australian National University, Economics and Environment Network.
- Graciela Chichilnisky & Geoffrey Heal, 1993.
"Who Should Abate Carbon Emissions? An International Viewpoint,"
NBER Working Papers
4425, National Bureau of Economic Research, Inc.
- Chichilnisky, Graciela & Heal, Geoffrey, 1994. "Who should abate carbon emissions? : An international viewpoint," Economics Letters, Elsevier, vol. 44(4), pages 443-449, April.
- 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.
- 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 920-937, July.
When requesting a correction, please mention this item's handle: RePEc:ube:dpvwib:dp0306. 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: (Silvia Glusstein-Gerber)
If references are entirely missing, you can add them using this form.