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North-South convergence and the allocation of CO2 emissions

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Abstract

We postulate a two-region world, comprised of North (calibrated after the US) and South (calibrated after China). Our optimization results show the compatibility of the following three desiderata: (1) Global CO2 emissions follow a conservative path that leads to the stabilization of concentrations at 450 ppm. (2) North and South converge to a path of sustained growth at 1% per year (28.2% per generation) in 2075. (3) During the transition to the steady state, North also grows at 1% per year while South’s rates of growth are markedly higher. The transition paths require a drastic reduction of the share of emissions allocated to North, large investments in knowledge, both in North and South, as well as very large investments in education in South. Surprisingly, in order to sustain North’s utility growth rate, some output must be transferred from South to North during the transition. Although undoubtedly subject to many caveats, our results support a degree of optimism by providing prima facie evidence of the possibility of tackling climate change in a way that is fair both across generations and across regions while allowing for positive rates of human development.

Suggested Citation

  • Humberto Llavador & John E. Roemer & Joaquim Silvestre, 2010. "North-South convergence and the allocation of CO2 emissions," Economics Working Papers 1234, Department of Economics and Business, Universitat Pompeu Fabra.
  • Handle: RePEc:upf:upfgen:1234
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    References listed on IDEAS

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    1. Llavador, Humberto & Roemer, John E. & Silvestre, Joaquim, 2011. "“A dynamic analysis of human welfare in a warming planet”," Journal of Public Economics, Elsevier, vol. 95(11), pages 1607-1620.
    2. Yan Wang & Yudong Yao, 2001. "Sources of China's economic growth, 1952-99 : incorporating human capital accumulation," Policy Research Working Paper Series 2650, The World Bank.
    3. Eaton, Jonathan & Kortum, Samuel, 1999. "International Technology Diffusion: Theory and Measurement," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(3), pages 537-570, August.
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    Cited by:

    1. Leszek Kąsek & Olga Kiuila & Krzysztof Wójtowicz & Tomasz Żylicz, 2012. "Economic effects of differentiated climate action," Working Papers 2012-12, Faculty of Economic Sciences, University of Warsaw.
    2. Olga Kiuila, 2013. "Regional economic effects of differentiated climate action," ERSA conference papers ersa13p334, European Regional Science Association.

    More about this item

    Keywords

    Convergence; CO2 emissions; North-South; climate change; sustainability; growth.;

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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