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Contraction of global carbon emissions: how acceptable are alternative emission entitlement schemes

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  • Böhringer, Christoph
  • Welsch, Heinz

Abstract

The allocation of emissions entitlements across countries is the single most controversial issue in international climate policy. Extreme positions within the policy debate range from entitlement based on current emission patterns (CEP) to equal-per-capita (EPC) allocations.Convergence (COV) from an initial CEP allocation towards EPC emission rights represents a reconciliation of the two. This paper maintains that the acceptability of alternative entitlement schemes depends on their implications for economic welfare and uses a dynamic multi-region general equilibrium model for a comparative economic assessment of the above allocation rules. We find welfare implications for the varius regions to be strongly influenced by changes in the terms of trade. Especially, regions may experience considerable welfare losses even under entitlement schemes which impose no binding emission constraint on them. Among the arrangements examined, COV cum emissions trading stands out for offering the developing countries substantial incentives for paticipation in the international greenhouse gas abatement effort without imposing excessive burdens on the industrialized countries.

Suggested Citation

  • Böhringer, Christoph & Welsch, Heinz, 2001. "Contraction of global carbon emissions: how acceptable are alternative emission entitlement schemes," ZEW Discussion Papers 01-65, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:5421
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    File URL: https://www.econstor.eu/bitstream/10419/24486/1/dp0165.pdf
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    References listed on IDEAS

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    1. Rutherford, Thomas F, 1999. "Applied General Equilibrium Modeling with MPSGE as a GAMS Subsystem: An Overview of the Modeling Framework and Syntax," Computational Economics, Springer;Society for Computational Economics, vol. 14(1-2), pages 1-46, October.
    2. Welsch, Heinz, 1993. "A CO2 agreement proposal with flexible quotas," Energy Policy, Elsevier, vol. 21(7), pages 748-756, July.
    3. Adam Rose & Brandt Stevens & Jae Edmonds & Marshall Wise, 1998. "International Equity and Differentiation in Global Warming Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 12(1), pages 25-51, July.
    4. Christoph Böhringer & Thomas Rutherford, 2002. "Carbon Abatement and International Spillovers," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 22(3), pages 391-417, July.
    5. Lindbeck, Assar, 1983. "The Recent Slowdowns of Productivity Growth," Economic Journal, Royal Economic Society, vol. 93(369), pages 13-34, March.
    6. Böhringer, Christoph & Jensen, Jesper & Rutherford, Thomas F., 1999. "Energy market projections and differentiated carbon abatement in the European Union," ZEW Discussion Papers 99-11, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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    More about this item

    Keywords

    climate policy; economic welfare; international equity; emissions trading; computable general equilibrium modeling;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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