Does Distribution Matter? When Flexibility and Pareto-Efficiency in Greenhouse Gas Abatement

Gunter Stephan and Georg M ller-F Rstenberger

Diskussionsschriften from Universitaet Bern, Departement Volkswirtschaft

Abstract: This paper analyses banking and borrowing of carbon emission rights within the framework of a simple, integrated assessment model. Breaking the world economy in just two regions it will be shown: (1) Increasing when-flexibility in greenhouse gas abatement through banking and borrowing of carbon emission permits has a positive effect on welfare for regions with a poor endowment in carbon emission rights, but negatively affects rich-endowed regions. (2) Intergenerational fairness advocates intertemporal flexibility in greenhouse gas abatement, irrespectively of the initial allocation of carbon right. (3) Changing the degree of when-flexibility has only a small impact on global climate damages. (4) This is in contrast to the observation that the initial allocation of carbon emission rights has a significant impact on atmospheric carbon.

Keywords: Carbon rights; climate policy; integrated assessment; banking and trade (search for similar items in EconPapers)
JEL-codes: F2 Q4 (search for similar items in EconPapers)
Date: 2001-07
New Economics Papers: this item is included in nep-ene and nep-env
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ube:dpvwib:dp0102

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