Climate policies in a second-best world--A case study on India

Sandrine Mathy and Céline Guivarch

Energy Policy, 2010, vol. 38, issue 3, 1519-1528

Abstract: The aim of this article is to analyze the potential for synergies between climate policies and development in a case study on India focusing on the power sector sub-optimalities. To do so, we use Imaclim-R, a dynamic recursive energy-economy model that represents a second best world with market imperfections and short-run adjustments constraints along a long-term growth path. The analysis suggests (i) global carbon pricing induces prohibitive macroeconomic costs for the Indian economy, even in the case of significant financial transfers associated with a global cap-and-trade system and a 'Contraction and Convergence in 2100' allocation scheme and (ii) the most cost efficient climate policies are not uniform carbon pricing only. The implementation of domestic policies suited to the national context, for instance targeting sub-optimalities in the power sector for India, allows reducing significantly the macroeconomic costs induced by international mitigation policies.

Keywords: India; Second-best; world; Synergies; between; climate; mitigation; and; development (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (20)

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Working Paper: Climate policies in a second-best world- a case study on India (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:38:y:2010:i:3:p:1519-1528

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