Global resilience to climate change: Examining global economic and environmental performance resulting from a global carbon dioxide market

Flavius Badau, Rolf Färe and Munisamy Gopinath

Resource and Energy Economics, 2016, vol. 45, issue C, 46-64

Abstract: In this study, we investigated global economic and environmental resilience in the presence of climate change. In particular, we examine the possibility of mitigating carbon dioxide (CO2) emissions without stressing standards of living. Here, we set up a cross-country CO2 market constrained by a quota, where CO2 is optimally re-allocated based on relative shadow prices of the pollutant. The objective is to stabilize global emissions without hindering global incomes and in the process achieve a single CO2 price. We introduce a re-allocation model that takes into account each country’s underlying polluting technology. The model solutions are then used to investigate whether a single, global price for CO2 is attainable. Our results suggest that global CO2 emissions could stabilize without stressing global incomes, with a global CO2 market achieving equilibrium. With a CO2 market, countries would then have the incentive to consider adopting, improving, or investing in additional abatement technologies to move beyond current capabilities, while continuing to increase standards of living.

Keywords: Cap and trade; Re-allocation models; Directional distance function; Shadow prices; Carbon dioxide (CO2); Polluting technology (search for similar items in EconPapers)
JEL-codes: F64 Q54 Q56 Q58 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0928765516301221
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:45:y:2016:i:c:p:46-64

DOI: 10.1016/j.reseneeco.2016.05.002

Access Statistics for this article

Resource and Energy Economics is currently edited by J. F. Shogren and S. Smulders

More articles in Resource and Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().