Unilateral Climate Policy: Harmful or Even Disastrous?

Hendrik Ritter and Mark Schopf

Environmental & Resource Economics, 2014, vol. 58, issue 1, 155-178

Abstract: This paper deals with possible foreign reactions to unilateral carbon demand reducing policies. It differentiates between demand side and supply side reactions as well as between intra- and inter-temporal shifts in greenhouse gas emissions. In our model, we integrate a stock-dependent marginal physical cost of extracting fossil fuels into Eichner and Pethig’s (Int Econ Rev 52(3):767–805, 2011 ) general equilibrium carbon leakage model. The results are as follows: Under similar but somewhat tighter conditions than those derived by Eichner and Pethig (Int Econ Rev 52(3):767–805, 2011 ), a weak green paradox arises. Furthermore, a strong green paradox can arise in our model under supplementary constraints. That means a “green” policy measure might not only lead to a harmful acceleration of fossil fuel extraction but to an increase in the cumulative climate damages at the same time. In some of these cases there is even a cumulative extraction expansion, which we consider disastrous. Copyright Springer Science+Business Media Dordrecht 2014

Keywords: Natural resources; Carbon leakage; Green paradox; Q31; Q32; Q54 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (36)

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Related works:
Working Paper: Unilateral Climate Policy: Harmful or even Disastrous? (2013)
Working Paper: Unilateral Climate Policy: Harmful or even Disastrous? (2013)
Working Paper: Reassessing the Green Paradox (2012)
Working Paper: Reassessing the Green Paradox (2012)
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DOI: 10.1007/s10640-013-9697-0

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