 Marginal reforms to facilitate climate change mitigation: An assessment of costs and abilities to abate of different countriesNo 1508, Discussion Papers from University of Exeter, Department of Economics Abstract: Employing the by-production approach to modelling emission-generating technologies proposed in Murty, Russell, Levkoff [2012] and Murty [2015] and adapting the policy reform approach to taxation policy in public economics due to Feldstein [1975] and Guesnerie [1977], we propose a methodology to identify profit-increasing and emission non-increasing input and sequestration reforms and to compute marginal abatement costs (MACs) of countries. The proposed formulae are based purely on data that defines the current status-quo and gain significance when long-run abatement plans based on future projections of the economy are implemented in a piecemeal manner. We show that the so derived MAC of any country is the ratio of its reduction in profit (RIP) and its ability to abate (ATA) at the status-quo. The RIP and the ATA measure, respectively, the decrease in profit and the reduction in emission at the status-quo when the abatement strategy that results in the greatest proportional decrease in emission is adopted. While the RIP depends on factors such as the profitability of various inputs and the costs of sequestration at the status-quo, the ATA depends on factors such as the extents of usage of fossil-fuels and carbon sequestration efforts. The formulae derived are used to compute the RIP, ATA, and the MACs of a sample of 118 countries. A wide international variation is found in the estimates, indicating potentials for gains from international trading in emission given the current state of the world economy and its level of technological development. In particular, countries that have submitted the highest emission-reduction targets under the Intended Nationally Determined Contributions (INDC) scheme to the UNFCCC are also among the countries with the highest MACs in our sample, while countries that have thus far shown caution in submitting their INDCs have low MACs. Carbon sequestration efforts such as afforestation contribute towards lowering MACs in countries that do undertake them. Keywords: marginal abatement costs; policy reforms; by-production model of emission generating technology; ability to abate; reduction in profit. (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:exe:wpaper:1508 Access Statistics for this paper More papers in Discussion Papers from University of Exeter, Department of Economics Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.