Unequal vulnerability to climate change and the transmission of adverse effects through international trade

Karine Constant and Marion Davin ()

No 2018.01, Working Papers from FAERE - French Association of Environmental and Resource Economists

Abstract: In this paper, we consider the unequal distribution of climate change damages in the world and we examine how the underlying costs can spread from a vulnerable to a non-vulnerable country through international trade. To focus on such indirect effects, we treat this topic in a North-South trade overlapping generations model in which the South is vulnerable to the damages entailed by global pollution while the North is not. We show that the impact of climate change in the South can be a source of welfare loss for northern consumers, in both the short and the long run. In the long run, an increase in the South’s vulnerability can reduce the welfare in the North economy even in the case in which it improves its terms of trade. In the short run, the South’s vulnerability can also represent a source of intergenerational inequity in the North. Therefore, we emphasize the strong economic incentives for non-vulnerable -and a fortiori less-vulnerable – economies to reduce the climate change damages on – more – vulnerable countries.

Keywords: International Trade; Climate change; Heterogeneous damages; Overlapping generations. (search for similar items in EconPapers)
JEL-codes: F18 F43 O41 Q56 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2018-01
New Economics Papers: this item is included in nep-env and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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http://faere.fr/pub/WorkingPapers/Constant_Davin_FAERE_WP2018.01.pdf First version, 2018 (application/pdf)

Related works:
Journal Article: Unequal Vulnerability to Climate Change and the Transmission of Adverse Effects Through International Trade (2019)
Working Paper: Unequal vulnerability to climate change and the transmission of adverse effects through international trade (2018)
Working Paper: Unequal vulnerability to climate change and the transmission of adverse effects through international trade (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:fae:wpaper:2018.01

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