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

Sandrine Mathy and Céline Guivarch

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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; (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
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00724498v1
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Published in Energy Policy, 2010, 38 (3), pp.1519-1528. ⟨10.1016/j.enpol.2009.11.035⟩

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Journal Article: Climate policies in a second-best world--A case study on India (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00724498

DOI: 10.1016/j.enpol.2009.11.035

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