Unilateral Climate Policy: Harmful or even Disastrous?

Hendrik Ritter and Mark Schopf

No 62, Working Papers CIE from Paderborn University, CIE Center for International Economics

Abstract: This paper deals with possible foreign reactions to domestic carbon demand reducing policies. It differentiates between demand side and supply side reactions as well as between intra- and intertemporal shifts of greenhouse gas emissions. In our model, we integrate a stock-dependent marginal physical cost of extracting fossil fuels into Eichner & Pethig's (2011) general equilibrium carbon leakage model. The results are as follows: Under similar but somewhat tighter conditions than those derived by Eichner & Pethig (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.

Keywords: Natural Resources; Carbon Leakage; Green Paradox (search for similar items in EconPapers)
JEL-codes: Q31 Q32 Q54 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2013-06
New Economics Papers: this item is included in nep-ene and nep-env
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Citations: View citations in EconPapers (11)

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http://groups.uni-paderborn.de/wp-wiwi/RePEc/pdf/ciepap/WP62.pdf (application/pdf)

Related works:
Journal Article: Unilateral Climate Policy: Harmful or Even Disastrous? (2014)
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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Persistent link: https://EconPapers.repec.org/RePEc:pdn:ciepap:62

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