Interregional burden-sharing of greenhouse gas mitigation in the United States

Adam Rose and ZhongXiang Zhang

MPRA Paper from University Library of Munich, Germany

Abstract: Emissions trading is an attractive candidate for implementing greenhouse gas mitigation, because it can promote both efficiency and equity. This paper analyzes the interregional impacts of alternative allocations of carbon dioxide emission permits within the U.S. The analysis is performed with the aid of a nonlinear programming model for ten EPA Regions and for six alternative permit distribution formulas. The reason that various alternatives need to be considered is that there is no universal consensus on the best definition of equity. Advance knowledge of absolute and relative regional economic impacts provides policy-makers with a stronger basis for making the choice. The analysis yields several useful results. First, the simulations indicate that no matter how permits are allocated, this policy instrument can substantially reduce the cost of greenhouse gas mitigation for the U.S. in comparison to a system of fixed quotas for each of its regions. Interestingly, the welfare impacts of several of the allocation formulas differ only slightly despite the large differences in their philosophical underpinnings. Also, the results for some equity criteria differ greatly from their application in the international domain. For example, the Egalitarian (per capita) criterion results in the relatively greatest cost burden being incurred by one of the regions of the U.S. with the lowest per capita income.

Keywords: Tradeable emission permits; climate policy; interregional equity (search for similar items in EconPapers)
JEL-codes: Q48 Q52 Q54 Q58 (search for similar items in EconPapers)
Date: 2003-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Journal Article: Interregional burden-sharing of greenhouse gas mitigation in the United States (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:12893

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