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Introduction to the Economics of Atmospheric Carbon-Dioxide Control

Amnon Levy ()

Economics Working Papers from School of Economics, University of Wollongong, NSW, Australia

Abstract: The objective of this paper is to provide an introduction to the economics of controlling the stock of carbon-dioxide in the atmosphere. The paper starts with a brief summary of the arguments against a wait-and-see strategy and in favour of controlling carbon emissions. It then provides a basic analysis of the effect of carbon tax on net-cash flow maximising agents’ emissions and offers two possible ways for setting the tax rate. The first one computes an atmospheric carbon-dioxide stock-targeting tax rate with abstinence of some agents, whereas the second considers universal cooperation and computes a welfare-maximising carbon-tax rate. While these computations assume a fixed rate of depletion of the atmospheric stock of carbon dioxide, the last section takes the depletion rate to be dependent on the distribution of the usable land between plants and humans and the change in the usable land to be dependent on the change in the atmospheric carbon-dioxide stock. The usable land allocation required for achieving a target stock of atmospheric carbon dioxide is subsequently computed.

Keywords: Emissions; Carbon-Cycle Imbalance; Atmospheric Carbon Stock; Global Warming; Usable land: Control Measures; Carbon Tax; Plants-Humans Land Allocation (search for similar items in EconPapers)
JEL-codes: Q52 Q54 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2011
New Economics Papers: this item is included in nep-ene and nep-env
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