Environmental and Resource Economics, Integrated Assessment, Climate Economics

 

 

“Optimal Global Dynamic Carbon Abatement”

 

Abstract: I investigate the optimal distribution of greenhouse gas emission reductions over time and between regions. Sandmo (2006) has shown that optimal marginal abatement costs should differ between different countries if no lump-sum transfers between those countries are possible. I extend his static result to a dynamic stock externality, so that it can be applied to climate change. I then use the integrated assessment model FUND to compute optimal marginal carbon abatement costs schedules for sixteen world regions for the next century. I find that if lump-sum transfers are not possible, a utilitarian global planner would have rich countries mitigate more and poor countries less than in a policy that is based purely on efficiency considerations. Ruling out lump-sum transfers has an ambiguous effect on the optimal quantity of global emission reductions: under standard assumptions about inequality aversion, optimal emission reductions are lower if lump-sum transfers between countries are ruled out. In a sensitivity analysis, I assume a more inequality-averse decision maker. In this scenario, optimal emission reductions are larger when lump-sum transfers are ruled out.

 

 

Ph.D. (Economics), 2009. International Max Planck Research School on Earth System Modelling and University of Hamburg, Germany.

M.Sc. (Environmental Change and Management), 2004. University of Oxford, United Kingdom.

M.Phil. (Philosophy, Logic and Philosophy of Science), 2003. Ludwig-Maximilians-Universität Munich, Germany.

Visiting Student (Philosophy), 2001-2002. University of Oxford, United Kingdom.

 

 

University of California, Berkeley

Department of Agricultural & Resource Economics

207 Giannini Hall # 3310

Berkeley, CA 94720-3310, USA

 

 

Email: anthoff@berkeley.edu

Phone: +1 (510) 213-6717