What is driving the EU Burden-sharing Agreement: efficiency or equity?

Area of Science:

• Environmental economics
• Climate policy analysis
• International environmental agreements

Background:

• The Kyoto Protocol mandated greenhouse gas emission reductions for the European Union.
• The Burden-Sharing Agreement (BSA) allocated specific reduction targets among member states.
• Evaluating the BSA's design is crucial for understanding its effectiveness and fairness.

Purpose of the Study:

• To evaluate the European Union's Burden-Sharing Agreement (BSA).
• To determine if cost efficiency was a primary consideration in the BSA.
• To assess the interplay between economic efficiency and equity in the agreement.

Main Methods:

• Calculated marginal abatement costs (MACs) using directional output distance functions.
• Estimated MACs based on country production data from 1990-2000.
• Regressed MACs and equity indicators against emission change targets.

Main Results:

• Marginal abatement costs were estimated for EU member states.
• Equity indicators were analyzed alongside cost efficiency.
• Both efficiency and equity metrics influenced the emission reduction targets.

Conclusions:

• The BSA settlement appears to have incorporated both economic efficiency and equity considerations.
• The findings suggest a balanced approach in redistributing emission reduction targets.
• The study provides insights into the design of international environmental policy instruments.