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Climate change control: the Lindahl solution.

Loek Groot1, Julia Swart2

  • 11Utrecht University School of Economics, P.O. Box 80125, 3508 TC Utrecht, The Netherlands.

Mitigation and Adaptation Strategies for Global Change
|August 11, 2018
PubMed
Summary
This summary is machine-generated.

This study evaluates carbon emission abatement burden sharing rules. Willingness to pay is key for optimal abatement and equitable redistribution, outperforming historical emissions or ability to abate.

Keywords:
Burden sharing ruleEfficiencyEquityLindahlNashTradable permits

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Area of Science:

  • Environmental Economics
  • Climate Policy
  • Game Theory

Background:

  • Greenhouse gas emissions necessitate effective global abatement strategies.
  • Burden sharing rules determine how abatement costs are distributed among nations.
  • Existing rules often fail to balance efficiency and equity.

Purpose of the Study:

  • To evaluate seven different burden sharing rules for carbon emission abatement.
  • To assess rules based on redistributive impact and optimal abatement achievement.
  • To inform policy on fair and effective climate change mitigation.

Main Methods:

  • Comparative analysis of seven burden sharing rules.
  • Evaluation of redistributive effects and efficiency in achieving optimal abatement.
  • Economic modeling of willingness to pay, Nash equilibrium, and social planner outcomes.

Main Results:

  • The Lindahl solution, based on willingness to pay, is superior to the non-cooperative Nash outcome.
  • Poor regions favor social planner outcomes with global permit markets for redistribution.
  • Burden sharing rules significantly impact both abatement effort and income distribution.

Conclusions:

  • Individual country emission abatement should be based on willingness to pay, not historical emissions or ability to abate.
  • Global permit markets can integrate abatement with income redistribution from rich to poor nations.
  • Policy should prioritize willingness to pay for effective and equitable climate change control.