Resource title

C & C - contraction and convergence of carbon emissions: the economic implications of permit trading

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Resource description

In the context of climate protection policy it has been suggested that global CO2 emissions should be reduced significantly (contraction) and that per capita emissions should gradually be equalized across countries (convergence). This paper uses a dynamic multi-region computable general equilibrium model of the world economy to assess the economics of ?Contraction and Convergence? (C&C). In comparing a regime of tradable and non-tradable emission rights for implementing C&C we find that the former allows to reduce long-term costs of abatement in terms of Hicksian equivalent variation in lifetime income by more than 50% percent in comparison with the latter. Under a tradable permit regime some developing countries improve their economic welfare even beyond non-abatement baseline levels. A decomposition of the general equilibrium effects associated with C&C shows that changes in the terms of trade constitute a key determinant of the overall welfare effects.

Resource author

Christoph Böhringer, Heinz Welsch

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/24299

Resource license

Adapt according to the presented license agreement and reference the original author.