Download Argument in the Greenhouse: The International Economics of by Sujata Gupta, Stephen Hall, Nick Mabey, Clare Smith PDF

By Sujata Gupta, Stephen Hall, Nick Mabey, Clare Smith

ISBN-10: 0203974182

ISBN-13: 9780203974186

ISBN-10: 0415149088

ISBN-13: 9780415149082

Overlaying either the constructing and constructed global, this booklet identifies very important new guidelines to foster potent agreements in emissions and stop international warming: lifelike regulations which should still obtain overseas and household aid.

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Additional resources for Argument in the Greenhouse: The International Economics of Controlling Global Warming

Example text

As carbon emissions fall and consumption of fossil fuels drop, competition in energy markets should cause the price of traded fuels to drop, thus giving an incentive for higher fossil fuel consumption. If the agreement to limit emissions is incomplete nonparticipating countries in particular will benefit as prices drop; in addition differential fuels costs give an incentive for fossil energy intensive industries to migrate from committed to uncommitted countries. The net result is a shift of carbon emissions from controlled to uncontrolled countries, so called ‘carbon leakage’, a rise in total emissions and an increase in the cost of reaching emission targets in committed countries.

These output losses stem from reduced competitiveness in some industries and, perhaps, a move to a less productive economy as investment shifts from International co-ordination of climate change prevention 29 improving labour productivity to increasing energy efficiency. As fossil fuels will continue to be used in the foreseeable future, so carbon tax revenues will be substantial. If these revenues are recycled into reducing other economic distortions, such as employers’ labour taxes (as opposed to being given back to households in a lump sum), then the net effect on macroeconomic output could be minimal or even positive (Barker 1994).

Barrett concludes that, given a large number of potential participants (30+), the maximum number of countries in a self-enforcing agreement (SEA) is small (2–3), with and without side payments, and this conclusion holds over several different assumptions about the form of country abatement cost and environmental benefit functions. The intuition of this result is that when there are a large number of potential participants the effect of one party’s leaving produces a minimal decline in global emissions, and in the Argument in the greenhouse 32 free-rider’s own environmental benefits, while reducing its abatement costs substantially; therefore, there is a strong incentive for individual countries to free-ride.

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Argument in the Greenhouse: The International Economics of Controlling Global Warming by Sujata Gupta, Stephen Hall, Nick Mabey, Clare Smith


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