تجارت کردن بین سهام درون و بین نسلی در سیاست آب و هوا
|کد مقاله||سال انتشار||مقاله انگلیسی||ترجمه فارسی||تعداد کلمات|
|26568||2014||19 صفحه PDF||سفارش دهید||محاسبه نشده|
Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : European Economic Review, Volume 69, July 2014, Pages 40–58
This paper focuses on two equity dimensions of climate policy, intra- and intergenerational, and analyzes the implications of equity preferences on climate policy, and on the production and consumption patterns in rich and poor countries. We develop a dynamic two-region model, in which each region suffers from global warming, but also has an inequality aversion over current consumption allocations. Inequality aversion generally lifts the consumption path of the poor region, while the rich region must take a greater share of the climate burden. Furthermore, with inequality aversion, the optimal climate policy generally leads to higher investment in clean capital in the North and in dirty capital in the South, thereby allowing the South to pollute more and develop faster. The optimal policy may even require the poor region to increase emissions relative to the uncoordinated Business-as-Usual case. Introducing local pollution and transfers confirm the main results.
While most scientists and politicians have recognized climate change as a threat to the future for many years, there is still an ongoing debate as to what to do about it. Researchers may not agree on the optimal emissions reductions even if they agree on the natural science background, the impacts and the costs of abating greenhouse gas emissions. One important reason is that optimal emission reductions depend on equity issues, and our discounting of future climate impacts is particularly important. However, ethical issues have not been fully explored in economic analyses, as greenhouse gas abatement not only affects the welfare distribution between present and future generations, but also the distribution within a generation, such as between rich and poor countries. These two equity dimensions are important when studying optimal emissions reductions, and as we explain below, they may work in different directions. The purpose of our study is to investigate the trade-off between the two dimensions of equity in climate policy. We ask the following question: How should we design climate policies when people have preferences for both equity dimensions, and what are the implications for emissions and energy investments? These dimensions of equity can be referred to as intra- and intergenerational. The first is primarily about how we should distribute the burdens within a generation, either within the generation living today or within future generations, see Kverndokk and Rose (2008). Two examples of this can be: who would suffer from climate change (inaction), and how should the burdens of mitigation (action) be distributed? In the years to come, the world may face large climatic changes, such as increased temperatures, sea level rise, changed wind and precipitation patterns, and more extreme weather ( IPCC, 2013). However, the associated damages will not be evenly distributed among countries or within a given country. Studies by Tol et al. (2000), Tol, 2002a and Tol, 2002b and Yohe et al. (2007) show that some sectors will lose from climate change while others will benefit. Poorer countries are likely facing relatively stronger negative impacts than richer countries. In addition, several studies suggest that the costs of action will vary across countries and sectors, and that abatement is generally more expensive in more energy efficient economies ( IPCC, 2007). Policy instruments implemented to reduce greenhouse gas emissions will impose different burdens on people, and economic instruments such as carbon taxes will often be regressive, so that the poorest will face the highest burden (see, e.g., Bye et al., 2002). While intragenerational equity is important, most of the equity debate related to climate change in the economic literature has been on intergenerational issues. This debate has focused on the size of emissions reductions to aim for, and on what should be the upper limit on the atmospheric greenhouse gas concentration or the global mean temperature. These questions also affect the distribution of burdens between the current generation and future generations, as the costs of mitigation are borne by the current generation, while future generations benefit from it. According to the literature, there are several reasons for extensive mitigation today, such as attitudes toward risk and concerns about catastrophic events (Weitzman, 2007a). However, most of the discussions have been about the appropriate discount rate for climate policy decisions, as the optimal abatement level is very sensitive to this parameter (Nordhaus, 2007, Weitzman, 2007b and Dasgupta, 2008), which again represents ethical choices.1 Intergenerational aspects of climate change have also been studied by John and Pecchenino with coauthors (John and Pecchenino., 1994 and John et al., 1995) who focus on the tradeoff between economic growth and environmental quality. Most studies treat intra- or intergenerational equity separately. However, choices that affect intergenerational distribution also affect the intragenerational distribution between rich and poor countries. As Heal (2009) points out, there are at least two ways in which preferences for equality affect the choice of climate action. First, if we believe that consumption increases over time, a high elasticity of marginal utility of consumption leads to less aggressive action. The reason is that this makes future generations richer, and if we care about inequality between the present and future generations, we place a lower value on the future rich (intergenerational equity). There is, however, an additional effect. The poor countries are likely to suffer the most from climate change. Hence, if we put a low weight on future outcomes, climate change is more likely to occur and hit poor countries hard (intragenerational equity). Consequently, the gap between the welfare levels of the rich and the poor may be wider, and based on the latter effect, stronger preferences for equality should go in the direction of more action to prevent climate change. These two effects of inequality aversion work in different directions, and the impacts of stronger preferences for equity on the level of greenhouse gas abatement are ambiguous. However, global models used to determine the optimal level of greenhouse gas emissions focus on the first effect (intergenerational), implying that stronger preferences for equality induce low abatement (see e.g., Nordhaus and Boyer, 2000).2 Schelling (1992) suggested one solution to this by arguing that the best way to reduce the impacts of global warming is development of the poor region. The developed world is not as vulnerable to climate change due to their high level of economic development. We therefore can reduce the vulnerability of poorer countries by letting them develop. The result may then be that the world is not hit as hard by climate change, while economic differences between regions are reduced. Apart from Schelling, few economists have discussed the linkages between the two equity dimensions. However, recently, Baumgärtner et al. (2012) provided a general discussion about the trade-offs between inter- and intragenerational equity in economic analysis, while Glotzbach and Baumgärtner (2012) analyze the relationship between these two aspects in ecosystem management. We are not aware of any studies of optimal climate policy that take both types of inequality aversion into account when investigating the impacts on emissions and investments in clean and dirty capital. Our paper aims to close this gap. We set up a simple model with two regions, a rich and a poor, to explicitly account for equity preferences along the two dimensions. The intergenerational aspect is the trade-off between welfare for present and future generations due to the impacts of global warming, while the intragenerational aspect is purely a developmental issue as we compare the consumption levels of the poor and the rich. We use the Fehr and Schmidt (1999) framework to express the latter concern. A recent experiment with participants who have been involved in international climate policy supports this (Dannenberg et al., 2010). We do not study differences in vulnerability to climate damage across countries as discussed by Schelling (1992), but focus on the implications of economic development in the poor region for emissions and capital investments. Our main finding is that preferences for intragenerational equality shift the climate burden toward the rich region; the poor region should generally use the more productive dirty capital to speed up its development, while the rich region should carry most of the abatement burden. Since clean capital is less productive, the consumption in the rich region falls and increases in the poor region. Hence, this result supports the claims made by developing countries in global climate negotiations, that emissions reductions will cause setbacks on the road to development. The paper is organized in the following way. In the next section, we study the optimal climate contract when people have preferences for both intra- and intergenerational equity, while Section 3 compares this outcome to the Business-as-Usual case (no social contract). In Section 4, we introduce some extensions and analyze the implications of direct transfers and local pollution under the social contract. We illustrate our results with numerical simulations of the optimal climate policy in Section 5. The final section concludes.
نتیجه گیری انگلیسی
This paper studies the trade-off between intra- and intergenerational equity as represented by preferences to reduce future climate damage and to increase economic development in the poor world today. We find that inequality aversion within a generation generally will reduce consumption and greenhouse gas emissions in the rich region of the world, while consumption and emissions will increase in the poor region. This happens as the rich region shifts toward more clean capital, while we allow the poor region to use more of the more productive dirty capital to develop faster. This result emphasizes the close relationship between development and climate policy, and justifies transferring emissions from North to South to promote economic development. This also holds when introducing monetary transfers between the regions, as well as when introducing negative effects of local pollution. Whether total greenhouse gas emissions increase because of income inequality aversion within a generation depends on the size of the emissions reductions in the North relative to the increases in the South. Indeed, in our numerical simulation we find that higher inequality aversion initially leads to lower environmental quality followed by a period of improved environmental quality compared to the case with no inequality aversion. If we consider the Kyoto Protocol in light of our findings, the division between Annex I and non-Annex I countries is in principle justified. The first group consists of rich countries that committed to reducing their greenhouse gas emissions, while the latter group consists of poorer developing countries that do not have to undertake emissions reductions. Hence, the division between Annex I- and non-Annex I countries was a way to transfer wealth from North to South by imposing the use of cleaner capital in the richest region, while poor countries could use dirty but more productive capital to speed up their development. This is in line with the optimal climate policy we have characterized in this paper. The Kyoto Protocol also defines a mechanism that support capital transfers from rich to poor countries, the clean development mechanism, but does not include debt remittance or similar direct financial transfers as ways to reduce the inequality between regions further. Finally, our results suggest that we should allow poor countries to pollute more in the short run while they catch up with the North. In the long run, however, all countries must contribute to improved environmental quality by restricting their emissions. There is no mechanism in the Kyoto Protocol to commit non-Annex I countries to reduce emissions as they become richer, but this is and should be a topic for current negotiations. Our work suggests that future climate agreements should contain mechanisms for wealth transfers to developing countries to speed up their development and reduce inequality. These mechanisms could be in the form of lower emissions reductions for developing countries, or direct transfers, such as debt remittance or development aid. A significant step in this direction is climate finance. Under the Copenhagen Accord of 2009, developed countries have promised to provide additional climate finance of up to $100 billion a year from 2020 to help developing countries to reduce their emissions and adapt to the consequences of climate change. There should also be explicit mechanisms that define how and when to limit the emissions of these countries as they become more developed. Moreover, our results show that in certain situations, climate agreements should require poor countries to increase their use of dirty capital in the short run to speed up their development, even if this yields higher levels of both local and global pollutants. The equality externality drives this result, as poor countries do not take into account the welfare loss of rich countries from inequality, and may therefore pollute too little and develop too slowly without emissions restrictions. In such situation, the developed countries can assist by funding technologies to reduce the negative effects of increased local pollution in the South. There are many possibilities for extending the current work. Our work abstracts from strategic considerations since we assume all countries are sufficiently small to take both prices and global environmental quality as given. In recent climate negotiations, it is quite clear that there are several big players that have significant impact both in relevant markets and on the climate. These include large countries such as the United States and China, as well as groups of countries that coordinate their actions (e.g., the European Union). Extending our analysis to allow for strategic interaction between countries and regions therefore seems highly relevant. Another possibility for future work is to investigate the implications of limited substitutability between clean and dirty capital. While we have assumed perfect substitution between clean and dirty capital, restrictions on the substitutability may affect the results. Finally, we have not discussed impacts of technological change, which may be significant when it comes to reducing global warming.