Who should pay for climate? The effect of burden-sharing mechanisms on abatement policies and technological transfers
Working Paper 96
Recent international environmental negotiations have highlighted the importance of establishing a commonly agreed approach to attribute climate change responsibilities.
In this paper we investigate how choices on allocation mechanisms are likely to affect optimal abatement effort paths and technological transfers. We derive a North-South optimal growth model from the 2007 version of the RICE model allowing for pollution-abating technological transfers, and use it to test three different allocation approaches, based on sovereignty, egalitarian and polluter pays principles.
Numerical simulations typical of integrated assessment models show that:
- the presence of technical transfers always improves intertemporal global welfare;
- the optimal abatement and technical transfers paths depend on the chosen burden-allocation rule;
- the costs associated with the introduction of a 2-degree limit to temperature increase are in all probability too high to be politically acceptable.