Brandt Stevens

International Equity and Differentiation in Global Warming Policy

Abstractne of the major obstacles to reaching a comprehensive agreement on global warming is the setting of greenhouse gas emission reduction targets for individual countries. Long-standing tensions between industrialized and developing countries have raised the issue of equity in burden-sharing. Moreover, individual industrialized nations have pleaded special circumstances and have sought differentiation in their obligations. This paper analyzes alternative rules for distributing tradable carbon dioxide emissions permits. A non-linear programming model, which distinguishes between allocation-based and outcome-based rules, is used to analyze the relative welfare outcomes. The model is applied to the world body of nations and yields several important policy implications.

The efficiency and equity of marketable permits for CO2 emissions

This paper examines the efficiency and equity implications of alternative assignments of marketable permits for carbon dioxide. A non-linear programming model is used to estimate the net welfare changes of permit allocations based on Sovereignty and Rawlsian equity criteria for 8 countries/regions covering the spectrum of economic development levels. The net welfare gains associated with an overall 20% reduction in CO2 emissions are estimated to be nearly

An Economic Analysis of Flexible Permit Trading in the Kyoto Protocol

20 billion, an increase of several billion dollars over a system of inflexible emission quotas requiring 20% abatement in each country. Also, although the welfare changes implied by alternative permit assignments may vary greatly between countries before trading, the trading process significantly reduces the disparities. This result stems from the Coase Theorem, which implies a uniquely efficient outcome. That is, individual country abatement levels and hence, costs, are the same under all permit assignments after trading, and net welfare for a given nation differs only by the amount of permit revenues/expenditures associated with the application of alternative equity criteria. Foremost among the papers policy implications is that although equity criteria may differ significantly in principle, their welfare implications in practice may be very similar for various subsets of these criteria. This should reduce tensions at the bargaining table and facilitate the negotiation of greenhouse gas agreements.

Assessing who gains and who loses from natural resource policy: Distributional information and the public participation process

This paper evaluates the relative gains from augmenting or restricting several of the flexibility mechanisms of the Kyoto Protocol. A nonlinear programming model of international emissions trading is used to assess the net benefits of extending trading across time periods and across countries (Joint Implementation), and including the developing world (Clean Development Mechanism). The effect of limiting permit purchases (supplementarity) is also evaluated. The analysis is intended to help guide further climate negotiations by identifying flexibility mechanisms that contribute the most to enhancing the gains from greenhouse gas mitigation and identifying restrictions that detract the most from these gains.

A Dynamic Analysis of the Efficiency and Equity of Tradeable Greenhouse Gas Emissions Permits

Abstract Recent legislation mandates an increased role for public participation in natural resource policy making. This paper presents an operational way to provide those impacted with relevant information and to enable public officials to assess public reaction to proposed policies. The methodology transforms results obtained from a multisector model of income formation and distribution into positive economic measures of distributional impacts. The usefulness of the methodology is illustrated in the context of a policy to increase coal surface mining on public lands.

Distributional impacts of oil and gas tax reforms

In December 1997, 38 industrialized and transitional countries agreed to the Kyoto Protocol, which committed them to targets and timetables to reduce six greenhouse gases (GHGs). In November 1998, in Buenos Aires, at the Fourth Conference of the Parties to the Framework Convention on Climate Change (COP-4), efforts were made to improve upon Kyoto by expanding the number of co-operating countries and enhancing the range of policy instruments to implement its objectives. However, COP-4 was a failure, as only two developing countries made commitments, and little progress was made in increasing the flexibility of policy implementation.

A Dynamic Analysis of the Marketable Permits Approach to Global Warming Policy: A Comparison of Spatial and Temporal Flexibility☆

Abstract Tax preferences relating to exploration and production in the oil and gas industries received a great deal of attention during the enactment of the US Federal Tax Reform Act of 1986. One of the main arguments put forth in favour of the removal of these preferences was that they favoured higher income taxpayers, and, therefore, were inequitable. A multisector income distribution model is utilized to examine the direct, indirect and induced distributional impacts of the ensuing reforms. The results indicate that, while the direct impact of these reforms is an improvement in equity among those receiving income from the oil and gas industries, the overall impact throughout the economy is equity-neutral. The result stems from the secondary effects of the tax, which lead to net reductions in production in the oil and gas industries and their direct and indirect suppliers.