Climate change policy in a second-best world [Elektronische Ressource] : an analysis of policy options under conditions of partial cooperation and uncertainty / vorgelegt von Robert Marschinski

Robert Marschinski

Informations

• Publié par: technische_universitat_berlin
• Publié le: 01 janvier 2011
• Nombre de lectures: 16
• Langue: Deutsch
• Poids de l'ouvrage: 3 Mo

Extrait

Technische Universität Berlin
School VII Economics and Management
_____________________________________________________




Climate Change Policy
in a Second-Best World

An Analysis of Policy Options under Conditions of Partial
Cooperation and Uncertainty



vorgelegt von
Robert Marschinski
aus Berlin



Von der Fakultät VII - Wirtschaft und Management
der Technischen Universität Berlin
zur Erlangung des akademischen Grades
Doktor der Wirtschaftswissenschaften
Dr. rer. oec.

genehmigte Dissertation

Promotionsausschuss:

Vorsitzender: Prof. Dr. Georg Meran
Berichter: Prof. Dr. Ottmar Edenhofer
Berichter: Prof. Dr. Christian von Hirschhausen

Tag der wissenschaftlichen Aussprache: 17.12.2010


Berlin 2011

D 83


Contents






Summary 7

Zusammenfassung 9

Acknowledgements 11


Chapter 1 13
Introduction

1.1 Motivation and Background: International Climate Policy ................ 13
1.2 Formal Approach and Framing: Climate Change in Economics ......... 19
1.3 Thesis Overview ................................................................................... 31
1.4 Concluding Remarks ............................................................................ 38


Chapter 2 41
Global Trading versus Linking: Architectures for International Emissions
Trading

2.1 Introduction .......................................................................................... 41
2.2 Definitions ............................................................................................ 43
2.3 Top-Down Architectures ....................................................................... 46
2.4 Bottom-Up Architectures ..................................................................... 50
2.5 Discussion ............................................................................................. 57
2.6 Conclusions ........................................................................................... 61


Chapter 3 63
Linking Carbon Markets: A Trade-Theory Analysis

3.1 Introduction .......................................................................................... 63
3.2 Literature Review ................................................................................. 65
3.3 Model Definition and Country Specification ........................................ 67
3.4 Economic Impacts of Linking ............................................................... 72
3.5 Extension: The Case of Non-Traded Goods.......................................... 77
3.6 Conclusions ........................................................................................... 80
3.7 Appendix ............................................................................................... 81


3
Chapter 4 91
The Effects of Tariffs on Coalition Formation in a Dynamic Global Warming
Game

4.1 Introduction and Motivation ................................................................ 91
4.2 Model Structure .................................................................................... 94
4.3 Solving for a Nash Equilibrium ........................................................... 97
4.4 Application to International Cooperation on Climate Change ............ 99
4.5 Conclusions ........................................................................................... 106
4.6 Appendix: Parameter Choices .............................................................. 107


Chapter 5 111
Revisiting the Case for Intensity Targets: Better Incentives and Less
Uncertainty for Developing Countries?

5.1 Introduction .......................................................................................... 111
5.2 Related Literature ................................................................................ 113
5.3 Definition of Intensity and Absolute Target ........................................ 114
5.4 Reduction of Cost Uncertainty ............................................................. 115
5.5 Reduction of Hot Air ............................................................................. 117
5.6 Compatibility with International Emissions Trading ......................... 119
5.7 Incentive To Decouple Carbon and Economic Growth ........................ 122
5.8 A Substitute for Banking and Borrowing? ........................................... 125
5.9 Conclusion............................................................................................. 128
5.10 Appendix ............................................................................................... 130


Chapter 6 135
Do Intensity Targets Control Uncertainty Better than Quotas? Conditions,
Calibrations, and Caveats

6.1 Introduction .......................................................................................... 135
6.2 Literature Review ................................................................................. 136
6.3 Model Description and Key Assumptions ............................................ 139
6.4 Intensity vs. Quota: Analytical Approach ............................................ 142
6.5 Estimation of Model Parameters ......................................................... 150
6.6 Intensity vs. Quota in a Real-World Setting ........................................ 154
6.7 Conclusion............................................................................................. 161
6.8 Appendix ............................................................................................... 162


References 165


5
Summary


Starting from the premise that climate change policymaking takes place under
considerable uncertainty and suffers from a lack of international cooperation,
and that this prevents the implementation of a global first-best policy, the
present thesis poses the second-best question of what can be done despite these
constraints and compares different policy options.
Under conditions of partial cooperation, two questions of the second-best type
arise: (i) What can already cooperating countries do to ensure their climate
policies are effective and cost-efficient? (ii) How can the highest possible level of
international cooperation be achieved? In this thesis, these issues are treated by
assessing different institutional forms of emissions trading, in particular the
‘linking’ of permit markets, and, also, by adopting a game-theoretic view to
analyze in how far trade sanctions can help to broaden international
cooperation. The results show (a) how institutional incompatibilities and general
equilibrium effects could reduce the benefits of a linking agreement, and (b) that
tariffs have a significant potential to increase participation in a climate
agreement.
Uncertainty, and how it affects different policy instruments, is the other second-
best aspect investigated. So-called intensity targets, which index emission
targets on GDP, are analyzed with regard to their effect on cost-uncertainty, and
their compatibility with international emissions trading. The results suggest
that due to the increased complexity and the potentially only modest benefits of
an intensity target, conventional absolute targets remain a robust choice for a
cautious policy-maker.

Keywords: Economics of Climate Change, Linking, International Cooperation,
Intensity Target, Uncertainty.
7 8
Zusammenfassung


Ausgehend von der Annahme dass Klimapolitik unter hoher Unsicherheit
operiert und dass - unter den derzeit gegebenen politischen Umständen - die
Umsetzung einer global optimalen Klimapolitik sehr unwahrscheinlich
erscheint, erkundet die vorliegende Arbeit mögliche ‚zweitbeste’ Optionen und
vergleicht verschiedene Politikinstrumente ihrer Umsetzung.
In einer Welt begrenzter internationaler Zusammenarbeit stellen sich in Bezug
auf zweitbeste Optionen folgende Fragen: (i) Wie können bereits kooperierende
Länder sicherstellen, dass ihre Klimaschutzmassnahmen wirksam und
kosteneffizient sind? (ii) Wie kann ein höchstmögliches Maß an Kooperation
erreicht werden? Bezüglich dieser Punkte werden in dieser Arbeit zum einen
verschiedene institutionelle Formen des Emissionshandels – insbesondere das
‚Linking’ von Zertifikatsmärkten – analysiert. Zum anderen wird aus einer
spieltheoretischen Perspektive untersucht, inwieweit Handelssanktionen zu
einer Verstärkung von internationaler Klimakooperation beitragen können. Die
Ergebnisse zeigen (a) wie institutionelle Unverträglichkeiten und allgemeine
Gleichgewichtseffekte den Nutzen eines Linking-Abkommens verringern
können, und (b) dass die Anzahl der Beitrittsländer eines Klimaabkommens
durch die Anwendung von Handelszöllen signifikant erhöht werden könnte.
Als weiteres Anwendungsfeld von zweitbesten Optionen widmet sich die Arbeit