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Global Climate Change Digest
A Guide to Information on Greenhouse Gases and Ozone Depletion
Published July 1988 through June 1999

FROM VOLUME 10, NUMBER 10, OCTOBER 1997

PROFESSIONAL PUBLICATIONS...
POLICY & ECONOMICS

Item #d97oct15

"Joint Implementation: An Effective Strategy for Combating Global Warming?" L.D.D Harvey (Dept. Geog., Univ. Toronto, 100 St. George St., Toronto ON M5S 3G3, Can.; e-mail: harvey@geog.utoronto.ca), E.J. Bush,Environment, 39(8), 14-20; 36-44, Oct. 1997.

This extensive critical look at the underlying assumptions and practical difficulties associated with this hotly debated policy mechanism raises questions about its long-term effectiveness. Nevertheless, joint implementation should be encouraged until such time as an effective global warming regime can be created.

Item #d97oct16

"Climate Change and the Insurance Industry: The Cost of Increased Risk and the Impetus for Action," M. Tucker (Dept. Finance, Fairfield Univ., Fairfield CT 06430; e-mail: tucker@fair1.fairfield.edu),Ecol. Econ., 22(2), 85-96, Aug. 1997.

A convincing economic argument for taking action to ameliorate climate change has not developed. This study applied an option pricing model to show how anticipated increases in damage to insured assets will justify higher insurance premiums, which in turn will bolster the argument for immediate policy steps against climate change.

Item #d97oct17

"Environmental Taxes and Quotas in the Presence of Distorting Taxes in Factor Markets," I.W.H. Parry (Resources for the Future, 1616 P St. NW, Washington DC 20036),Resource & Energy Econ., 19(3), 203-220, Aug. 1997.

This technical economic analysis compares the welfare effects of environmental taxes with those of non-auctioned environmental quotas, in the presence of a pre-existing tax on labor income. Complications posed by pre-existing tax distortions can be a key factor in instrument choice, a result with implications for choosing between a carbon tax and a system of freely allocated carbon permits.

Item #d97oct18

"Carbon Taxes and India," K.A. Fisher-Vanden (JFK School of Govt., Belfer 403, 79 JFK St., Cambridge MA 02138; e-mail: kfv@ksgbbs.harvard.edu), P.R. Shukla et al.,Energy Economics, 19(3), 289-325, July 1997.

Uses the Indian module of the Second Generation Model to explore three scenarios in which greenhouse gases are controlled (at one, two, and three times 1990 levels). Compares the costs of stabilizing emissions at these levels using carbon taxes or domestic tradable permits, taking into account India's rapidly growing population and the relative abundance of coal and biomass. Also examines the impacts of a global tradable permits market. The latter (i.e., a global policy) would benefit India more than any independent actions.

Item #d97oct19

"Distribution of Potential Gains from International Environmental Agreements: The Case of the Greenhouse Effect," M. Escapa (Dpto. de Fundamentos del Análisis Econ., Univ. del País, Bilbao, Spain), M.J. Gutíerrez,J. Environ. Econ. & Mgmt., 33(1), 1-16, May 1997.

Countries worldwide stand to gain if they cooperate in reducing aggregate greenhouse emissions, because the overall goal can be met at lower cost. This analysis quantifies how this gain would be distributed among countries. Contrary to previous analyses, it considers different weighting as well as equal weighting of the welfare functions of various countries.

Item #d97oct20

Special issue. ENERGY-ENVIRONMENTAL MODELLING, Energy Economics, 19(1), D.W. Bunn, E. Larson, K. Vlahos, Eds., Mar. 1997. Contains reviewed papers from the Symposium on Energy models for Policy and Planning (London, 1995).

"Economic Growth, International Competitiveness and Environmental Protection: R&D and Innovation Strategies with the WARM Model," C. Carraro (Dept. Econ., Univ. Venice, Ca 'Foscari, 30123 Venice, Italy), M. Galeotti, 2-28. An economic general equilibrium model applied to the European Union shows that policies to stimulate environmental R&D, technological innovation and diffusion may provide firms with proper incentives while preserving their competitiveness, and would have positive effects on economic growth.

"Are Environmental Taxes a Free Lunch? Issues in Modelling the Macroeconomic Effects of Carbon Taxes," N. Mabey (London Business School, Sussex Pl., Regent's Pk., London NW3 4LL, UK), J. Nixon, 29-56.

"General Multi-Product, Multi-Pollutant Market Pollution Permit Model: A Variational Inequality Approach," A. Nagurney (Dept. Finance, Sch. Management, Univ. Massachusetts, Amherst MA 01003), K.K. Dhanda, J.K. Stranlund, 57-76.

"The Page95 Model: Integrating the Science and Economics of Global Warming," E.L. Plambeck (Dept. of Eng. Econ. Systems, Stanford Univ., Stanford CA 94304), C. Hope, J. Anderson, 77-101. Updates the policy analysis of global warming performed with the original PAGE model in 1992, by incorporating these subsequent scientific developments: the cooling effect of sulfate particles, the low net warming effect of halocarbons, and improved regional impact estimates.

"Dynamic Energy and Environment Equilibrium Model for the Assessment of CO₂ Emission Control in Canada and the USA," W. Chung (Dept. Mgmt. Sci., Univ. Waterloo, 200 University Ave., Waterloo ON N2L 3G1, Can.), Y.J. Wu, J.D. Fuller, 103-124. Model results show that delaying a CO₂ emission control program can be very costly, and that the Toronto conference target (50% reduction in 1988 CO₂ emissions by 2030) is impossible to meet without significant changes in fuels, technologies or lifestyles.

"Stabilizing Energy Related CO₂ Emissions for India," S. Gupta (Tata Energy Res. Inst., Habitat Pl., Lodi Rd., New Delhi 110 003, India), S. Hall, 125-150. Concludes that a combination of macroeconomic policies and micro-level investments are required to achieve substantial emission reductions in the medium term.

Item #d97oct21

"Population and Global Warming With and Without CO₂ Targets," S.R. Gaffin (Environ. Defense Fund, 275 Park Ave. S, New York NY 10010), B.C. O'Neill, Population & Environ., 18(4), 389-413, Mar. 1997.

Uses an integrated climate-economics model to explore the sensitivity of future global warming to variable population growth rates, to contribute to the ongoing debate over the extent to which climate change should be added to the list of concerns surrounding population growth. In the absence of specified atmospheric targets, projected CO₂ levels in the year 2150 show great sensitivity to population. With targets imposed, results show that stabilization of atmospheric CO₂ at a level much lower than 550 ppm requires steep emissions cuts that are only weakly affected by the full range of variable population growth rates.

Item #d97oct22

"The Energy Subregion as a Basis for Greenhouse Policy," N. Grollman (Dept. Geog. & Environ. Sci., Monash Univ., Clayton, VIC 3168, Australia),Energy Policy, 25(4), 459-467, Mar. 1997.

Advocates the concept of the "energy subregion" as an appropriate framework for reducing energy-related greenhouse gas emissions, because unilateral global measures tend to founder. It links populations and their energy needs to specific energy resources, infrastructure, sectoral demands and other conditions, and enables emission reduction measures to be implemented at an organizational level commensurate with differing resource levels and with the decision-making powers of key players. This concept also encourages an approach which reduces the dependence of the developing South on the industrialized North. Presents examples from the East Asia/Pacific region.

Item #d97oct23

"Negotiating an Agreement on Global Warming: A Theoretical Analysis," Z. Chen (Dept. Econ., Carleton Univ., Ottawa ON K1S 5B6, Can.),J. Environ. Econ. & Mgmt., 32(2), 170-188, Feb. 1997.

Uses a two-country bargaining model to study how the responsibilities for combating global warming can be allocated through negotiation. Factors affecting the outcome include the populations of the countries. Also discusses enforcement.

Item #d97oct24

"Climate Change and Overlapping Generations," R.B. Howarth (Dept. Environ. Studies, Univ. California, Santa Cruz, Calif.; e-mail: howarth@cats.ucsc.edu),Contemporary Econ. Policy, 14(4), 100-111, Oct. 1996.

Examines the interplay between discounting and the distribution of welfare between generations in formulating climate change response strategies. The Nordhaus (1994) model for climate policy analysis can be understood as a reduced form of an overlapping generations model that embodies more realistic demographic assumptions. This analysis shows that his results are strongly sensitive to changes in the relative weight attached to welfare of present vs. future generations, and that imposing relatively aggressive policies to abate emissions is economically efficient. Economists can contribute to the analysis of climate policies by accounting for the complex interplay among economics, ethics, and public values in framing intergenerational choices.

Item #d97oct25

"A Regional Dynamic General-Equilibrium Model of Alternative Climate-Change Strategies," W.D. Nordhaus (Dept. Econ., Yale Univ., 28 Hillhouse Ave., New Haven CT 06511), Z. Yang,Amer. Econ. Rev., 86(4), 741-765, Sep. 1996.

Presents the Regional Integrated model of Climate and the Economy (RICE), which analyzes different national strategies in climate change policy and how they influence those of other countries. Cooperative policies show much higher levels of emissions reductions than do noncooperative strategies. There are substantial differences in the levels of controls in both the cooperative and the noncooperative policies among different countries, and high-income countries may be the major losers from cooperation.