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Global resilience to climate change: Examining global economic and environmental performance resulting from a global carbon dioxide market

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  • Badau, Flavius
  • Färe, Rolf
  • Gopinath, Munisamy
Abstract
In this study, we investigated global economic and environmental resilience in the presence of climate change. In particular, we examine the possibility of mitigating carbon dioxide (CO2) emissions without stressing standards of living. Here, we set up a cross-country CO2 market constrained by a quota, where CO2 is optimally re-allocated based on relative shadow prices of the pollutant. The objective is to stabilize global emissions without hindering global incomes and in the process achieve a single CO2 price. We introduce a re-allocation model that takes into account each country’s underlying polluting technology. The model solutions are then used to investigate whether a single, global price for CO2 is attainable. Our results suggest that global CO2 emissions could stabilize without stressing global incomes, with a global CO2 market achieving equilibrium. With a CO2 market, countries would then have the incentive to consider adopting, improving, or investing in additional abatement technologies to move beyond current capabilities, while continuing to increase standards of living.

Suggested Citation

  • Badau, Flavius & Färe, Rolf & Gopinath, Munisamy, 2016. "Global resilience to climate change: Examining global economic and environmental performance resulting from a global carbon dioxide market," Resource and Energy Economics, Elsevier, vol. 45(C), pages 46-64.
    • Handle: RePEc:eee:resene:v:45:y:2016:i:c:p:46-64
    DOI: 10.1016/j.reseneeco.2016.05.002
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    Citations

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    Cited by:

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    2. Qunli Wu & Huaxing Lin, 2019. "Estimating Regional Shadow Prices of CO 2 in China: A Directional Environmental Production Frontier Approach," Sustainability, MDPI, vol. 11(2), pages 1-19, January.
    3. Kabata, T. & Fulginiti, L.E. & Perrin, R.K., 2020. "The potential cost of methane and nitrous oxide emissions regulation in U.S. agriculture," Staff Papers 311048, University of Nebraska-Lincoln, Department of Agricultural Economics.
    4. Qunli Wu & Shuting Gu, 2021. "Exploring the focus of future CO2 emission reduction in China's industrial sectors," Greenhouse Gases: Science and Technology, Blackwell Publishing, vol. 11(4), pages 682-696, August.
    5. Deng, Zhongqi & Jiang, Nan & Pang, Ruizhi, 2021. "Factor-analysis-based directional distance function: The case of New Zealand hospitals," Omega, Elsevier, vol. 98(C).
    6. Felipe de Figueiredo Silva & Richard K. Perrin & Lilyan E. Fulginiti, 2019. "The opportunity cost of preserving the Brazilian Amazon forest," Agricultural Economics, International Association of Agricultural Economists, vol. 50(2), pages 219-227, March.
    7. Flavius Badau & Nicholas Rada, 2022. "Disequilibrium effects from misallocated markets: An application to agriculture," Agricultural Economics, International Association of Agricultural Economists, vol. 53(4), pages 592-604, July.
    8. Badau, Flavius & Rada, Nicholas, 2016. "The Price of Inefficiency in Indian Agriculture," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235622, Agricultural and Applied Economics Association.
    9. Eucabeth Majiwa & Boon L. Lee & Clevo Wilson, 2018. "Increasing agricultural productivity while reducing greenhouse gas emissions in sub†Saharan Africa: myth or reality?," Agricultural Economics, International Association of Agricultural Economists, vol. 49(2), pages 183-192, March.

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    More about this item

    Keywords

    Cap and trade; Re-allocation models; Directional distance function; Shadow prices; Carbon dioxide (CO2); Polluting technology;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment

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