Suchergebnisse

AbstractThe objective of this paper is to assess the use of simple rules for the social cost of carbon. It is shown that several interrelated objections may apply. The main issues are the following. First, the underlying theoretical models typically assume that the economy finds itself on a balanced growth path, implying that addressing the issue of designing policies for the short run, which play a role in the actual policy debate, are neglected. Second, for some cases the assumptions made regarding the marginal damages of high temperature or of arge atmospheric$$CO_{2}$$CO2stocks are shown to be incompatible with other assumptions made. Third, typically the rules follow from an optimal growth model and associate the social cost for a particular year with GDP for that year, but it is not always acknowledged that it should be optimal rather than actual GDP for that year. I also go into the performance of simple rules as compared to first-best.

Early this year, Thomas Friedman (2014) reported on a (Wikileaks) cable sent in 2008 from the US Embassy in Damascus concerning the drought Syria had been suffering from since 2006 (and which was going to last for another couple of years). The Syrian UN food and agriculture representative was seeking assistance for among others 15,000 small-holding farmers, who might otherwise seek jobs in Syrian cities (leaving many women and children behind in poverty) and who could arguably add to already existing social and economic tensions in those cities.

In the standard setting a system of tradable permits is effective and cost-efficient in attaining the policy objective of pollution reduction. This outcome is challenged in case of a tradable permit system in a federal system/constitution with individual states having discretionary power regarding environmental policy and where pollution is transboundary across states. This paper explores the opportunities of the central authority to influence the effectiveness and efficiency of the system, under various institutional arrangements, through the initial allocation of permits.