Carbon Leakage with International Technology Spillovers

In this paper we study the effect of international technology spillovers on carbon leakage. We first develop and analyse two simple competing models for carbon leakage. The first model represents the pollution haven hypothesis. It focuses on the international competition between firms that produce energy-intensive goods. The second model highlights the role of a globally integrated carbon-energy market. We calculate formulas for the leakage rates in both models and, through meta-analysis, show that the second model captures best the major mechanisms reported in the CGE literature on carbon leakage. We extend this model with endogenous energy-saving technology and international technology spillovers. This feature is shown to decrease carbon leakage. We build-in the endogenous energy-saving technology in a large CGE model and verify that the results from the formal model carry over. Carbon leakage becomes negative for moderate levels of international technology spillover.arbon-Leakage, Climate Policy, Induced Technological Change; Trade and Environment

Fair Trade And Ethical Labeling In The Clothing, textile, And Footwear Sector: The Case Of Blue Jeans

Consumer labels are quite common in the clothing, textiles, and footwear industry

Comercio Justo Y Etiquetaje Etico En El Sector De Ropa, Textil, Y Calzado: El Caso De Blue Jeans (jeans Azules)

Etiquetas del consumidor son bastante comunes en la industria de ropa, textiles y calzado

Marginal Abatement Costs of Carbon-Dioxide Emissions: A Meta-Analysis. ESRI WP248, June 2008

In this paper we carry out a meta-analysis of recent studies into the costs of greenhouse gas mitigation policies that aim at the long-term stabilization of these gases in the atmosphere. We find the cost estimates of the studies to be sensitive to the level of the stabilization target, the assumed emissions baseline, intertemporal optimisation, the choice of control variable (CO2 only versus multigas), assumptions on future technological options (backstop and carbon capture and storage), and, to a lesser degree, the scientific “forum” in which the study was developed

Methodological aspects of recent climate change damage cost studies

This paper discusses methodological aspects of recent climate change damage studies. Assessing the total and/or marginal damage costs of environmental change is often difficult and it is certainly difficult in the case of climate change. A major obstacle is the uncertainty on the physical impacts of climate change, especially related to extreme events and so-called ‘low-probability high-impact’ scenarios. The subsequent transposition of physical impacts into monetary terms is also a delicate step, given that climate change impacts involve both market and non-market goods and services, covering health, environmental and social values, and that impacts may be distant in time and space. The complexity of climate change cost assessment thus involves several crucial dimensions, including non-market evaluation, risk and uncertainty, baseline definition, equity and discounting, further elaborated in this paper in the course of the overview of the literature and of the overview and evaluation of the key methodological issues.Climate change damage costs, cost of inaction, methodological aspects, risk and uncertainty, discounting, equity

The potential of water markets to allocate water between industry, agriculture, and public water utilities as an adaptation mechanism to climate change

One of the climate change scenarios that have been developed for the Netherlands predicts hotter and drier summers and a substantial drop in river discharge. This might lead to water scarcity with detrimental economic and environmental effects. Among the possible adaptation responses to climate change-induced water scarcity, the re-allocation of water resources among competing uses should also be considered. In this paper, we extend and apply a computable general equilibrium (CGE) model to assess the potential of water markets (water allocation according to its shadow price) to guide the allocation of scarce water across agriculture, manufacturing, and public water supply. We develop four scenarios in which the scope of water markets is increased from industry-specific to economy-wide. The results show that the agricultural sector bears nearly all of the losses from a new water-scarce climate, while the manufacturing sectors are able to mitigate their losses to a large extent by technical measures. Extending the scope of water markets unambiguously increases economic output and results in a re-allocation of water to the manufacturing sector from the agricultural sector and from public water services. If, perhaps for political reasons, public water services are excluded from water trading, water is re-allocated from agriculture to manufacturing. Depending on which sectors are included, the construction of a water market can have negative or positive effects on a sector’s output, and although the implementation of water markets may be positive for overall economic output and can hence assist adaptation, the effect on vulnerable or societally sensitive economic sectors, such as public water, should be taken into account when implementing such a market

The Effect of Trade Liberalisation on Carbon Leakage Under the Kyoto Protocol: Experiments with GTAP-E

A group of industrialised countries and countries with economies in transition have agreed to reduce their emissions of greenhouse gases under the Kyoto Protocol of the United Nations Framework Convention on Climate Change. Because of impacts on international trade and investments, the emission reduction policies of these countries - the so-called Annex I countries - could lead to loss of competitiveness and carbon leakage. In the context CO2 reduction policies, changes in import tariffs and other trade barriers have received little attention in the literature. This paper presents quantitative estimations of the impacts of the implementation of the Kyoto agreements on carbon leakage with and without freer trade. The calculations are made with a static, multisector, multiregion applied general equilibrium model (GTAP-E) that allows for inter-fuel and interfactor substitutions. We find that under a plausible range of assumptions, the implementation of the Uruguay Round reductions of import tariffs a) increases the rate of carbon leakage by around 3 percent-points, but b) does not reduce the competitiveness of energy-intensive industries in Annex 1 countries