Burden Sharing Emissions and Climate Change: A Theoretic Welfare Approach

Abstract

The approximated cost-benefit function of pollution abatement from two integrated assessment models are employed in constructing of social welfare functions (SWF). Following a normative approach and evaluating equally the environmental goods in rich and poor countries, furthermore using distributional weights, a relation between elasticity of marginal utility epsilon and inequality aversion parameter gamma is established. By maximizing the global social welfare, the optimal pollution abatement level are found. The relation between the income elasticity of marginal utility epsilon and the inequality aversion parameter gamma allow to narrow the variation of epsilon for a particular value of gamma. As a consequence, smaller variation for optimal abatement levels are obtained, which allows to inspect if the Kyoto abatement objectives respect the requirement of evaluating equally the environmental goods in rich and poor countries.cost-benefit analysis, distributional weights, global warming, welfare theory, integrated assessment modeling