Interregional Burden-Sharing of Greenhouse Gas Mitigation in the United States

East-West Center Working Paper No. 62

35 Pages Posted: 18 Sep 2004

See all articles by Adam Rose

Adam Rose

Pennsylvania State University - Department of Geography

ZhongXiang Zhang

Tianjin University - Ma Yinchu School of Economics

Date Written: September 2004

Abstract

Emissions trading is an attractive candidate for implementing greenhouse gas mitigation, because it can promote both efficiency and equity. This paper analyzes the interregional impacts of alternative allocations of carbon dioxide emission permits within the U.S. The analysis is performed with the aid of a nonlinear programming model for ten EPA Regions and for six alternative permit distribution formulas. The reason that various alternatives need to be considered is that there is no universal consensus on the best definition of equity. Advance knowledge of absolute and relative regional economic impacts provides policy-makers with a stronger basis for making the choice.

The analysis yields several useful results. First, the simulations indicate that no matter how permits are allocated, this policy instrument can substantially reduce the cost of greenhouse gas mitigation for the U.S. in comparison to a system of fixed quotas for each of its regions. Interestingly, the welfare impacts of several of the allocation formulas differ only slightly despite the large differences in their philosophical underpinnings. Also, the results for some equity criteria differ greatly from their application in the international domain. For example, the Egalitarian (per capita) criterion results in the relatively greatest cost burden being incurred by one of the regions of the U.S. with the lowest per capita income.

Keywords: Tradeable emission permits, climate policy, interregional equity

JEL Classification: Q54, Q58, Q52, Q48

Suggested Citation

Rose, Adam and Zhang, ZhongXiang, Interregional Burden-Sharing of Greenhouse Gas Mitigation in the United States (September 2004). East-West Center Working Paper No. 62, Available at SSRN: https://ssrn.com/abstract=592163 or http://dx.doi.org/10.2139/ssrn.592163

Adam Rose

Pennsylvania State University - Department of Geography ( email )

302 Walker Building
University Park, PA 16802
United States

ZhongXiang Zhang (Contact Author)

Tianjin University - Ma Yinchu School of Economics ( email )

92 Weijin Road, Nankai District
Tianjin 300072
China
+86 22 87370560 (Phone)

HOME PAGE: http://ideas.repec.org/f/pzh243.html

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