Paper #1646

Título:

Global unanimity agreement on the carbon budget

Autores:

Humberto Llavador y John E. Roemer

Data:

Abril 2019

Resumen:

Carbon budgets are a useful way to frame the climate mitigation challenge and much easier to agree upon than the allocation of emissions. We propose a mechanism with countries agreeing on the global carbon budget, while the decision to emit is decentralized at the country level. The revenue is collected in a global fund and allocated according to endogenously defined weights proportional to the marginal cost of climate change. The proposal features a unanimous agreement of the national citizenries of the world and global Pareto efficiency. We run a simulation in the spirit of the Paris Agreement, with zero emissions after 2055. At the Global Unanimity Equilibrium, permits are priced at 90$/tC, yielding 1.3 trillion dollars annually. Africa, India and the less developed countries in Asia are the only net recipients, while the US and China are the largest net contributors.

Palabras clave:

carbon budget, emissions, international agreement, permits, climate change

Códigos JEL:

Q54, Q56, Q58, F53, F64

Área de investigación:

Microeconomía / Economía Laboral, Pública, de Desarrollo y de la Salud

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