Empirical modeling of the economy and the environment

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ZhongXiang Zhang employs a global model based on marginal abatement cost curves for 12 world regions to analyze the contributions of the flexibility mechanisms under the Kyoto Protocol: emissions trading, joint implementation, and the clean development mechanism. He finds that the reduction in compliance costs for industrialized regions is contingent on the availability of these mechanisms. Notably, fewer restrictions lead to greater gains, though these benefits are unevenly distributed, favoring regions with higher autarkic marginal abatement costs. Restrictions not only limit efficiency gains for industrialized regions but also hinder financial flows to developing countries under the clean development mechanism. Christoph Bohringer, Glenn W. Harrison, and Thomas F. Rutherford assess the welfare implications of various methods for distributing the EU's emission reduction commitments among member states. Utilizing a large-scale CGE model, they compare a uniform proportional cutback in emissions and the existing EU burden-sharing agreement with an equitable allocation scheme based on an endogenous burden-sharing calculation, which aims to equalize the relative welfare costs across member states.