November 15, 2010

The Carbon-Budget Approach to Climate Stabilization: Cost-Effective Subglobal versus Global Action

by Thomas Eichner and Rüdiger Pethig

- Scientific expertise suggests that mitigating extreme world-wide climate change damages requires avoiding increases in the world mean temperature exceeding 2°C. To achieve the two degree target, the cumulated global emissions must not exceed some limit, the so-called global carbon budget. In a two-period two-country general equilibrium model with a finite stock of fossil fuels we compare the cooperative cost-effective policy with the unilateral cost-effective policy of restricting emissions to the global carbon budget.

Eichner, T. and R. Pethig (2010). "The Carbon-Budget Approach to Climate Stabilization: Cost-Effective Subglobal versus Global Action." CESifo Working Paper No. 3232, Nov 2010.