Aspects of burden-sharing of common action to mitigate climate change

Abstract

The paper discusses burden-sharing of a common 'ceiling' for total emissions of CO2 for a group of countries. The distribution of quotas is assumed to be based on the anticipated emissions in each country after a uniform carbon tax is imposed. A 'fair' burden can be defined as the resulting reduction in NNP. Over time, however, this would lead to an unfair distribution unless the quotas were adjusted or compensated according to the changes in NNP. However, in practice, NNP turns out as rather imperfect measure of welfare. Thus, to achieve a fair sharing of burden over time, a more comprehensive macro-economic analysis of the participating countries would be necessary. A particular attention should then be given to differences in the utilization of natural resources and the openness of the economies. Also other costs and benefits resulting from the measures should be examined. These include the effect on total governmental revenues as a result of the carbon tax.