Efficiency Gains from 'What' - Flexibility in Climate Policy - an Integrated Cge Assessment

28 Pages Posted: 19 Oct 2004 Last revised: 15 Aug 2008

See all articles by Christoph Böhringer

Christoph Böhringer

University of Oldenburg - Economic Policy; Centre for European Economic Research (ZEW)

Andreas Löschel

University of Muenster - Chair of Microeconomics, esp. Energy and Resource Economics

Thomas F. Rutherford

Centre for Energy Policy and Economics

Date Written: 2004

Abstract

We investigate the importance of 'what'-flexibility on top of 'where'- and 'when'-flexibility for alternative emission control schemes that prescribe long-term temperature targets and eventually impose additional constraints on the rate of temperature change. We find that 'what'-flexibility substantially reduces the compliance costs under alternative emission control schemes. When comparing policies that simply involve long-term temperature targets against more stringent strategies that include additional constraints on the rate of temperature increase, it turns out that the latter involve huge additional costs. These costs may be interpreted as additional insurance payments if damages should not only dependent on absolute temperature change but also on the rate of temperature change.

Keywords: Climate policy, integrated assessment, what-flexibility

JEL Classification: D58, Q43

Suggested Citation

Bohringer, Christoph and Löschel, Andreas and Rutherford, Thomas F., Efficiency Gains from 'What' - Flexibility in Climate Policy - an Integrated Cge Assessment (2004). ZEW - Centre for European Economic Research Discussion Paper No. 04-048, Available at SSRN: https://ssrn.com/abstract=606401 or http://dx.doi.org/10.2139/ssrn.606401

Christoph Bohringer (Contact Author)

University of Oldenburg - Economic Policy ( email )

Centre for European Economic Research (ZEW) ( email )

D-68161 Mannheim
Germany
+49 6211235200 (Phone)
+49 6211235226 (Fax)

Andreas Löschel

University of Muenster - Chair of Microeconomics, esp. Energy and Resource Economics ( email )

Universitätsstr. 14-16
48143 Munster
Germany

HOME PAGE: http://www.wiwi.uni-muenster.de/eroe

Thomas F. Rutherford

Centre for Energy Policy and Economics ( email )

ETH-Zentrum
Zurich, CH-8092
United States
+41 (0)44/632 6359 (Phone)
+41 (0)44/632 1622 (Fax)

HOME PAGE: http://www.cepe.ethz.ch/

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
120
Abstract Views
1,283
rank
281,472
PlumX Metrics