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Abstract:
Countries can reduce global emissions by reducing own consumption since they are linked to the total value of consumption world wide. Two effects are at issue: a utility loss from forgone consumption and a utility gain from lowered temperature change. It is thus unclear whether own country emissions reductions are in the self interest; typically they are not for small countries, but may be for larger countries. Here are investigate the incentives for individual large population low wage rapidly growing countries in the BRIC group (Brazil, Russia, India, China) and the groups of countries as a sub-global coalition. We also assess what level of other countries’ trade measures linked to non participation is needed to induce compliance as an all or nothing discrete choice. We capture induced changes in the global trade equilibrium in our analysis, as well as participation linked to financial transfers. Our results suggest that only very high tariffs over a hundred percent by all other countries, or even higher tariffs by the OECD alone, could induce participation by BRIC countries, especially when the country is a net exporter. Equally, large financial transfers would be needed.

trade sanctions, financial transfers, global emissions, climate change

Abstract:
In the paper we discuss China's participation in both the 2009 Copenhagen negotiations on a post-Kyoto global climate change regime currently under way and out beyond Copenhagen in further negotiations likely to follow. China is now both the largest and most rapidly growing carbon emitter, and has much higher emission intensity relative to GDP than OECD countries. In the Copenhagen negotiation, there will be strong pressure on China to take on emissions reduction commitments and China's concern will be to do so in ways that allow continuation of a high growth rate and fast development. Central to this will be maintaining access to OECD markets for manufactured exports in face of potential environmental protectionism. Thus the broad approach seems likely to be to take on environmental commitments in part in return for stronger guarantees of access to export markets abroad. This involves directly linked trade and environmental commitments although how linkage can be made explicit is a major issue. More narrowly, the issues that seem likely to dominate the climate change negotiating agenda from China's viewpoint are the interpretation of the common but differentiated responsibilities (CBDR) principle adopted in Kyoto, the choice of negotiating instruments and form of emission commitments, and the size (and form) of accompanying financial funds for adaptation and innovation. We suggest that a possible interpretation of CBDR reflecting China's desire to leave room to grow when undertaking emission reduction commitments might be for China to take on emission intensity commitments while OECD countries take on emission level commitments. Larger funds and flexibility in their use will also raise China's willingness to make commitments.

Abstract:
Large population/rapidly growing economies such as China and India have argued that in the upcoming UNFCCC negotiations in Copenhagen, any emission reduction targets they take on should be based on their intensity of emissions (emissions/$GDP) on a target date not the level of emissions. They argue that this will allow room for their continued high growth, and level commitments in the presence of sharply differential growth between OECD and non-OECD economies represent asymmetric and unacceptable arrangements. Much of the policy literature agrees with this position, also arguing that while there is equivalence between commitments if growth rates are certain, where growth rates are uncertain equivalence breaks down. However, no explicit models or experimental design are used to support this claim. Here we use a modeling framework in which countries face a business as usual (BAU) growth profile under no mitigation, and can mitigate (reduce consumption) and lower temperature change but with a utility loss. International trade enters through trade in country differentiated goods, and the impact of mitigation on country welfare depends critically on the assumed severity of climate related damage. We then consider cases where country growth rates are uncertain, and compare the impacts of levels versus intensity commitments, with the latter made equivalent in the sense that expected emissions are the same. There are different senses of this equivalence; global equivalence with differing country impacts, or strict country by country equivalence. Under intensity commitments there is more variation in both consumption and emissions than is the case with level commitments, and we show cases where level commitments are preferred to intensity commitments by all countries. Whether this is the case also depends upon how growth rate uncertainty is specified. We are also able to consider packages of mixed level and intensity commitments by country which might be the outcome of UNFCCC negotiations. Outcomes can thus be opposite to prevailing opinion, but it depends on how the equivalent targets are specified.

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