Climate Change Mitigation Strategies in Fast-Growing Countries: The Benefits of Early Action

31 Pages Posted: 8 Sep 2009

See all articles by Valentina Bosetti

Valentina Bosetti

Bocconi University; CMCC - Euro Mediterranean Centre for Climate Change

Carlo Carraro

Fondazione Eni Enrico Mattei (FEEM); Ca' Foscari University of Venice; CMCC - Euro Mediterranean Centre for Climate Change (Climate Policy Division); IPCC; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Centre for European Policy Studies, Brussels; Green Growth Knowledge Platform; International Center for Climate Governance

Massimo Tavoni

Fondazione Eni Enrico Mattei (FEEM); Princeton University - Princeton Environmental Institute

Multiple version iconThere are 4 versions of this paper

Date Written: August 2009

Abstract

This paper builds on the assumption that OECD countries are (or will soon be) taking actions to reduce their greenhouse gas emissions. These actions, however, will not be sufficient to control global warming, unless developing countries also get involved in the cooperative effort to reduce GHG emissions. This paper investigates the best short-term strategies that emerging economies can adopt in reacting to OECD countriesÂ’ mitigation effort, given the common long-term goal to prevent excessive warming without hampering economic growth. Results indicate that developing countries would incur substantial economic losses by following a myopic strategy that disregards climate in the short-run, and that their optimal investment behaviour is to anticipate the implementation of a climate policy by roughly 10 years. Investing in innovation ahead of time is also found to be advantageous. The degree of policy anticipation is shown to be important in determining the financial transfers of an international carbon market meant to provide incentives for the participation of developing countries. This is especially relevant for China, whose recent and foreseeable trends of investments in innovation are consistent with the adoption of domestic emission reduction obligations in 2030.

Keywords: Climate Policy, Developing Countries, Energy-economy modeling

JEL Classification: Q43, Q54, Q55

Suggested Citation

Bosetti, Valentina and Carraro, Carlo and Tavoni, Massimo, Climate Change Mitigation Strategies in Fast-Growing Countries: The Benefits of Early Action (August 2009). CEPR Discussion Paper No. DP7394, Available at SSRN: https://ssrn.com/abstract=1469873

Valentina Bosetti

Bocconi University

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CMCC - Euro Mediterranean Centre for Climate Change

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Carlo Carraro (Contact Author)

Fondazione Eni Enrico Mattei (FEEM) ( email )

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Centre for European Policy Studies, Brussels

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Green Growth Knowledge Platform ( email )

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International Center for Climate Governance ( email )

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Massimo Tavoni

Fondazione Eni Enrico Mattei (FEEM) ( email )

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Italy

Princeton University - Princeton Environmental Institute

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