Rick van der Ploeg, Armon Rezai, 05 January 2018

Trump’s election has brought climate change deniers to the centre of global policymaking. This column uses Pascal’s wager as a model to explore optimal policy given uncertainty over the fundamental causes of global warming. This agnostic approach finds that assigning even a high probability to climate change deniers being correct has insignificant effects on policy. Pricing carbon is shown to be optimal in either case, and robust to whether policymakers want to maximise global welfare, or minimise regret in the worst case.

Gregory Casey, Oded Galor, 23 March 2017

Most policies that target climate change – such as carbon taxes and cap-and-trade programmes – have long-term benefits but short-term economic costs. This column argues that population policies may not be subject to this trade-off. In particular, policies that reduce population growth can have a direct positive effect on income per capita as well as lowering growth of carbon emissions. Such policies could play an important role in the portfolio of actions aimed at mitigating climate change.

Arik Levinson, James O'Brien, 11 March 2015

Rich countries pollute less partly because people in richer countries consume a less pollution-intensive bundle of goods. This column investigates whether this results from consumer preferences or economy-wide changes. Within a country, the environmental Engel curve is concave – meaning that richer households, while polluting more, consume a less pollution-intensive bundle. Over time, this accounts for half of the decrease in rich household pollution, with the remainder being due to price changes and environmental regulations.

Matthew Kahn, Siqi Zheng, 19 January 2010

China’s economic growth has profound environmental implications. This column estimates the household carbon emissions of China’s major cities. Even in China’s most polluting city, per household emissions are just one-fifth of those in San Diego, the greenest city in the US.

Raymond Riezman, John Whalley, Yuezhou Cai, 09 April 2009

This column explains how damage from global temperature increases needs to be large before countries reduce carbon emissions. It shows, using simulations, that larger countries should be more willing to participate in cooperative arrangements and countries adopting a longer-term view will be more inclined to reduce carbon emissions. It also argues that international trade is largely a positive force in reducing carbon emissions.

John Whalley, Yan Dong, 25 November 2008

Trade and environmental regimes may need to be more closely linked in a post-Kyoto world. This column discusses trade policy initiatives’ potential contribution to global carbon emissions reduction and the potential impacts of proposals for carbon-reduction-motivated geographical trade arrangements. It suggests that the need to link environmental and trade policy may render the WTO obsolete.

Hans-Werner Sinn, 31 October 2007

EU leaders don’t determine the pace of climate change. Demand reduction by some consumers only lowers fossil fuel consumption to the degree that resource owners decide to curtail their supply. Ultimately, the volume of fossil fuel burnt globally depends upon the rate of extraction and this is in the hands of oil producers who care about carbon’s intertemporal price path. Policies aimed at lowering carbon demand without concern for the price path of carbon may backfire.

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