Comparing climate strategies: Economic optimization versus equitable burden-sharing

SEI Working Paper WP-US-1104

Author(s): Ackerman, F. ; Bueno, R. ; Kartha, S. ; Kemp-Benedict, E.
Year: 2011

Climate policy addresses a global problem, with costs and benefits distributed unevenly around the world. Questions of efficiency and equity are central to the allocation of costs; they are typically handled either by modeling optimal policies based on economic efficiency, or by setting standards that embody principles of equity.

This analysis employs the Climate and Regional Economics of Development (CRED) integrated assessment model to assess the optimal international allocation of effort. The authors compare CRED scenarios to the results of an equity-oriented burden-sharing framework, Greenhouse Development Rights (GDRs), which allocates effort to countries based on their responsibility (emissions) and capacity (income).

The authors calibrate CRED to generate a scenario comparable to the GDRs reference case, or business as usual. They then recalibrate CRED to generate a mitigation scenario comparable to the GDRs emergency reduction scenario, which preserves a high likelihood of staying below 2°C. Finally, they compare the share of global effort allocated to high-income countries in the CRED mitigation scenario and the GDRs emergency reduction scenario, finding them to be similar in both models.

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