Climate Protection Strategies: International Allocation and Distribution Effects

In international climate policy discussions, one of the centralissues for medium- to long run climate protection strategiesis the uncertainty about the costs and the distributional effectsof specific unilateral or multilateral emission reductions. Thispaper looks at the world-wide effects of climate protection strategieson the allocation of resources, on economic growth in differentregions, and on the regional welfare effects. The analysis isbased on a global recursively dynamic, multi-region, multi-sectorcomputable general equilibrium model parameterized accordingto the ICLIPS (Integrated Assessment of Climate Protection Strategies)integrated assessment model. The simulations show that nationalclimate policies will have important international repercussions.It is therefore important to consider international allocationeffects in the analysis of national climate protection strategies.The welfare costs of greenhouse gas emission reductions risemore than proportionally with lower emission targets. The analysisof the carbon leakage rate indicates that most of the leakagerapidly disappears if emission reduction moves towards an efficientdistribution of emission targets.