Think Globally, Act Locally? Stock vs Flow Regulation of a Fossil Fuel

Amigues, Jean-Pierre, Chakravorty, Ujjayant and Moreaux, Michel (2009) Think Globally, Act Locally? Stock vs Flow Regulation of a Fossil Fuel. TSE Working Paper, n. 09-115

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Official URL: http://tse-fr.eu/pub/21973

Abstract

Regulation of environmental externalities like global warming from the burning of fossil fuels (e.g., coal and oil) is often done by capping both emission flows and stocks. For example, the European Union and states in the Northeastern United States have introduced caps on flows of carbon emissions while the stated goal of the Intergovernmental Panel on Climate Change (IPCC) which provides the science behind the current global climate negotiations is to stabilize the atmospheric stock of carbon. Flow regulation is often local or regional in nature, while stock regulation is global. How do these multiple pollution control efforts interact when a nonrenewable resource creates pollution? In this paper we show that local and global pollution control efforts, if uncoordinated, may exacerbate environmental externalities. For example, a stricter cap on emission flows may actually increase the global pollution stock and hasten the date when the global pollution cap is reached.

Item Type: Monograph (Working Paper)
Language: English
Date: November 2009
JEL codes: Q12 - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
Q32 - Exhaustible Resources and Economic Development
Q41 - Demand and Supply
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 18 Jan 2012 06:01
Last Modified: 07 Mar 2018 13:22
OAI ID: oai:tse-fr.eu:21973
URI: http://publications.ut-capitole.fr/id/eprint/3296

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