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Climate Policy In Practice: A Typology Of Obstacles And Implications For Integrated Assessment Modeling

Author

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  • IRIS STAUB-KAMINSKI

    (Potsdam Institute for Climate Impact Research, P.O. Box 60 12 03, 14412 Potsdam, Germany)

  • ANNE ZIMMER

    (Potsdam Institute for Climate Impact Research, P.O. Box 60 12 03, 14412 Potsdam, Germany)

  • MICHAEL JAKOB

    (Potsdam Institute for Climate Impact Research, P.O. Box 60 12 03, 14412 Potsdam, Germany;
    Mercator Research Institute on Global Commons and Climate Change, Torgauer Str. 12–15, 10829 Berlin, Germany)

  • ROBERT MARSCHINSKI

    (Potsdam Institute for Climate Impact Research, P.O. Box 60 12 03, 14412 Potsdam, Germany;
    Technische Universität Berlin, Strasse des 17. Juni 145, 10623 Berlin, Germany)

Abstract

The implementation of mitigation policies will be complicated by several real-world imperfections ("second-best conditions") and constraints typically not included in the more idealized economies assumed in Integrated Assessment Models (IAMs), based on which such policies are derived. But which of these numerous imperfections found in real economies are actually relevant in this context? And how could they — in principle — be taken into account by IAMs? Based on a literature review, we propose a typology of three categories of obstacles inhibiting "first-best" conditions and outcomes: first, obstacles impeding the setting of least-cost abatement incentives; second, obstacles limiting the supply and exploitation of abatement options; and, third, obstacles creating distortions between the price and marginal costs of abatement. By reviewing the implementation of energy policy in China, we put our typology into practice and identify specific empirical evidence for each category. IAMs in principle can (and in practice often do) incorporate several relevant obstacles by means of additional cost or quantity constraints. However, the nature of some obstacles relating to strategic interactions between economic agents appears to be incompatible with the standard representative agent social-planner framework often employed in IAMs, suggesting a need for complementary analysis with decentralized "Integrated Policy Assessment Models".

Suggested Citation

  • Iris Staub-Kaminski & Anne Zimmer & Michael Jakob & Robert Marschinski, 2014. "Climate Policy In Practice: A Typology Of Obstacles And Implications For Integrated Assessment Modeling," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 5(01), pages 1-30.
  • Handle: RePEc:wsi:ccexxx:v:05:y:2014:i:01:n:s2010007814400041
    DOI: 10.1142/S2010007814400041
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    References listed on IDEAS

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