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Estimating the marginal abatement costs of carbon dioxide emissions in China: A parametric analysis

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  • Du, Limin
  • Hanley, Aoife
  • Wei, Chu

Abstract

This paper investigates the technical inefficiency, shadow price and substitution elasticity of CO2 emissions of China based on a provincial panel for 2001-2010. Using linear programming to calculate a quadratic parameterized directional output distance function, we show that China's technical inefficiency increases over the period implying further scope for CO2 emissions reduction in the medium and longer term at best by 4.5% and 4.9% respectively. Our results (notwithstanding regional differences) highlight increases in the shadow price of CO2 abatement (1000 Yuan/ton in 2001 to 2100 Yuan/ton in 2010). Additionally, increasingly steep substitution elasticity highlights the difficult reality of reducing China's CO2 emissions.

Suggested Citation

  • Du, Limin & Hanley, Aoife & Wei, Chu, 2013. "Estimating the marginal abatement costs of carbon dioxide emissions in China: A parametric analysis," Kiel Working Papers 1883, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1883
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    References listed on IDEAS

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    More about this item

    Keywords

    CO2 emissions; Shadow Price; Parametric Estimation; China;
    All these keywords.

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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