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Sharing the burden for climate change mitigation in the Canadian federation

Author

Listed:
  • Christoph Böhringer

    (University of Oldenburg, Department of Economics)

  • Nicholas Rivers

    (Graduate School of Public and International Affairs and Institute of Environment, University of Ottawa)

  • Tom F. Rutherford

    (University of Wisconsin, Madison, USA)

  • Randall Wigle

    (Balsillie School of International Affairs and School of Business and Economics, Wilfrid Laurier University)

Abstract
Dividing the burden for greenhouse gas abatement amongst the provinces has proven challenging in Canada, and is a major factor contributing to Canada's poor historic performance on greenhouse gas abatement. As the country aims to achieve substantial cuts to emissions over the next decade and by mid-century, such burden sharing considerations are likely to be elevated in importance. This paper uses a calibrated multi-region multi-sector computable general equilibrium model to compare a number of archetypal rules for sharing the burden of a joint commitment amongst members for the case of greenhouse gas reductions in Canada. Because of the substantial heterogeneity amongst Canadian provinces, these different burden sharing rules imply signifcantly different relative abatement effort amongst provinces, and also signifcantly different welfare implications. When emission permits are allocated on an equal per capita basis, welfare is increased in Ontario, British Columbia, Quebec, and Manitoba, and signifcantly reduced in Alberta and Saskatchewan. In contrast, when emission permits are allocated based on historic emissions, Alberta and Saskatchewan are made better off, and Ontario, British Columbia, Quebec, and Manitoba are made worse off. We compare these archetypal burden sharing rules to existing provincial emission reduction commitments, and find that none of the standard burden sharing rules comes close to existing commitments. We argue that the debate on burden sharing of greenhouse gas abatement in Canada could be objectified if informed by coherent quantitative analysis such as the one presented here.

Suggested Citation

  • Christoph Böhringer & Nicholas Rivers & Tom F. Rutherford & Randall Wigle, 2014. "Sharing the burden for climate change mitigation in the Canadian federation," Working Papers V-362-14, University of Oldenburg, Department of Economics, revised Jan 2014.
    • Handle: RePEc:old:dpaper:362
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Meier, Jan-Niklas & Lehmann, Paul, 2022. "Optimal federal co-regulation of renewable energy deployment," Resource and Energy Economics, Elsevier, vol. 70(C).
    2. repec:clg:wpaper:2015-15 is not listed on IDEAS
    3. Meya, Jasper N. & Neetzow, Paul, 2021. "Renewable energy policies in federal government systems," Energy Economics, Elsevier, vol. 101(C).
    4. Zhang, Da & Peng, Hantang & Zhang, Lin, 2023. "Share of polluting input as a sufficient statistic for burden sharing," Energy Economics, Elsevier, vol. 121(C).
    5. Beck, Marisa & Rivers, Nicholas & Yonezawa, Hidemichi, 2016. "A rural myth? Sources and implications of the perceived unfairness of carbon taxes in rural communities," Ecological Economics, Elsevier, vol. 124(C), pages 124-134.
    6. Sarah Dobson & G. Kent Fellows, 2017. "Big and Little Feet: A Comparison of Provincial Level Consumption- and Production-Based Emissions Footprints," SPP Research Papers, The School of Public Policy, University of Calgary, vol. 10(23), September.
    7. Böhringer, Christoph & Rivers, Nicholas & Yonezawa, Hidemichi, 2016. "Vertical fiscal externalities and the environment," Journal of Environmental Economics and Management, Elsevier, vol. 77(C), pages 51-74.
    8. Jared C. Carbone & Nicholas Rivers & Akio Yamazaki & Hidemichi Yonezawa, 2020. "Comparing Applied General Equilibrium and Econometric Estimates of the Effect of an Environmental Policy Shock," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 7(4), pages 687-719.
    9. Jasper Meya & Paul Neetzow, 2019. "Renewable energy policies in federal government systems," Working Papers V-423-19, University of Oldenburg, Department of Economics, revised Jul 2019.
    10. Da Zhang & Marco Springmann & Valerie J. Karplus, 2016. "Equity and emissions trading in China," Climatic Change, Springer, vol. 134(1), pages 131-146, January.
    11. Da Zhang & Marco Springmann & Valerie Karplus, 2016. "Equity and emissions trading in China," Climatic Change, Springer, vol. 134(1), pages 131-146, January.
    12. Roolfs, Christina & Gaitan, Beatriz & Edenhofer, Ottmar, 2021. "Make or brake — Rich states in voluntary federal emission pricing," Journal of Environmental Economics and Management, Elsevier, vol. 109(C).
    13. Babonneau, Frédéric & Haurie, Alain & Vielle, Marc, 2018. "Welfare implications of EU Effort Sharing Decision and possible impact of a hard Brexit," Energy Economics, Elsevier, vol. 74(C), pages 470-489.
    14. Roolfs, Christina & Gaitan Soto, Beatriz & Edenhofer, Ottmar & Lessmann, Kai, 2021. "Technology Beats Capital -- Sharing the Carbon Price Burden in Federal Europe," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242381, Verein für Socialpolitik / German Economic Association.
    15. Jared C. Carbone & Kenneth J. McKenzie, 2015. "Going Dutch? The Impact of Oil Price Shocks on the Canadian Economy," Working Papers 2015-07, Colorado School of Mines, Division of Economics and Business.
    16. Meier, Jan-Niklas & Lehmann, Paul, 2020. "Optimal federal co-regulation of renewable energy deployment," UFZ Discussion Papers 8/2020, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).

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    More about this item

    Keywords

    climate; burden sharing; computable general equilibrium analysis;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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