Keywords: developing countries, equity, global warming, fairness, greenhouse gases, GHG emissions, tradeable permits, welfare outcomes
Will a global warming agreement be fair to developing countries?
Fairness, or equity, is a major concern of developing countries in negotiating a global agreement on greenhouse gas emission reductions. Operational versions of several equity concepts are analysed in the context of tradeable permits. We find that a global least-cost mitigation strategy is compatible with a variety of equity criteria. Moreover, the more cost-effective the global strategy, the greater the potential for North-South transfers. However, in many cases, the fairness of the final welfare outcomes differs significantly from the application of first principles for allocating permits. At the same time, several disparate equity criteria yield similar inter-country welfare outcomes. Still, some seemingly reasonable criteria are probably untenable from a political standpoint.