Who should pay for climate? The effect of burden-sharing mechanisms on abatement policies and technological transfers

Recent international environmental negotiations have highlighted the importance of establishing a commonly agreed approach to attribute climate change responsabilities. In this paper I investigate how choices on allocation mechanisms are likely to affect optimal abatement effort paths and technological transfers. I derive a North- South optimal growth model from the 2007 version of the RICE model allowing for pollution-abating technological transfers and use it to test three different allocation approaches, based on sovereignty, egalitarian and polluter pays principles. Numerical simulations typical of integrated assessment models show that: a) the presence of technical transfers always improves intertemporal global welfare; b) the optimal abatement and technical transfers paths depend on the chosen burden-allocation rule; c) the costs associated with the introduction of a 2-degree limit to temperature increase are in all probability too high to be politically acceptable.