Climate Change: Impacts and Solutions

Abstract

The thesis consists of an introduction and four research papers assessing impacts and responses to climate change. Particularly, there are two key reasons that motivates the thesis. First, climate economic models are often criticized for their representation of potential biodiversity impact of climate change. Second, as the world still relies on unilateral initiatives to combat climate change, these initiatives may lead to carbon leakage. Paper 1 incorporates recent empirical estimates of the economic value of biodiversity and ecosystem services in a well-known Integrated Assessment Model (IAM). Paper 2 examines the welfare effects of complementing the anti-leakage measure output-based allocation (OBA) with a consumption tax on emission-intensive and trade-exposed (EITE) goods. Paper 3 extends the analyses in paper 2 by evaluating the potential outcome of climate policies in a non-cooperative policy instrument game between regions who regulate their emissions separately. Finally, paper 4 examines the welfare effect of combining an emission trading system with an emission offset mechanism abroad for the domestic EITE sector.