Essays on issues in climate change policy
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This thesis addresses three themes relating to climate change. The first is which types of fossil fuel to leave in the ground when they can differ in both their extraction cost and emissions rate. The analysis shows that without resource constraints there will always be use of at least one fossil fuel in the steady-state. With exhaustion constraints, any fossil fuel that has a lower extraction cost than the marginal cost of the backstop will be extracted in finite time regardless of the emissions rate. The only environmental consideration is the timing of extraction rather than leaving fossil fuel stock in the ground forever. The second theme is how altruistic concern of individuals for the well-being of others influences the socially optimal consumption levels and optimal emissions tax in a global context. If individuals have altruistic concern but believe that their consumption is negligible, they will not change their behaviour. However, non-cooperative governments maximising domestic welfare will internalise some of the damage inflicted on other countries depending on the level of altruistic concern individuals have and the cooperative optimum also changes as altruism leads individuals to effectively experience damage in other countries as well as the direct damage to them. Still, for behaviour to change, individuals need to make their decisions in a different way. The third chapter develops a new theory of moral behaviour whereby individuals balance the cost of not acting in their own self-interest against the hypothetical moral value of adopting a Kantian form of behaviour, asking what would happen if everyone else acted in the same way as they did. If individuals behave this way, then altruism matters and it may induce individuals to cut back their consumption. But nevertheless the optimal environmental tax is exactly the same as the standard Pigovian tax.
Thesis, PhD Doctor of Philosophy
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