How much climate policy has cost for OECD countries?

Research output: Contribution to journalArticleScientificpeer-review

Abstract

High economic cost of climate policy has attracted critical debate since the Kyoto Protocol. However, reliable empirical evidence of the abatement cost of green-house gases across countries remains scant. In this study we estimate the average yearly green-house gas abatement costs per capita for a panel of 28 OECD countries in years 1990–2015. The marginal abatement costs are estimated using a novel data-driven approach based on convex quantile regression. Compared to traditional frontier estimation methods, the quantile approach takes into account a broader set of abatement options and is more robust to inefficiency, noise, and heteroscedasticity in empirical data. The comparison of OECD countries shows that the actual abatement cost per capita has been very modest, much lower than predicted in the late 1990s. This result has profound policy implications, calling for more ambitious climate change mitigation strategy in the future.
Original languageEnglish
Article number104681
Pages (from-to)1-8
JournalWORLD DEVELOPMENT
Volume125
DOIs
Publication statusPublished - Jan 2020
MoE publication typeA1 Journal article-refereed

Keywords

  • Abatement cost
  • Climate change
  • Convex quantile regression
  • Green-house gases
  • Kyoto Protocol
  • OECD countries

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