Climate Change Economics

“The common but differentiated responsibilities” requires that participating countries in the Paris Agreement need to clarify their national emission reduction priorities and develop practical and feasible plans based on their local conditions. This paper aims to estimate the CO₂ emission efficiency and the potential emission reduction of the Paris Agreement contracting countries and identify the key influencing factors of CO₂ emission efficiency for the period of 1991–2014. A nonradial directional distance function, the metafrontier approach, and the bootstrapped truncated regression model are used. The following are the main conclusions: (1) China makes the highest annual potential CO₂ emission reduction of 2133.13 billion tons. (2) The technology gap appears to be a major contributor to the potential CO₂ emission reductions in the low income group (82.87%) and the lower–middle income group (66.01%), and thus these economies should pursue technological innovation to improve carbon emission efficiency; the potential CO₂ emission reductions in other groups are mainly the result of management inefficiency (with 57.52% and 78.38% of potential emission reductions by the upper–middle income and high income countries coming from management inefficiency). Therefore, some countries in the specific income group exhibit different emission reduction focus. (3) According to a regression analysis on the CO₂ emission efficiency contributing factors, the progress of total factor productivity and improvement of management level can improve the CO₂ emission efficiency. This study might be the first attempt to decompose the potential CO₂ emission reduction of these countries and provides each country with targeted, effective emission reduction priorities.

Globalization, commercialization, modernization, erratic climatic conditions, individual expectations, contagion, and government policies are some of the reasons attributed to farmers’ suicides. This study hypothesizes that farmer suicides in India are primarily linked to loss in agricultural productivity which in turn is affected by adverse weather and low penetration of irrigation networks. Using panel data of 16 major states in India, from 1996 to 2015 and Control Function (CF) approach, the study shows that keeping all other factors fixed, a one degree rise in temperature results in 4.8% higher farmer suicides through a 3.6% decline in agricultural productivity. Further, the study highlights the significant role played by the contagion factors influencing farmer suicides. The study argues for policy responses that address covariate shocks arising from weather vagaries, price volatility, and liquidity constraint as well as idiosyncratic shocks arising from farmer-specific characteristics.

Climate change has severely affected the crops’ productivity during the last few decades across the agrarian economies of the world, thereby resulting in a considerable loss per farmer in the yearly net revenue. Pakistan’s agriculture is sensitive to warming and it experienced an adverse effect in the net farm revenue (NFR). This study primarily predicts the adverse climate effects and estimates the NFR of the farmers of five major crops (wheat, rice, cotton, sugarcane and maize) in two different seasons, winter (Rabbi) and summer (Kharif), in Pakistan. This study is based upon the secondary cross-sectional data [Household Integrated Economic Survey of Pakistan (HIES), 2015–2016] along with the time series data regarding climatic variables from 1981 to 2016. A well-established Ricardian approach has been employed to test the association between net revenue of the farmer and climatic variability. Results of overall study conclude that increases in average summer (winter) temperature and average winter (summer) rainfall have adverse (favorable) impacts on all of the crops’ productivity during both seasons, winter (Rabbi) and summer (Kharif), in Pakistan, thus leading to a decline (an increase) in NFR. Future increases in temperature will be harmful and may lead to significant loss in the revenue amount. The analysis of adaptation techniques exhibits beneficial impacts on the NFR and it is concluded that adaptations are helpful tool for the farmers to minimize revenue loss.

The Paris Agreement of 2015 uses Nationally Determined Contributions (NDCs) to achieve its goal to limit climate change to well below 2^°C. Article 6 allows countries to cooperatively implement NDCs provided they do not double-count mitigation. We estimate that economic efficiency gains from cooperative implementation of existing NDC goals using Article 6 could reduce the cost of achieving NDC goals in 2030 to all parties by $\sim$$$300\times 10^9$, which if reinvested in additional emissions mitigation could add 9 billion tons CO₂/year mitigation, beyond the 8 billion tons CO₂/year currently pledged in 2030. We estimate that more than half of the 2030 gains could come from nature-based measures, but long-term potential for nature-based measures is more limited. How much or even if this economic potential can be realized is uncertain and will depend on both the rules and their implementation.