Abstract
Arguments over equity during abatement goal setting is the principal obstacle to climate mitigation cooperation, while allocating global emissions to each country as deduced from the climate objective according to certain equitable principles offers an effective alternative to ending this dispute. Such an alternative also endows each country with the freedom to determine and develop its own pathway under its emissions budget while ensuring that global climate targets are met. Within this context, this paper integrated economic growth theory with the optimal control model and simulated the optimal abatement pathway as well as the economic growth trajectory for China within the allocated emissions budget. The study found that research and development (R&D) investment is an effective way of improving energy efficiency. Our simulation showed that the R&D intensity of the gross domestic product (GDP) would see a slight decline for the inceptive period, followed by an aggressive rise to a relatively high level before decreasing again. Under the 450 ppm carbon concentration target, the R&D investment intensity would have to increase significantly beginning from 2014 because of the more stringent demands as compared to other less rigorous targets such as 500 ppm. The economy would continue to grow, although growth would occur less rapidly under rigorous targets: relative to 2007 levels, the GDP would grow by 11-fold and 15-fold under the 450 and 500 ppm scenarios, respectively. Before enforcement of an effective R&D investment, the carbon emissions would increase rapidly, while after enforcement, the speed of carbon emissions would slow down.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Bohm, P., & Larsen, B. (1994). Fairness in a tradable-permit treaty for carbon emission reduction in Europe and the Former Soviet Union. Environmental and Resource Economics, 4(3), 219–239. doi:10.1007/BF00692325.
Bosetti, V., Carraro, C., Massetti, E., Sgobbi, A., & Tavoni, M. (2009). Optimal energy investment and R &D strategies to stabilize atmospheric greenhouse gas concentrations. Resource and Energy Economics, 31(2), 123–137.
Bosetti, V., Massetti, E., Tavoni, M. (2007). The WITCH Model. Structure, Baseline, Solutions. Working Papers 2007.10, Fondazione Eni Enrico Mattei. http://www.feem.it/userfiles/attach/Publication/NDL2007/NDL2007-010.pdf. Accessed 8 November 2012
Burniaux, J., & Truong, T. (2002). GTAP-E: An energy-environmental version of the GTAP model. GTAP Technical Papers 923, Department of Agricultural Economics, Purdue University. https://www.gtap.agecon.purdue.edu/resources/download/1203.pdf. Accessed 8 November 2012
Cass, D. (1965). Optimum growth in an aggregative model of capital accumulation. The Review of Economic Studies, 32(3), 233–240.
Ding, Z. L., Duan, X. N., Ge, Q. S., & Zhang, Z. Q. (2009). Control of atmospheric \(\text{ CO }_{2}\) concentration by 2050: An allocation on the emission rights of different countries. Science China Earth Sciences. doi:10.1007/s11430-009-0115-3.
Doyen, L., Dumas, P., & Ambrosi, P. (2008). Optimal timing of \(\text{ CO }_{2}\) mitigation policies for a cost-effectiveness model. Mathematical and Computer Modeling, 48, 882–897.
Goldsmith, R. W. (1951). A perpetual inventory of national wealth (pp. 5–61). New York: National Bureau of Economic Research.
Kartha, S., Baer, P., Athanasiou, T., Kemp-Benedict, E. (2010). The right to development in a climate constrained world: the greenhouse development rights framework. In: Voss, M., Der Klimawandel (pp. 205–226), VS Verlag für Sozialwissenschaften.
Kemfert, C. (2002). An integrated assessment model of economy-energy-climate—the model Wiagem. Integrated Assessment, 3(4), 281–298.
Koopmans, T. C. (1965). On the concept of optimal economic growth. No 163, Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University, http://EconPapers.repec.org/RePEc:cwl:cwldpp 163. Accessed 7 November 2012
Kverndokk, S. (1995). Tradable \(\text{ CO }_{2}\) emission permits: Initial distribution as a justice problem. Environmental values, 4(2), 129–148.
Manne, A., Mendelsohn, R., & Richels, R. (1995). MERGE—A model for evaluating regional and global effects of GHG reduction policies. Energy Policy, 23(1), 17–34.
Nordhaus, W. D. (2010). Economic aspects of global warming in a post-Copenhagen environment. Proceedings of the National Academy of Sciences of the United States of America, 107, 11721–11726.
Nordhaus, W. D., & Yang, Z. L. (1996). A regional dynamic general equilibrium model of alternative climate change strategies. The American Economic Review, 86(4), 741–765.
Popp, D. (2004). ENTICE: Endogenous technological change in the DICE model of global warming. Journal of Environmental Economics and Management, 48(1), 742–768.
Ramsey, F. (1928). A mathematical theory of saving. Economic Journal, 38, 543–559.
Rose, A., Stevens, B., Edmonds, J., & Wise, M. (1998). International equity and differentiation in global warming policy: an application to tradable emission permits. Environmental and Resource Economics, 12(1), 25–51.
Solow, R. M. (1956). A contribution to the theory of economic growth. Quarterly Journal of Economics, 70(1), 65–94.
Wang, Z., Wu, J., Li, G. Q., Zhang, H. B., & Wang, L. J. (2009). Using simulation to assess climate change strategies for global participation. Acta Ecologica Sinica, 29(5), 2407–2417.
Wang, Z., Zhu, Y. B., Liu, C. X., & Ma, X. Z. (2010). Integrated projection of carbon emission for China under the optimal economic growth path. Acta Geographica Sinica, 65(12), 1562–1571.
Wing, I. S., Daenzer, K., Fisher-Vanden, K., Calvin, K. (2011). Phoenix model documentation. Resource Document. http://www.globalchange.umd.edu/data/models/phx_documentation_august_2011.pdf. Accessed 7 November 2012
Wu, J., & Wang, Z. (2010). Key Issues of International Emission Mitigation Schemes. Science & Technology for Development, 3, 21–25.
Wu, J., Wang, Z., & Zhu, Q. T. (2010). Analysis on mitigation schemes combating climate change. Journal of Safety and Environment, 6, 92–97.
Zhang, J., Wu, G. Y., & Zhang, J. P. (2004). The estimation of China’s provincial capital stock: 1952–2000. Economic Research Journal, 39(10), 35–44.
Zhu, Y. B., & Wang, Z. (2011). Application of optimal control theory in the determination of optimal \(\text{ CO }_{2}\) abatement and economic growth paths in China. 2011 Third Pacific-Asia Conference on Circuits, Communications and System (IEEE), 339–341.
United Nations, Department of Economic and Social Affairs, Population Division (2011). World population prospects: The 2010 revision, CD-ROM Edition. http://esa.un.org/unpd/wpp/Excel-Data/population.htm. Accessed 20 February 2013
Wang, J. Y., & Lin, L. (2006). Analysis on labor force participation rate and labor supply in the future in China. Population Journal, 4, 19–24.
Acknowledgments
Financial support was provided by Grant No. 2012CB955804 from the National Basic Research Program of China (973 Program), Grant No. 41201594 from the National Science Foundation of China, and Grant No. XDA05150502 from the “Strategic Priority Research Program—Climate Change: Carbon Budget and Relevant Issues” of the Chinese Academy of Sciences.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Zhu, Y., Wang, Z. An Optimal Balanced Economic Growth and Abatement Pathway for China Under the Carbon Emissions Budget. Comput Econ 44, 253–268 (2014). https://doi.org/10.1007/s10614-013-9383-x
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10614-013-9383-x