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Environmental and Resource Economics

, Volume 74, Issue 2, pp 727–759 | Cite as

Unequal Vulnerability to Climate Change and the Transmission of Adverse Effects Through International Trade

  • Karine Constant
  • Marion DavinEmail author
Article

Abstract

In this paper, we consider the unequal distribution of climate change damages in the world and we examine how the underlying costs can spread from a vulnerable to a non-vulnerable country through international trade. To focus on such indirect effects, we treat this topic in a North–South trade overlapping generations model in which the South is vulnerable to the damages entailed by global pollution while the North is not. We show that the impacts of climate change in the South can be sources of welfare loss for northern consumers in both the long and the short run. In the long run, an increase in the South’s vulnerability can reduce the welfare in the North economy even in the case in which it improves the terms of trade of the North. In the short run, the South’s vulnerability can also represent a source of intergenerational inequity in the North. Therefore, we emphasize the strong economic incentives for non-vulnerable—and a fortiori less vulnerable—economies to reduce the climate change damages on more vulnerable countries.

Keywords

International trade Climate change Heterogeneous damages Overlapping generations 

JEL Classification

F18 F43 O41 Q56 

Notes

Acknowledgements

We would like to thank the co-editor Robert Elliott, and the two anonymous referees for their helpful comments on an earlier draft. We are also grateful to the participants at the conferences LAGV 2017, EAERE 2017, FAERE 2017, SAET 2018 and at the workshops on location choices and environmental economics (2017, Pau), on growth, environment and population (2017, Nanterre) and on environmental regulation, trade and innovation (2018, Créteil). Supports from ANR GREEN-econ (ANR-16-CE03-0005) are gratefully acknowledged.

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Copyright information

© Springer Nature B.V. 2019

Authors and Affiliations

  1. 1.ERUDITE, UPECUniversité Paris EstCréteilFrance
  2. 2.CEE-M, Univ. Montpellier, CNRS, INRA, Montpellier SupAgroMontpellierFrance

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