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This important new book enhances our understanding of the dynamic interactions between economic activity, economic growth, pollution abatement and environmental policy. It addresses one main policy problem: how can the direct and indirect costs of environmental policy for multiple pollutants be properly assessed in an applied model? Using an original methodology, the author constructs a multi-sectoral dynamic applied general equilibrium model. This new integrated model greatly improves the empirical analysis of the dynamic reactions of economic agents to pollution control, explicitly taking into account the direct and indirect effects of abatement on the economy and the environment. The author goes on to apply the model to study the costs of various environmental policies including climate change, acidification, eutrophication, smog formation and the dispersion of fine dust. He finds that if environmental policies can be implemented simultaneously and in a cost-effective manner, the economic costs of these policies can be effectively limited through a combination of economic restructuring and adopting technical abatement measures. Modelling the Costs of Environmental Policy will prove essential and enlightening reading for scholars, students and researchers of environmental and resource economics, environmental policy and economic modelling

This paper examines stability of international climate agreements for carbon abatement under an optimal transfer rule and renegotiations. The optimal transfer rule suggested to stabilise international environmental agreements (Weikard 2005, Carraro, Eyckmans and Finus 2006) is no longer optimal when agreements are renegotiated. We determine the conditions for optimal self-enforcing sequences of agreements. If these conditions are met, then transfer payments can be arranged such that no country wants to change its membership status at any stage. In order to demonstrate the applicability of our condition we use the STACO model, a 12-regions global model, to assess the impact of welldesigned transfer rules on the stability of an international climate agreement. Although there are strong free-rider incentives, we find a stable grand coalition in the first commitment period in a game with one round of renegotiations.

This paper shows in an empirical context that substantial cost reductions can be achieved in the implementation of Dutch national climate policy by (i) targeting the policy at the stock of greenhouse gases, thus allowing polluters flexibility in their timing of emission reductions; and (ii) integrating climate policy with other policies, thereby optimising the restructuring of the economy needed to achieve environmental policy targets. A dynamic applied general equilibrium model with bottom-up information on abatement techniques is used to show that the optimal timing of GHG emission reductions tends to follow the timing for the other environmental themes with an additional emphasis on emission reductions in the later periods. The optimal mix of technical measures and economic restructuring as source of emission reductions is affected by the strictness of environmental policy targets for all themes and hence can only be derived from an integrated analysis of these policies.

This study aims at integrating a materials flow model into an economic model, such that theeconomic effects of policies on the use materials and products can be analysed. Methods for studyingmaterials and product flows do not properly take into account economic, behavioural or policy aspects.But most economic models do not consider material flows explicitly.To analyse the economic effects an applied general equilibrium (AGE) model is used. The mainadvantage is that full direct and indirect effects of policies can be analysed. A disaggregated model isused to examine the effects of materials and product policies on various production sectors, householdsgroups, employment and the use of materials.The model is applied to metal flows in the Netherlands. The results show that the effects of aregulating levy on materials may be large for some production sectors, depending on where in theproduction process the levy is imposed. The basic metal industry and large metal using productionsectors may be negatively affected by metal levies. Positive effects of the levies occur for otherproduction sectors, for example the basic chemical industries and the petroleum refineries. In mostscenarios, the labour income households can improve their real income, whilst the households oftransfer recipients observe a fall in real income. However, for most production sectors and householdgroups the effects are small. No 'double dividend' is found in the various scenarios.

This paper studies energy bias in technical change. For this purpose, we develop a computable general equilibrium model that builds on endogenous growth models. The model explicitly captures links between energy, the rate and direction of technical change, and the economy. We derive the equilibrium determinants of biased technical change and show the importance of feedback in technical change, substitution possibilities between final goods, and generalequilibrium effects for the equilibrium bias. If the feedback effect is strong, or the substitution elasticity large, or both, our model tends to a corner solution in which only technologies are developed that are appropriate for production of non-energy intensive goods.

Climate change may cause most harm to countries that contribute least to greenhouse gas emissions. This paper identifies deontology, solidarity and consequentialism as the principles that can serve as a basis for a fair international burden sharing scheme of adaptation costs. We translate these principles into criteria that can be applied in assigning contributions of individual countries, namely historical responsibility, equality and capacity to pay. Specific political and scientific choices are discussed, highlighting implications for international burden-sharing. Combining historical responsibility and capacity to pay seems a promising starting point for international negotiations on the design of burden-sharing schemes. From the numerical assessment, it is clear that UNFCCC Annex I countries carry the greatest burden under most scenarios, but contributions differ substantially subject to the choice of an indicator for capacity to pay. The total financial contribution by the Annex I countries could be in the range of $55-68 billion annually.

This paper investigates the economic incentives of countries to cooperate on international adaptation financing. Adaptation is generally implicitly incorporated in the climate change damage functions as used in Integrated Assessment Models. We replace the implicit decision on adaptation with explicit adaptation in a multi-regional setting by using an adjusted RICE model. We show that making adaptation explicit will not affect the optimal mitigation path when adaptation is set at its optimal level. Sub-optimal adaptation will, however, change the optimal mitigation path. Furthermore this paper studies for different forms of cooperation what effects international adaptation transfers will have on (i) domestic adaptation and (ii) the optimal mitigation path. Adaptation transfers will fully crowd out domestic adaptation in a first best setting. Transfers will decrease overall mitigation in our numerical simulations. An analytical framework is used to analyse the most important mechanisms and a numerical model is used to assess the magnitude of effects.