The Marginal Abatement Cost of Carbon Emissions in China

There is an emerging literature estimating the marginal cost of carbon mitigation in China using distance function approaches; however, empirical estimates vary widely in magnitude and variation, which undermines support for policies to curb carbon emission. Applying three commonly used distance functions to China’s provincial data from 2001 to 2010, we show that the variability can be partially explained by the difference in the input/output coverage and whether the estimated marginal abatement cost (MAC) is conditional or unconditional. We also argue that the substantial heterogeneity in abatement cost estimates could be related to an economic interpretation that radial measures reflect the short-run MACs while non-radial measures reflect the long-run MACs. Our mean short-run MAC for carbon is 20 US$ per tonne, an amount that is very close to the carbon prices observed in China’s recently launched pilot markets.


Issue Date:
May 21 2015
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/204973
Page range:
2
Total Pages:
32
JEL Codes:
N55; Q32; Q52; Q54
Series Statement:
Working papers
1511




 Record created 2017-04-01, last modified 2017-08-28

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