Abstract:

This dissertation examines the economics of transboundary air pollution, i.e. air pollution whose effects exceed national boundaries. In Chapter 1, I focus on an example of a regional air pollution: acid rain. I solve a dynamic differential game between three East Asian countries (South Korea, Japan and China) to compare the emission/deposition steady state levels in a case with and without an international sulfur abatement agreement. The result shows that, unlike in Europe, where an international sulfur abatement agreement drastically decreased regional emission; in the East Asian countries the decrease is simulated to be only slight (0.4% reduction of the total regional emission). Furthermore, in terms of incentives to cooperate. I show that only Korea and Japan gain from cooperating and that China will not.

Chapters 2 and 3 focus on issues in global climate change. Chapter 2 examines the process of forest carbon sequestration and its role in carbon abatement. I provide a literature review of previous cost estimates of carbon sequestration to determine whether forest sinks are, in fact, cost effective options in abating carbon. Furthermore, I provide cost estimates for forest carbon sequestration through afforestation in Russia. The results show that costs of sequestering carbon by forests in Russia are only a quarter to a third of those in the US.

Chapter 3 examines the validity of the parameter values used in climate change simulation computer models used in current climate change policy work. In particular, the essay focuses on the consequence of employing parameter values which have been estimated with the assumption of cost minimization. In the case of developing countries such as India; such assumptions may not be realistic. I present the consequences of using parameters which do and do not assume cost minimization with respect to Indian carbon emission and abatement costs using a climate change simulation model. I find that assuming cost minimization results in overestimating energy consumption and emission levels and also in overestimating the efficacy of a carbon tax.