North-­‐South Convergence and the allocation of CO2 Emissions

Abstract

Mankind must cooperate to reduce GHG emissions to prevent a catastrophic rise in global temperature. How can the necessary costs of reducing GHG emissions be allocated across regions of the world, within the next few generations, and simultaneously address growth expectations and economic development? We postulate a two-region world and, based on sustainability and egalitarian criteria, calculate optimal paths in which a South, like China, and a North, like the United States, converge in welfare per capita to a path of sustained growth of 1.3% per year by 2080, while global CO2 emissions are restricted to a conservative path that leads to the stabilization of concentrations at 450 ppm CO2. Growth expectations in the North and the South must be scaled back substantially, not only after 2080, but also in the transition period. Global negotiations to restrict emissions to an acceptably low level cannot succeed absent such an understanding. Feasible growth paths with low levels of emissions require heavy investments in education and knowledge. Northern and Southern growth must be restricted to 1.2% and 3.2% per year, respectively, over the next 75 years. Politicians who wish to solve the global-warming problem must prepare their polities to accept this reality. Key Words: Economic models, sustainability, North-South convergence, climate negotiations, growth, GHG concentrations