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This paper presents a generalized dynamic model of greenhouse gas emissions trading under constraints on the volume of transactions. An empirical version of the model is used to evaluate potentially cost-saving flexibility mechanisms (joint implementation and clean development mechanism) and potentially cost-adding restrictions (supplementarity) of the Kyoto Protocol. The results indicate the greatest gains would stem from extending permit trading spatially among industrialized nations, although sizable gains would also emanate from the inclusion of developing countries. Gains from intertemporal trading (banking and borrowing) are meager. Restrictions on the volume of permit purchases have by far the most costly effect when developing countries are incorporated into trading. Sensitivity tests with respect to differential discount rates across countries and technological change indicate the results are robust.

This paper examines the efficiency and equity implications of alternative assignments of marketable permits for carbon dioxide. A non-linear programming model is used to estimate the net welfare changes of permit allocations based on Sovereignty and Rawlsian equity criteria for 8 countries/regions covering the spectrum of economic development levels. The net welfare gains associated with an overall 20% reduction in CO2 emissions are estimated to be nearly $20 billion, an increase of several billion dollars over a system of inflexible emission quotas requiring 20% abatement in each country. Also, although the welfare changes implied by alternative permit assignments may vary greatly between countries before trading, the trading process significantly reduces the disparities. This result stems from the Coase Theorem, which implies a uniquely efficient outcome. That is, individual country abatement levels and hence, costs, are the same under all permit assignments after trading, and net welfare for a given nation differs only by the amount of permit revenues/expenditures associated with the application of alternative equity criteria. Foremost among the paper's policy implications is that although equity criteria may differ significantly in principle, their welfare implications in practice may be very similar for various subsets of these criteria. This should reduce tensions at the bargaining table and facilitate the negotiation of greenhouse gas agreements.

This paper formulates an input-output method for determining the distributional consequences of energy development projects. The method is oriented to the conditions appearing in many contemporary development settings where large resident populations and other factors are likely to inhibit boomtown scenarios. An analysis of geothermal energy development in Imperial County, California, is presented. The results indicate that personal income inequality is likely to increase by several percentage points as measured by the Gini coefficient. The sensitivity of the results is examined with respect to important factors such as labor supply elasticities, preferential employment of local residents, and the concentration of land holdings.

Recent legislation mandates an increased role for public participation in natural resource policy making. This paper presents an operational way to provide those impacted with relevant information and to enable public officials to assess public reaction to proposed policies. The methodology transforms results obtained from a multisector model of income formation and distribution into positive economic measures of distributional impacts. The usefulness of the methodology is illustrated in the context of a policy to increase coal surface mining on public lands.

Tax preferences relating to exploration and production in the oil and gas industries received a great deal of attention during the enactment of the US Federal Tax Reform Act of 1986. One of the main arguments put forth in favour of the removal of these preferences was that they favoured higher income taxpayers, and, therefore, were inequitable. A multisector income distribution model is utilized to examine the direct, indirect and induced distributional impacts of the ensuing reforms. The results indicate that, while the direct impact of these reforms is an improvement in equity among those receiving income from the oil and gas industries, the overall impact throughout the economy is equity-neutral. The result stems from the secondary effects of the tax, which lead to net reductions in production in the oil and gas industries and their direct and indirect suppliers.