Publication:
The Timing versus Allocation Trade-off in Politically Constrained Climate Policies

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dc.contributor.authorBauer, Adam Michael
dc.contributor.authorHallegatte, Stéphane
dc.contributor.authorMcIsaac, Florent
dc.date.accessioned2024-11-18T17:00:39Z
dc.date.available2024-11-18T17:00:39Z
dc.date.issued2024-11-18
dc.description.abstractWhen leaders face political economy constraints, is it best to delay all decarbonization initiatives until a sectorally coordinated strategy can be implemented, or is it preferable to implement an approach where sectors’ decarbonization strategies are uncoordinated This question underscores a crucial trade-off – here coined the “timing versus allocation” trade-off – for politically constrained climate policymakers: (i) to sacrifice the optimal timing of climate policies to preserve the optimal allocation of emissions across economic sectors, or (ii) to preserve the optimal timing of abatement investment to the detriment of the allocation of emissions across sectors. This paper systematically explores this trade-off by presenting a modeling framework that elucidates the economic implications of various sub-optimal policy approaches to decarbonization that involve relaxing or delaying decarbonization efforts in a subset of sectors or economy-wide. The paper shows that the cost difference between an economy-wide, coordinated decarbonization strategy and an uncoordinated approach with heterogeneous carbon prices is smaller than the cost of delaying action and implementing a coordinated policy in the future. This implies that it is preferable to implement some policy in each sector, insofar as this is politically feasible, with less politically challenged sectors compensating with a marginal increase in policy ambition. The paper further elucidates how sectors with high annual emission rates, such as energy, are more costly to delay in comparison to their mid- to low-emission counterparts, such as industry, despite these sectors being nominally more costly sectors to decarbonize.en
dc.identifierhttp://documents.worldbank.org/curated/en/099144211072445400/IDU166da20581c28314e5619c6512a33b683eb58
dc.identifier.doi10.1596/1813-9450-10971
dc.identifier.urihttps://hdl.handle.net/10986/42432
dc.languageEnglish
dc.language.isoen_US
dc.publisherWashington, DC: World Bank
dc.relation.ispartofseriesPolicy Research Working Paper; 10971
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttps://creativecommons.org/licenses/by/3.0/igo/
dc.subjectGREEN INVESTMENT
dc.subjectPOLITICAL ECONOMY
dc.subjectCLIMATE POLICY
dc.subjectSECOND-BEST POLICIES
dc.subjectADJUSTMENT COSTS
dc.titleThe Timing versus Allocation Trade-off in Politically Constrained Climate Policiesen
dc.typeWorking Paper
dspace.entity.typePublication
okr.associatedcontenthttps://reproducibility.worldbank.org/index.php/catalog/217 Link to reproducibility package
okr.crossref.titleThe Timing versus Allocation Trade-off in Politically Constrained Climate Policies
okr.date.disclosure2024-11-18
okr.date.doiregistration2025-04-07T08:16:20.781538Z
okr.date.doiregistration2025-04-08T16:07:23.415080Z
okr.date.doiregistration2025-04-09T02:49:44.094142Z
okr.date.lastmodified2024-11-07T00:00:00Zen
okr.doctypePolicy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/099144211072445400/IDU166da20581c28314e5619c6512a33b683eb58
okr.guid099144211072445400
okr.identifier.docmidIDU-66da2058-c283-4e56-9c65-2a33b683eb58
okr.identifier.doi10.1596/1813-9450-10971
okr.identifier.doihttps://doi.org/10.1596/1813-9450-10971
okr.identifier.externaldocumentum34419316
okr.identifier.internaldocumentum34419316
okr.identifier.reportWPS10971
okr.import.id5806
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/099144211072445400/pdf/IDU166da20581c28314e5619c6512a33b683eb58.pdfen
okr.region.geographicalWorld
okr.topicEnergy::Energy Policies & Economics
okr.topicEnvironment::Environmental Economics & Policies
okr.topicEnvironment::Pollution Management & Control
okr.topicEnvironment::Climate Change and Environment
okr.topicEnvironment::Environmental Governance
okr.unitGGSVP-VP
okr.unitSD Practice Group - IFC
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relation.isAuthorOfPublication.latestForDiscovery2fea2b63-4a74-5fbd-b964-71ef895df009
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