Umeå Economic Studies,
Umeå University, Department of Economics

Abstract: Under the Kyoto Protocol the European Union (EU) agreed to reduce the emissions of greenhouse gases by 8 percent in comparison with the level in 1990. The Burden-Sharing Agreement (BSA) further redistributes the overall 8 percent reduction target among the EU Member States. The purpose of this paper is to evaluate the BSA from both an economical and a political perspective, which means performing hypothesis tests of whether cost-efficiency and equity respectively, were considered in the BSA settlement. Variables used to perform the equity tests are chosen on the basis of the Triptych study. However, the cost-efficiency test is made possible by first calculating marginal abatement costs from the directional output distance function, which is estimated on country production data for 1990-2000. The function is estimated using both corrected ordinary least squares and linear programming techniques. The main conclusion drawn from this study is that both efficiency and equity were considered important to the BSA.

Keywords: burden-sharing; cost-efficiency; parametric directional output distance function; equity; greenhouse gas emission control

JEL-codes: C61; D63; D72; L51; Q53

34 pages, December 16, 2003

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Published as

Per-Olov Marklund and Eva Samakovlis, (2007), 'What is Driving the EU Burden-Sharing Agreement: Efficiency or Equity?', Journal of Environmental Management, vol 85, no 2, pages 317-329

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