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This paper considers the persistent effects of climate change on the speed of demographic transition,and hence on the size of the population in regions that are the least developed and the most vulnerable to climate change, such as Sub-Saharan Africa. These effects are transmitted through interactions between the education gender gap within families, fertility, and the local environment, through which the demographic transition is delayed. Environmental conditions affect intra-household labor allocation because of the impacts on local resources under the poor infrastructural system. Examples include the collection of essential resources, e.g. clean water and firewood, by women for their families’ daily lives. Climate change causes damage to local resources, offsetting (partially) the role of technological progress and infrastructure investment in saving time that women spend on their housework duties. Hence, the gender inequality in education/income is upheld, delaying declines in fertility and creating population momentum. The bigger population, in turn, degrades local resources and the environment through expanded production. The interplay between local resources, gender inequality, and population, under the persistent effect of climate change, may thus generate a slow demographic transition and stagnation of the least developed regions. We provide empirical confirmation for our theoretical predictions using data from 44 African countries in the period from 1960 to 2017.

Carbon dioxide removal from the atmosphere is becoming an important option to achieve net zero climate targets. This paper develops a welfare and public economics perspective on optimal policies for carbon removal and storage in non-permanent sinks like forests, soil, oceans, wood products or chemical products. We derive a new metric for the valuation of non-permanent carbon storage, the social cost of carbon removal (SCC-R), which embeds also the conventional social cost of carbon emissions. We show that the contribution of CDR is to create new carbon sinks that should be used to reduce transition costs, even if the stored carbon is released to the atmosphere eventually. Importantly, CDR does not raise the ambition of optimal temperature levels unless initial atmospheric carbon stocks are excessively high. For high initial atmospheric carbon stocks, CDR allows to reduce the optimal temperature below initial levels. Finally, we characterize three different policy regimes that ensure an optimal deployment of carbon removal: downstream carbon pricing, upstream carbon pricing, and carbon storage pricing. The policy regimes differ in their informational and institutional requirements regarding monitoring, liability and financing.

Carbon dioxide removal from the atmosphere is becoming an important option to achieve net zero climate targets. This paper develops a welfare and public economics perspective on optimal policies for carbon removal and storage in non-permanent sinks like forests, soil, oceans, wood products or chemical products. We derive a new metric for the valuation of non-permanent carbon storage, the social cost of carbon removal (SCC-R), which embeds also the conventional social cost of carbon emissions. We show that the contribution of CDR is to create new carbon sinks that should be used to reduce transition costs, even if the stored carbon is released to the atmosphere eventually. Importantly, CDR does not raise the ambition of optimal temperature levels unless initial atmospheric carbon stocks are excessively high. For high initial atmospheric carbon stocks, CDR allows to reduce the optimal temperature below initial levels. Finally, we characterize three different policy regimes that ensure an optimal deployment of carbon removal: downstream carbon pricing, upstream carbon pricing, and carbon storage pricing. The policy regimes differ in their informational and institutional requirements regarding monitoring, liability and financing., CEPA Discussion Papers; 62

This paper highlights the importance of carbon dioxide removal (CDR) technologies for climate policy. We first describe their role in iconic transformation pathways and discuss removal costs and storage duration of different technologies. Based on economic principles, we characterize optimal removal flows and reservoirs for non-permanent removals. Furthermore, we discuss different pricing regimes that achieve an optimal allocation under different information and liability conditions. Notably, seemingly cheap removal technologies in the land sector can indeed be very expensive when increasing opportunity costs and and impermanence are appropriately accounted for. The use of non-permanent removal – though to a certain extent economically optimal – creates high liability to firms and regulators that warrants a careful and deliberative risk management. Based on these insights, we discuss how policy makers can embed the CDR option in the EU's policy architecture. There are four key tasks for regulating bodies to ensure an optimal governance: the management of the net carbon emission cap; support for research, development and diffusion of CDR technologies; certification of the quality of removals; management of the liability implied by non-permanent CDR. We propose that three new institutions, a European Carbon Central Bank, a Carbon Removal Certification Authority and a Green Leap Innovation Authority, are established to carry out these tasks.