Exercise3
Exercise3
Exercise 3
Submit your answers by Monday 2.10.2017 at 14:15. You should return your solutions via
MyCourses. The main assistant of this exercise is Sannamari Pilpola.
1. Home assignment
2. Home assignment
Nicolas Stern stated in his 2008 review “The Economics of Climate Change” that in order to
stabilize atmospheric CO2 concentration to 550 ppm 1 , the average annual global carbon
footprint should decrease to around 2 tons of CO2 per capita by 2050. According to Eurostat,
the carbon footprint of an average EU28 citizen is now (2015) about 9 tons of CO2 per year.
a) Using the IPAT model, calculate how fast Technology should improve (annual % decrease
in the ratio of CO2(kg)/GDP(€)) if we want to achieve that goal in Europe while preserving
the 2 % annual increase in real GDP (in 2015 euros).
b) If Technology cannot be improved at all, how much would the GDP per capita need to
decrease (annual % decrease) to reach the goal?
1
This number corresponds to a likely 2–5 °C global temperature increase, see the figure and the table below.