Cost of reducing carbon emissions in developing countries : evidence from Colombia

While shifting to technologies that emit less carbon dioxide could alleviate this problem, such technologies are much more costly than those now in use. This paper combines an econometric model of energy demand with a mathematical programming model of commercial energy supplies to analyze energy-environmental linkages in Colombia. The integrated model, which could be modified to include the emissions of other greenhouse gases such as nitrous oxide, allows the use of carbon dioxide emission constraints that apply simultaneously to the entire energy sector, thus permitting the model to choose a least-cost approach to any emission reduction program. Key conclusions are that (1) the costs of reducing carbon dioxide emissions in Colombia are high, and (2) these costs appear to conform to patterns established for industrially developed countries. These cost estimates raise questions about the practicality of reduction programs in developing countries such as Colombia, where resources might be better used to meet economic, social, or other environmental problems. Additionally, a reduction program would substantially alter Colombia"s energy sector. Domestic coal producers, which provide thousands of jobs in the interior, would shrink dramatically, while the natural gas and hydroelectric sectors would make major gains. Further dependence on hydroelectricity, however, would increase Colombia"s vulnerability to drought such as devastated the country in 1992.