WHEN DO CARBON MARKETS REDUCE INEQUALITY? ARTICLE 6 TRANSFERS UNDER ALTERNATIVE FUTURES

We assess whether Article 6 carbon market transfers reduce between-region income inequality. Using an integrated assessment model (Global Change Analysis Model (GCAM)) with endogenous regional GDP, we model a maximalist form of Article 6 cooperation, with internationally transferred mitigation outcomes (ITMOs) traded across 32 regions under three socioeconomic baselines (SSP1, SSP2, SSP4) and a net-zero 2050 pathway. Our primary metric is the population-weighted global Gini coefficient, which we decompose into policy burden and transfer components and examine across the regional income distribution. Article 6 reduces inequality under most scenarios, with Gini reductions of 0.5–0.9 points by 2050 under SSP1, SSP2, and net-zero pathways. Under SSP4, where income divergence erodes lower-income regions’ comparative advantage in low-cost mitigation, the progressive effect weakens to near-neutral ([Formula: see text]0.03 Gini points). The financial transfer effect dominates the policy burden effect by a factor of three to six. Theil decomposition confirms this operates overwhelmingly through the between-region channel under convergent scenarios, weakening to 79% under SSP4. Africa’s position as net seller or buyer serves as a diagnostic of this dependence. Article 6 can reduce global inequality, but the outcome depends on underlying development conditions rather than the market mechanism itself.