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The Private Provision of International Impure Public Goods: the Case of Climate Policy

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  • Martin Altemeyer-Bartscher
  • Anil Markandya
  • Dirk T.G. Rübbelke

Abstract

We discuss a tax-transfer scheme that aims at addressing the under-provision problem associated with the private supply of international public goods and at bringing about Pareto optimal allocations internationally. In particular, we consider the example of the global public good ‘climate stabilisation’, both in an analytical and a numerical simulation model. The proposed scheme levies Pigouvian taxes globally, while international sidepayments are employed in order to provide incentives to individual countries for not taking a free-ride from the international Pigouvian tax scheme. The side-payments, in turn, are financed via the environmental taxes. As a distinctive feature we take into account ancillary benefits that may be associated with local public characteristics of climate policy. We determine the positive impact that ancillary effects may exert on the scope for financing side-payments via environmental taxation. A particular attractive feature of ancillary benefits is that they arise shortly after the implementation of climate policies and therefore yield an almost immediate payback of investments in abatement efforts. Especially in times of high public debt levels, long periods of amortisation would tend to reduce political support for investments in climate policy.

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  • Martin Altemeyer-Bartscher & Anil Markandya & Dirk T.G. Rübbelke, 2011. "The Private Provision of International Impure Public Goods: the Case of Climate Policy," Working Papers 2011-09, BC3.
    • Handle: RePEc:bcc:wpaper:2011-09
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    Cited by:

    1. Marc Daube, 2019. "Altruism and Global Environmental Taxes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(4), pages 1049-1072, August.
    2. Dascher, Kristof, 2013. "City Silhouette, World Climate," MPRA Paper 48375, University Library of Munich, Germany.
    3. Martin Altemeyer-Bartscher & Anil Markandya & Dirk T. G. R�bbelke, 2014. "International Side-payments to Improve Global Public Good Provision when Transfers are Refinanced through a Tax on Local and Global Externalities," International Economic Journal, Taylor & Francis Journals, vol. 28(1), pages 71-93, March.

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