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Global refunding and climate change

Author Info

  • Gersbach, Hans
  • Winkler, Ralph

Abstract

We design a global refunding scheme as a new international approach to address climate change. Participating in the global refunding system requires an initial payment. It allows each country to set its carbon emission tax, while aggregate tax revenues are partially refunded to member countries in proportion to the relative emission reductions they achieve within a given period. The refunding scheme reduces the intertemporal climate change problem into a static public goods problem. In a simple model we show that a suitably designed global refunding scheme achieves the social global optimum, provided that all countries participate. We discuss several procedures to achieve initial participation.

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Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 36 (2012)
Issue (Month): 11 ()
Pages: 1775-1795

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Handle: RePEc:eee:dyncon:v:36:y:2012:i:11:p:1775-1795
Contact details of provider: Web page: http://www.elsevier.com/locate/jedc

Keywords: Climate change mitigation; Global refunding scheme; International agreements; Incentive-compatible mechanisms;

Find related papers by JEL classification:

  • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
  • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
  • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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