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Global refunding and climate change

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  • 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.

Suggested Citation

  • Gersbach, Hans & Winkler, Ralph, 2012. "Global refunding and climate change," Journal of Economic Dynamics and Control, Elsevier, vol. 36(11), pages 1775-1795.
  • Handle: RePEc:eee:dyncon:v:36:y:2012:i:11:p:1775-1795
    DOI: 10.1016/j.jedc.2012.06.001
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    Cited by:

    1. Gersbach, Hans & Hummel, Noemi, 2016. "A development-compatible refunding scheme for a climate treaty," Resource and Energy Economics, Elsevier, vol. 44(C), pages 139-168.
    2. Hans Gersbach & Noemi Hummel & Ralph Winkler, 2011. "Sustainable Climate Treaties," Diskussionsschriften dp1105, Universitaet Bern, Departement Volkswirtschaft.
    3. Billette de Villemeur, Etienne & Leroux, Justin, 2016. "A liability approach to climate policy: A thought experiment," MPRA Paper 75497, University Library of Munich, Germany.
    4. Louis-Gaëtan Giraudet & Céline Guivarch, 2016. "Global warming as an asymmetric public bad," Working Papers 2016.26, FAERE - French Association of Environmental and Resource Economists.
    5. Etienne Billette de Villemeur & Justin Leroux, 2015. "Track-and-Trade: A liability approach to climate policy," CIRANO Working Papers 2015s-18, CIRANO.

    More about this item

    Keywords

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

    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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