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Curbing Emissions through a Carbon Liabilities Market: A note from a climate skeptic's perspective

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Abstract

We argue for the creation of a carbon liabilities market to address climate change. Each period, countries would be made liable for their share of responsibility in current climate damage. Because liabilities could be traded like financial debt, robustness to strategic manipulations and efficiency ensue. Moreover, this decentralizes the choice of the rate by which countries discount future benefits and damage. Rather than being based on an expected discounted sum of future marginal damage (as with a carbon tax or tradable emission permits) our proposal relies only on observed realized damage and on the well-documented emission history of countries.

Suggested Citation

  • Justin Leroux, 2014. "Curbing Emissions through a Carbon Liabilities Market: A note from a climate skeptic's perspective," CIRANO Working Papers 2014s-20, CIRANO.
    • Handle: RePEc:cir:cirwor:2014s-20
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    File URL: https://cirano.qc.ca/files/publications/2014s-20.pdf
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    References listed on IDEAS

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    1. Steven Shavell, 2011. "Corrective Taxation versus Liability," American Economic Review, American Economic Association, vol. 101(3), pages 273-276, May.
    2. Kolstad, Charles D & Ulen, Thomas S & Johnson, Gary V, 1990. "Ex Post Liability for Harm vs. Ex Ante Safety Regulation: Substitutes or Complements?," American Economic Review, American Economic Association, vol. 80(4), pages 888-901, September.
    3. Hammond, Peter J, 1981. "Ex-ante and Ex-post Welfare Optimality under Uncertainty," Economica, London School of Economics and Political Science, vol. 48(191), pages 235-250, August.
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    More about this item

    Keywords

    Carbon Liabilities; Climate Policy; Market Instruments;
    All these keywords.

    JEL classification:

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

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