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A method to finance a global climate fund with a harmonized carbon tax

Author

Listed:
  • Silverstein, David N.

Abstract

Funding a response to climate change after Kyoto will require another look at both burden sharing and funding mechanisms. After reviewing the risks of cap-and-trade with carbon offsets and the advantages of a harmonized carbon tax, a method is proposed to utilize a harmonized carbon tax to finance a global climate fund. A common carbon tax rate is assessed across all nations and collected internally for internal investments in climate change. Financing for the global climate fund is generated from transferring a percentage of the collected carbon tax based on historical responsibility for carbon emissions and national wealth. Collected revenue is disbursed for climate aid based on a set of national climate need factors for adaptation, preserving strategic carbon sinks, low-carbon infrastructures and population management. In the interest of distributive justice, nations themselves determine the need factors of each other. Unlike cap-and-trade, this method does not explicitly require emissions caps. Formulas are presented for collection and disbursement, which require parameters for a globally harmonized carbon tax rate, a climate fund contribution rate, a national wealth threshold for fund contributions and need factors for each nation. Published economic and emissions data are used with the formulas to demonstrate an example of how the financing can work. This presents an equitable way to address climate needs across all nations on both a global and regional level.

Suggested Citation

  • Silverstein, David N., 2010. "A method to finance a global climate fund with a harmonized carbon tax," MPRA Paper 27121, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:27121
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    File URL: https://mpra.ub.uni-muenchen.de/27121/1/MPRA_paper_27121.pdf
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    References listed on IDEAS

    as
    1. Hufbauer, Gary Clyde & Kim, Jisun, 2009. "Climate Policy Options and the World Trade Organization," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 3, pages 1-15.
    2. Frank Ackerman, 2008. "Carbon Markets and Beyond: The Limited Role of Prices and Taxes in Climate and Development Policy," G-24 Discussion Papers 53, United Nations Conference on Trade and Development.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    climate change; global warming; climate fund; carbon tax; cap-and-trade; climate finance; Kyoto protocol;

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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