Funding Climate Justice: Taxation Transfers and Green Bonds

This chapter proposes climate change impact burden-sharing with a taxation-and-bonds strategy. Five indices are empirically created to determine which countries should be using taxation to raise funds for the climate bonds issuance and which countries should be granted transfer payments via climate bonds premiums. Taxation could be imposed on countries with these features: Territories that gain economically from climate change and countries that are climate flexible in terms of a broad range of climate zones available. In addition, countries that have high CO2 emissions and unchanging CO2 emissions levels as well as consume goods and services to a higher degree than other countries are also candidates for climate taxation. Those countries that have favorable bank lending rates could also contribute to climate bonds in the issuance to transfer funds via climate bonds to climate-inflexible regions of the world that are losing the most and the fastest from global warming. In addition, those countries should receive transfer payments via bonds that have low CO2 emissions and/or are lowering CO2 emissions. Those countries that only produce goods that are then consumed in other places of the world should also be favored by the transfer scheme. For countries that have unfavorable bank lending rates and hence higher industry financing costs the transfer funds could aid climate change mitigation and adaptation.