Sustainable Climate Treaties

Gersbach, Hans; Hummel, Noemi; Winkler, Ralph (June 2011). Sustainable Climate Treaties (Discussion Papers 11-05). Bern: Department of Economics

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We examine a global refunding scheme for mitigating climate change. Countries pay an initial fee into a global fund that is invested in long-run assets. In each period, part of the fund is distributed among the participating countries in relation to the emission reductions they have achieved in this period. We identify two possible types of sustainable treaty. A first-best sustainable treaty involves varying amounts of refunded wealth and a minimal amount of initial fees inducing socially desirable abatement efforts in each period. In a secondbest sustainable treaty with only two parameters – optimally selected initial fees and constant refunds equal to the interest earned on the fund – the stock of greenhouse gases converges to the socially optimal stock. Finally, we suggest ways for countries to raise money for the payment of initial fees that are neutral to tax payers and international capital markets.

Item Type:

Working Paper

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics

UniBE Contributor:

Gersbach, Hans and Winkler, Ralph

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

Series:

Discussion Papers

Publisher:

Department of Economics

Language:

English

Submitter:

Lars Tschannen

Date Deposited:

15 Oct 2020 17:33

Last Modified:

15 Oct 2020 17:33

JEL Classification:

Q54, H23, H41

BORIS DOI:

10.7892/boris.145749

URI:

https://boris.unibe.ch/id/eprint/145749

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