On the Design of Global Refunding and Climate Change

CER-ETH - Center of Economic Research at ETH Zurich, Working Paper No. 07/69

34 Pages Posted: 28 Jun 2007

See all articles by Hans Gersbach

Hans Gersbach

ETH Zurich - CER-ETH -Center of Economic Research; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Ralph Winkler

University of Bern - Department of Economics; University of Bern - Oeschger Centre for Climate Change Research

Multiple version iconThere are 2 versions of this paper

Date Written: June 2007

Abstract

We design a global refunding scheme as a new international approach to address climate change. A global refunding system 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, compared to some given baseline emissions. In a simple model we show that a suitably designed global refunding scheme is self-enforcing and achieves the social global optimum.

Keywords: climate change mitigation, global refunding scheme, international agreements, self-enforcing mechanisms

JEL Classification: H23, Q54, H41

Suggested Citation

Gersbach, Hans and Winkler, Ralph, On the Design of Global Refunding and Climate Change (June 2007). CER-ETH - Center of Economic Research at ETH Zurich, Working Paper No. 07/69, Available at SSRN: https://ssrn.com/abstract=996787 or http://dx.doi.org/10.2139/ssrn.996787

Hans Gersbach (Contact Author)

ETH Zurich - CER-ETH -Center of Economic Research ( email )

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CESifo (Center for Economic Studies and Ifo Institute)

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Ralph Winkler

University of Bern - Department of Economics ( email )

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HOME PAGE: http://www.ralph-winkler.de

University of Bern - Oeschger Centre for Climate Change Research ( email )

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Switzerland

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