On the Design of Global Refunding and Climate Change

32 Pages Posted: 23 May 2008

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: July 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, H41, Q54

Suggested Citation

Gersbach, Hans and Winkler, Ralph, On the Design of Global Refunding and Climate Change (July 2007). CEPR Discussion Paper No. DP6379, Available at SSRN: https://ssrn.com/abstract=1136704

Hans Gersbach (Contact Author)

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

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IZA Institute of Labor Economics

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CESifo (Center for Economic Studies and Ifo Institute)

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Centre for Economic Policy Research (CEPR)

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Ralph Winkler

University of Bern - Department of Economics ( email )

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Switzerland
+41 31 631 4508 (Phone)

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

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

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Bern, 3012
Switzerland

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