Working Paper: CEPR ID: DP6379
Authors: Hans Gersbach; Ralph Winkler
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 Codes: H23; H41; Q54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| global refunding scheme (GRS) (H81) | optimal emission abatement levels (Q52) |
| global refunding scheme (GRS) (H81) | compliance with abatement objectives (Q52) |
| global refunding scheme (GRS) (H81) | increased cooperation among countries (F55) |
| GRS internalizes externalities (D62) | optimal emission abatement levels (Q52) |
| design of the GRS (C90) | freeriding problem resolution (H40) |