Sustainable Climate Treaties

Hans Gersbach, Noemi Hummel and Ralph Winkler

No 6385, CESifo Working Paper Series from CESifo

Abstract: We examine long-run treaties 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 suitably rescaled by a weighting factor. We show that a suitably selected refunding scheme implements the globally optimal reductions of greenhouse gases in all periods as a unique subgame perfect equilibrium. The country-specific initial fees can be chosen to engineer a Pareto improvement and to ease participation. We also show that any planned abatement path as e.g. the one envisioned by the Paris Agreement in 2015 can be implemented by an appropriately chosen refunding scheme. 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.

Keywords: climate change mitigation; refunding scheme; international agreements; sustainable treaty (search for similar items in EconPapers)
JEL-codes: H23 H41 Q54 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Sustainable Climate Treaties (2011)
Working Paper: Sustainable Climate Treaties (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_6385

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