Sustainable Climate Treaties

Hans Gersbach, Noemi Hummel () and Ralph Winkler
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Noemi Hummel: ETH Zurich, Switzerland

No 11/146, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

Abstract: 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.

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)
Pages: 40 pages
Date: 2011-06
New Economics Papers: this item is included in nep-ene and nep-env
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Sustainable Climate Treaties (2017)
Working Paper: Sustainable Climate Treaties (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eth:wpswif:11-146

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