Tradable climate liabilities: A thought experiment

Etienne Billette de Villemeur and Justin Leroux

Ecological Economics, 2019, vol. 164, issue C, -

Abstract: We envision the creation of a climate liability market to address climate change. Each period, countries are issued liability commensurate to their emissions of the period. Liability bearers are required to pay over time, as climate harm materializes. Revenues are used to compensate participating countries in proportion of climate harm. Because liabilities are traded like financial debt among participants, the mechanism achieves a unique carbon price through decentralization of the choice of a discount rate as well as beliefs about the severity of the climate problem. We discuss properties of such a mechanism along the dimensions of efficiency, fairness, exposure to risk, commitment, participation, as well as implementation challenges.

Keywords: Climate liability; Market instruments; Pigovian tax; Risk sharing (search for similar items in EconPapers)
JEL-codes: H23 Q54 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (2)

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Working Paper: Tradable climate liabilities: A thought experiment (2019)
Working Paper: Tradable Climate Liabilities: A Thought Experiment (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolec:v:164:y:2019:i:c:25

DOI: 10.1016/j.ecolecon.2019.106355

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