Funding International Climate Protection: How to Overcome the Bergstrom Paradox?

Wolfgang Buchholz (), Richard Cornes, Wolfgang Peters and Dirk Rübbelke

Chapter 10 in Climate Finance:Theory and Practice, 2017, pp 213-228 from World Scientific Publishing Co. Pte. Ltd.

Abstract: In a world where the public good “climate protection” is provided via voluntary contributions, a country may introduce international transfers unilaterally in order to induce other countries to raise their contributions to this public good. With it underprovision of climate protection and inefficiency may be reduced. However, it is not obvious whether both donor and recipient are better off with funding. As in its pure form, funding climate protection only favors the donor (cf. Bergstrom, 1989), an additional instrument needs to restrict donor’s advantages. Such a modified mechanism can be understood as a compromise between two bargaining partners searching for a solution which splits their gains in a fair way.

Keywords: Climate Finance; Adaptation; Mitigation; Green Climate Fund; International Environmental Agreements; International Transfers; Economics (search for similar items in EconPapers)
Date: 2017
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