Public Policies against Global Warming

Hans-Werner Sinn

No 2087, CESifo Working Paper Series from CESifo

Abstract: Judged by the principle of intertemporal Pareto optimality, insecure property rights and the greenhouse effect both imply overly rapid extraction of fossil carbon resources. A gradual expansion of demand-reducing public policies – such as increasing ad-valorem taxes on carbon consumption or increasing subsidies for replacement technologies – may exacerbate the problem as it gives resource owners the incentive to avoid future price reductions by anticipating their sales. Useful policies instead involve sequestration, afforestation, stabilization of property rights and emissions trading. Among the public finance measures, constant unit carbon taxes and source taxes on capital income for resource owners stand out.

Keywords: global warming; carbon taxes; Pareto optimality (search for similar items in EconPapers)
JEL-codes: H23 O13 Q32 Q54 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (17)

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Working Paper: Public Policies against Global Warming (2007)
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