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Long-Term Climate Treaties with a Refunding Club

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BORIS DOI
10.48350/163577
Date of Publication
2021
Publication Type
Article
Division/Institute

Departement Volkswirt...

Author
Gersbach, Hans
Hummel, Noemi
Winkler, Ralphorcid-logo
Departement Volkswirtschaftslehre (VWL)
Subject(s)

300 - Social sciences...

Series
Environmental and resource economics
ISSN or ISBN (if monograph)
1573-1502
Publisher
Springer
Language
English
Publisher DOI
10.1007/s10640-021-00597-3
Description
We show that an appropriately-designed “Refunding Club” can simultaneously solve both free-riding problems in mitigating climate change—participating in a coalition with an emission reduction target and enduring voluntary compliance with the target once the coalition has been formed. Countries in the Club pay an initial fee into a fund that is invested in assets. In each period, part of the fund is distributed among the Club members in relation to the emission reductions they have achieved, suitably rescaled by a weighting factor. We show that an appropriate refunding scheme can implement any feasible abatement path a Club wants to implement. The contributions to the initial fund can be used to disentangle efficiency and distributional concerns and/or to make a coalition stable. Making the grand coalition stable in the so-called “modesty approach” requires less than 0.5% of World GDP. Finally, we suggest ways to foster initial participation, to incorporate equity concerns with regard to developing countries, and ways to ease the burden to fill the initial fund.
Handle
https://boris-portal.unibe.ch/handle/20.500.12422/59334
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FileFile TypeFormatSizeLicensePublisher/Copright statementContent
Gersbach2021_Article_Long-TermClimateTreatiesWithAR.pdftextAdobe PDF3.77 MBAttribution (CC BY 4.0)publishedOpen
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