Climate Policy and Developing Countries

42 Pages Posted: 22 Dec 2011

See all articles by Hans Gersbach

Hans Gersbach

ETH Zurich - CER-ETH -Center of Economic Reseaarch; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Noemi Hummel

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich

Date Written: December 2011

Abstract

We suggest a development-compatible refunding system designed to mitigate climate change. Industrial countries pay an initial fee into a global fund. Each country chooses its national carbon tax. Part of the global fund is refunded to developing and industrial countries, in proportion to the relative emission reductions they achieve. Countries receive refunds net of tax revenues. We show that such a scheme can simultaneously achieve efficient emission reductions and equity objectives, as developing countries abate voluntarily, do not have to pay an initial fee, are net receivers of funds, and are net beneficiaries. Moreover, we explore the potential of simple refunding schemes that do not claim tax revenues and only rely on initial fees paid by industrial countries.

Keywords: climate change mitigation, developing countries, international agreements, refunding scheme

JEL Classification: H23, H41, O10, O13, Q54

Suggested Citation

Gersbach, Hans and Hummel, Noemi, Climate Policy and Developing Countries (December 2011). CEPR Discussion Paper No. DP8685. Available at SSRN: https://ssrn.com/abstract=1976027

Hans Gersbach (Contact Author)

ETH Zurich - CER-ETH -Center of Economic Reseaarch ( email )

Zürichbergstrasse 18
Zurich, 8092
Switzerland
+41 44 632 82 80 (Phone)
+41 44 632 18 30 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Noemi Hummel

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich ( email )

Zürichbergstrasse 18
Zurich, 8092
Switzerland

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