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Discussion Paper Details

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Title: Climate Policy and Developing Countries

Author(s): Hans Gersbach and Noemi Hummel

Publication Date: December 2011

Keyword(s): climate change mitigation, developing countries, international agreements and refunding scheme

Programme Area(s): Development Economics and Public Economics

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.

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Bibliographic Reference

Gersbach, H and Hummel, N. 2011. 'Climate Policy and Developing Countries'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8685