Ralph Winkler, Universität Bern: "Long-term Climate Treaties with a Refunding Club"

Zoom meeting link:
https://zoom.us/j/95997521341?pwd=V1UzZFpPaUVVT0R5NlFpdGdNemlKdz09

Meeting-ID: 959 9752 1341
Code: 5j4wEm

Abstract:

We examine long-run treaties for mitigating climate change through a "Refunding Club". 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 participating countries in relation to the emission reductions they have achieved in this period, suitably rescaled by a weighting factor. We show that an appropriate refunding scheme can implement any feasible abatement path a coalition of countries forming a Refunding 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. While the funds required to implement the socially optimal path are large, making the grand coalition stable in the so-called "modesty approach" requires less than 1\% 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.