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Sharing the Cost of Global Warming

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Abstract
Due to meteorological factors, the distribution of the environmental damage due to climate change bears no relationship to that of global emissions. We argue in favor of offsetting this discrepancy, and propose a global insurance scheme to be financed according to countries' responsibility for climate change. Because GHG decay very slowly, we argue that the actual burden of global warming should be shared on the basis of cumulated emissions, rather than sharing the expected costs of actual emissions as in a Pigovian taxation scheme. We characterize new versions of two well-known cost-sharing schemes by adapting the responsibility theory of Bossert and Fleurbaey (1996) to a context with externalities. Du fait de phénomènes météorologiques, la répartition des dommages environnementaux est indépendante de celle des émissions de gaz à effet de serre (GES). Nous explorons la possibilité de corriger cette inadéquation via un « fonds assuranciel global », financé en fonction de la responsabilité de chaque pays concernant les changements climatiques. Étant donné la très longue durée de vie de plusieurs GES dans l'atmosphère, nous avançons que les dommages observés doivent être partagés en fonction des émissions cumulées, plutôt que de partager les coûts futurs espérés des émissions actuelles, comme le ferait une taxe pigouvienne. Nous employons la théorie de la responsabilité de Bossert et Fleurbaey (1996), adaptée à un contexte avec externalités, pour caractériser de nouvelles versions de deux mécanismes de partage connus.

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  • Justin Leroux, 2010. "Sharing the Cost of Global Warming," CIRANO Working Papers 2010s-32, CIRANO.
    • Handle: RePEc:cir:cirwor:2010s-32
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    References listed on IDEAS

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    1. Bossert W., 1996. "Redistribution mechanisms based on individual characteristics," Mathematical Social Sciences, Elsevier, vol. 31(1), pages 51-51, February.
    2. Norman Henderson & Ian Bateman, 1995. "Empirical and public choice evidence for hyperbolic social discount rates and the implications for intergenerational discounting," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 5(4), pages 413-423, June.
    3. Baumol, William J, 1972. "On Taxation and the Control of Externalities," American Economic Review, American Economic Association, vol. 62(3), pages 307-322, June.
    4. Leroux, Jistin, 2004. "Strategy-Proofness and Efficiency Are Incompatible in Production Economies," Working Papers 2004-07, Rice University, Department of Economics.
    5. Marc Fleurbaey & Walter Bossert, 1996. "Redistribution and compensation (*)," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 13(3), pages 343-355.
    6. Nicholas Stern, 2008. "The Economics of Climate Change," American Economic Review, American Economic Association, vol. 98(2), pages 1-37, May.
    7. Leroux, Justin, 2004. "Strategy-proofness and efficiency are incompatible in production economies," Economics Letters, Elsevier, vol. 85(3), pages 335-340, December.
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    Cited by:

    1. Athanasoglou, Stergios, 2022. "On the existence of efficient, individually rational, and fair environmental agreements," Journal of Mathematical Economics, Elsevier, vol. 98(C).
    2. Francisco Cabo & Mabel Tidball, 2022. "Cooperation in a Dynamic Setting with Asymmetric Environmental Valuation and Responsibility," Dynamic Games and Applications, Springer, vol. 12(3), pages 844-871, September.
    3. Ilaria Colivicchi & Gianluca Iannucci, 2023. "The Environmental Responsibility of Firms and Insurance Coverage in an Evolutionary Game," Dynamic Games and Applications, Springer, vol. 13(3), pages 801-818, September.
    4. Billette de Villemeur, Etienne & Leroux, Justin, 2016. "A liability approach to climate policy: A thought experiment," MPRA Paper 75497, University Library of Munich, Germany.
    5. Han, Rong & Li, Jianglong & Guo, Zhi, 2022. "Optimal quota in China's energy capping policy in 2030 with renewable targets and sectoral heterogeneity," Energy, Elsevier, vol. 239(PA).
    6. Yanbin Li & Zhen Li & Min Wu & Feng Zhang & Gejirifu De, 2018. "Regional-Level Allocation of CO 2 Emission Permits in China: Evidence from the Boltzmann Distribution Method," Sustainability, MDPI, vol. 10(8), pages 1-16, July.
    7. Tiberio Daddi & Niccolò Maria Todaro & Maria Rosa De Giacomo & Marco Frey, 2018. "A Systematic Review of the Use of Organization and Management Theories in Climate Change Studies," Business Strategy and the Environment, Wiley Blackwell, vol. 27(4), pages 456-474, May.
    8. Billette de Villemeur, Etienne & Leroux, Justin, 2013. "Curbing emissions through (efficient) carbon liabilities: A note from a climate skeptic's perspective," MPRA Paper 46953, University Library of Munich, Germany.
    9. Billette de Villemeur, Etienne & Leroux, Justin, 2019. "Tradable climate liabilities: A thought experiment," Ecological Economics, Elsevier, vol. 164(C), pages 1-1.
    10. Billette de Villemeur, Etienne & Leroux, Justin, 2016. "Accounting for Needs in Cost Sharing," MPRA Paper 73434, University Library of Munich, Germany.
    11. Billette de Villemeur, Etienne & Leroux, Justin, 2016. "Plaidoyer pour une autre approche des politiques climatiques : De la poursuite de l’intérêt propre à l’introduction du principe de responsabilité [For another approach to climate policy: From the p," MPRA Paper 74998, University Library of Munich, Germany.

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    More about this item

    Keywords

    climate change; cost sharing; responsibility; compensation ; changements climatiques; partage de coûts; responsabilité; compensation;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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