Curbing Emissions through a Carbon Liabilities Market: A note from a climate skeptic's perspective

Billette de Villemeur, Etienne and Leroux, Justin (2014): Curbing Emissions through a Carbon Liabilities Market: A note from a climate skeptic's perspective.

Abstract

We argue for the creation of a carbon liabilities market to address climate change. Each period, countries would be made liable for their share of responsibility in current climate damage. Because liabilities could be traded like financial debt, robustness to strategic manipulations and e¢ ciency ensue. Moreover, this decentralizes the choice of the rate by which countries discount future beneÖts and damage. Rather than being based on an expected discounted sum of future marginal damage (as with a carbon tax or tradable emission permits) our proposal relies only on observed realized damage and on the well-documented emission history of countries.

• Item Type: MPRA Paper
• Language: English
• Keywords: Carbon Liabilities, Climate Policy, Market Instruments
• Subjects: H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H23 - Externalities ; Redistributive Effects ; Environmental Taxes and Subsidies; K - Law and Economics > K1 - Basic Areas of Law > K13 - Tort Law and Product Liability ; Forensic Economics; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q54 - Climate ; Natural Disasters and Their Management ; Global Warming

References

Calabresi, G., The Cost of Accidents: A Legal and Economic Analysis, New Haven, CN.: Yale University Press, 1970.

Billette de Villemeur, E. and J. Leroux (2011) "Sharing the Cost of Global Warming", The Scandinavian Journal of Economics, 113(4), 758-783.

Hammond, Peter J., (1981) "Ex-Ante and Ex-Post Welfare Optimality under Uncertainty", Economica, 48 (n.191),235-250.

Kolstad, C. D., T.S. Ulen and G.V. Johnson (1990), "Ex Post Liability for Harm,vs. Ex Ante Safety Regulation: Substitutes of Complements?", American Economic Review, 80(4), 888-901.

Shavell, S. (1984) "Liability for Harm Versus Regulation of Safety", Journal of Legal Studies, June 1984, 13, 357-374.

Shavell, Steven, (2011), "Corrective taxation versus liability", American Economic Review, Papers and Proceedings, 101(3), 273-276.