Du 21/01/2020 de 12:30 à 13:30

Salle R1-09, Campus Jourdan, 48 boulevard Jourdan, 75014 Paris

WREN-LEWIS Liam(PSE)
WREN-LEWIS Liam(PSE)
BERTOLI Simone(Université Clermont Auvergne, CNRS, CERDI, IZA, ICM)
BERTOLI Simone(Université Clermont Auvergne, CNRS, CERDI, IZA, ICM)
LOCHMANN Alexia(PSE)
LOCHMANN Alexia(PSE)
STERN Lennart(PSE)
GOVIND Yajna(PSE, WID)
FROMENTIN Julie(Université Paris 1-Panthéon Sorbonne, INED, ICM)
SOLIGNAC Matthieu(Université de Bordeaux, CNRS, Comptrasec ; Ined; ICM)
SOLIGNAC Matthieu(Université de Bordeaux, CNRS, Comptrasec ; Ined; ICM)
TOMA Sorana(ENSAE, ICM)
TOMA Sorana(ENSAE, ICM)

Funding Global Public Good Institutions via taxes on aviation emissions- a comparison of three proposed mechanisms

The EU is considering taking unilateral action to achieve higher carbon pricing for international aviation. It has been proposed that the EU could start a club mechanism whereby participating countries would have to tax at a fixed rate the emissions of all outgoing flights as well as all flights coming in from non-participants. They would then have to allocate a certain proportion of the tax revenue to some agreed-upon global institution for climate change mitigation. I propose an alternative club mechanism in which participating countries could allocate their tax revenue to Global Public Good Institutions (GPGIs) of their choice from a set GPGIs recognised as eligible in the treaty establishing the mechanism. Of the tax revenue that participants decide to not allocate, they could retain a fixed proportion. The remaining revenue would be added to the GPGIs in proportion to the aggregate allocations made to them. I consider an example where the set of eligible GPGIs consists of 2 GPGIs for global health and 4 for climate change mitigation. I estimate the payoffs that countries would derive from money being added to the different GPGIs,taking into account the heteogrenous benefits generated by each GPGI, the rents that some GPGIs create and the redistributional effects that some GPGIs induce by changing e.g. the oil price. Using an iterated best response algorithm and assuming that initially only the EU and China participate, I predict that this new mechanism can achieve 22% more welfare gains than the previously proposed one, raising 50% more revenue for GPGIs. I then enrich the mechanism by allowing countries to also give to so called “proportional matching funds”, which distribute their budget to subsets of GPGIs, in proportion to the direct allocations made to these GPGIs. This enriched mechanism can achieve 67% more welfare gains than the previously proposed one, raising 100% more revenue for GPGIs.