Climate in the 21st Century: A Macroeconomic Model of Fair Global Warming Benefits Distribution to Grant Climate Justice Around the World and Over Time

Abstract

Climate justice accounts for the most challenging global governance goal. In the current post-COP21 Paris agreement climate change mitigation and adaptation efforts, the financialization of the ambitious goals has leveraged into a blatant demand. In the weighting of the burden of global warming, the benefits of a warming earth have been neglected since recently. Following the introduction of the gains from climate change (Puaschunder, 2017), this article proposes a model to distribute the benefits of a warming earth in a fair way based on which countries are losing and which countries are winning from a warming earth until 2100. A macroeconomic cost-benefit analysis thereby aids to find the optimum solution on how to distribute climate change benefits and burden within society. When unidimensionally focusing on estimated GDP growth given a warmer temperature, over all calculated models assuming linear, prospect or hyperbolic gains and losses, the world will be gaining more than losing from a warming earth until 2100. Based on the index of 188 countries of the world, less countries (n=78) will gain more from global warming until 2100 than more countries (n=111) will lose from a warming earth. Based on the overall index factored by GDP per inhabitant, global warming benefits are demanded to be redistributed in a fair way to offset the costs of climate change loser countries for climate change mitigation and adaptation efforts and to instigate a transition into renewable energy. Adding onto contemporary climate fund raising strategies ranging from emissions trading schemes (ETS) and carbon tax policies as well as financing climate justice through bonds as viable mitigation and adaptation strategies, climate justice is introduced to comprise of fairness between a countries but also over generations in a unique and unprecedented tax-and-bonds climate change gains and losses distribution strategy. Climate change winning countries are advised to use taxation to raise revenues to offset the losses incurred by climate change. Climate change losers could raise revenues by issuing bonds that have to be paid back by taxing future generations. Regarding taxation, within the winning countries, foremost the gaining GDP sectors should be taxed. Climate justice within a country should also pay tribute to the fact that low-and high income households share the same burden proportional to their dispensable income, for instance enabled through a progressive carbon taxation. Those who caused climate change could be regulated to bear a higher cost through carbon tax in combination with retroactive billing through inheritance tax to map benefits from past wealth accumulation that potentially contributed to global warming. Deriving respective policy recommendations for the wider climate change community in the discussion of the results is aimed at ensuring to share the burden but also the benefits of climate change within society in an economically efficient, legally equitable and practically feasible way.