The Private Provision of International Impure Public Goods: the Case of Climate Policy

The authors propose a global Pigouvian tax scheme combined with international side-payments to achieve Pareto-optimal climate policy. They argue that treating climate policy as an 'impure public good'—which provides both global climate stabilisation and local ancillary benefits (e.g., reduced air pollution)—increases the attractiveness of mitigation and provides immediate financial payback for investments. Numerical simulations show that while ancillary benefits only moderately increase the required tax rates, they expand the financial scope for international transfers. The study concludes that these immediate local benefits are critical for political support, especially for countries with high public debt, as primary climate benefits are delayed by approximately half a century.

• Climate policy is characterized as an 'impure public good' because it produces both primary benefits (global climate stabilisation) and ancillary benefits (local improvements in air quality, noise, and congestion).
• There is a significant temporal gap between the implementation of climate policy and the realization of benefits: primary benefits are delayed by about 50 years due to thermal inertia, whereas ancillary benefits are realized almost immediately.
• The proposed international regime uses global Pigouvian taxes to influence private sector emissions, with the resulting tax revenues used to fund international side-payments that incentivize countries to avoid free-riding.
• Numerical simulations indicate that the presence of ancillary benefits increases the demand for climate policy and justifies higher environmental tax rates, thereby increasing the funds available for international transfers.
• The study finds that the tax rates required to move from a Cournot-Nash equilibrium to a global optimum typically range from 1% to 5% of the output of the polluting good, with rates increasing sharply as preferences for the global public good increase.
• Ancillary benefits are particularly important for political feasibility in countries with high public debt because they provide an immediate payback on investments, avoiding the long amortisation periods associated with primary climate benefits.

APA

Altemeyer-Bartscher, M., Markandya, A., & Rübbelke, D. (2011). The Private Provision of International Impure Public Goods: the Case of Climate Policy. Basque Centre for Climate Change. https://www.bc3research.org/h6T8Uy8Nm4gFs0O/201109050205441373946687.pdf

Chicago

Altemeyer-Bartscher, Martin, Anil Markandya, and Dirk Rübbelke. The Private Provision of International Impure Public Goods: the Case of Climate Policy. Basque Centre for Climate Change, 2011. https://www.bc3research.org/h6T8Uy8Nm4gFs0O/201109050205441373946687.pdf.

Wikipedia

{{cite report |last1=Altemeyer-Bartscher |first1=Martin |last2=Markandya |first2=Anil |last3=Rübbelke |first3=Dirk |title=The Private Provision of International Impure Public Goods: the Case of Climate Policy |publisher=Basque Centre for Climate Change |date=September 2011 |url=https://www.bc3research.org/h6T8Uy8Nm4gFs0O/201109050205441373946687.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{altemeyerbartscher2011private, author = {Altemeyer-Bartscher, Martin and Markandya, Anil and Rübbelke, Dirk}, title = {{The Private Provision of International Impure Public Goods: the Case of Climate Policy}}, institution = {Basque Centre for Climate Change}, year = {2011}, month = sep, url = {https://www.bc3research.org/h6T8Uy8Nm4gFs0O/201109050205441373946687.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }