Working Paper: CEPR ID: DP3606
Authors: Francesco Bosello; Barbara Buchner; Carlo Carraro; Davide Raggi
Abstract: This Paper analyses the relationship between different equity rules and the incentives to sign and ratify a climate agreement. A widespread conjecture suggests that a more equitable distribution of the burden of reducing emissions would enhance the incentives for more countries ? particularly big emitters ? to accept an emission reduction scheme defined within an international climate agreement. This Paper shows that this conjecture is only partly supported by the empirical evidence that can be derived from the recent outcomes of climate negotiations. Even though an equitable sharing of the costs of controlling GHG emissions can provide better incentives to sign and ratify a climate agreement than the burden sharing implicit in the Kyoto agreement, a stable global agreement cannot be achieved. A possible strategy to achieve a global agreement without free-riding incentives is a policy mix in which global emission trading is coupled with a transfer mechanism designed to offset incentives to free ride.
Keywords: agreements; climate; equity; incentives; negotiations; policy; transfers
JEL Codes: C70; H00; H30; Q38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| equitable distribution of the burden of reducing greenhouse gas emissions (H23) | better incentives for countries to sign and ratify climate agreements (F53) |
| equitable burden-sharing (D63) | enhance likelihood of agreement participation (D70) |
| equity improves profitability of climate agreements (Q56) | does not guarantee stability (C62) |
| transfer mechanisms (F24) | enhance profitability (L21) |
| transfer mechanisms (F24) | do not ensure stable global agreement (F53) |
| policy mix (global emission trading + transfer mechanisms) (F16) | achieve stable agreement (C62) |