Working Paper: CEPR ID: DP5034
Authors: Barbara Buchner; Carlo Carraro
Abstract: No international regime on climate change is going to be fully effective in controlling GHG emissions without the involvement of countries such as China, India, the United States, Australia, and possibly other developing countries. This highlights an unambiguous weakness of the Kyoto Protocol, where the aforementioned countries either have no binding emission targets or have decided not to comply with their targets. Therefore, when discussing possible post-Kyoto scenarios, it is crucial to prioritise participation incentives for all countries, especially those without explicit or with insufficient abatement targets. This paper offers a bottom-up game-theoretic perspective on participation incentives. Rather than focusing on issue linkage, transfers or burden sharing as tools to enhance the incentives to participate in a climate agreement, this paper aims at exploring whether a different policy approach could lead more countries to adopt effective climate control policies. This policy approach is explicitly bottom-up, namely it gives each country the freedom to sign agreements and deals, bilaterally or multilaterally, with other countries, without being constrained by any global protocol or convention. This study provides a game-theoretic assessment of this policy approach and then evaluates empirically the possible endogenous emergence of single or multiple climate coalitions. Welfare and technological consequences of different multiple bloc climate regimes will be assessed and their overall environmental effectiveness will be discussed.
Keywords: agreements; climate; incentives; negotiations; policy
JEL Codes: C72; H23; Q25; Q28
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| lack of supranational authority (F55) | noncooperative game environment (C72) |
| noncooperative game environment (C72) | freeriding incentives (H40) |
| expected payoffs from cooperation vs freeriding (C71) | countries' choice to join coalitions (D74) |
| presence of multiple coalitions (D74) | fragmented climate regimes (F12) |
| regional or subglobal climate blocs (R11) | better incentives for countries to participate in climate agreements (F64) |
| countries' strategic choices (F55) | varying levels of greenhouse gas abatement (Q52) |
| formation of blocs (D74) | improved environmental effectiveness compared to noncooperative scenarios (C71) |