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Can Equity Enhance Efficiency? Some Lessons from Climate Negotiations

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  • Bosello, Francesco
  • Buchner, Barbara
  • Carraro, Carlo
  • Raggi, Davide

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.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3606.

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Date of creation: Feb 2003
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Handle: RePEc:cpr:ceprdp:3606

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Keywords: agreements; climate; equity; incentives; negotiations; policy; tranfers;

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References

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Citations

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Cited by:
  1. Johan Eyckmans & Michael Finus, 2003. "New Roads to International Environmental Agreements: The Case of Global Warming," Energy, Transport and Environment Working Papers Series ete0318, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment.
  2. Carlo Carraro & Johan Eyckmans & Michael Finus, 2006. "Optimal Transfers and Participation Decisions in International Environmental Agreements," Working Papers 2006_44, Department of Economics, University of Venice "Ca' Foscari".
  3. Michael Finus & Juan-Carlos Altamirano-Cabrera & Ekko Ierland, 2005. "The effect of membership rules and voting schemes on the success of international climate agreements," Public Choice, Springer, vol. 125(1), pages 95-127, July.
  4. Dritan Osmani, . "A note on optimal transfer schemes, stable coalition for environmental protection and joint maximization assumption," Working Papers FNU-176, Research unit Sustainability and Global Change, Hamburg University.
  5. Valentina Bosetti & Carlo Carraro & Enrica De Cian & Romain Duval & Emanuele Massetti & Massimo Tavoni, 2009. "The Incentives to Participate in, and the Stability of, International Climate Coalitions: A Game-theoretic Analysis Using the Witch Model," Working Papers 2009.64, Fondazione Eni Enrico Mattei.
  6. M Sáiz & Eligius Hendrix & Niels Olieman, 2006. "On the Computation of Stability in Multiple Coalition Formation Games," Computational Economics, Society for Computational Economics, vol. 28(3), pages 251-275, October.
  7. Michael Finus & Ekko van Ierland, 2003. "Stability of Climate Coalitions in a Cartel Formation Game," Working Papers 2003.61, Fondazione Eni Enrico Mattei.

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