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Can Equity Enhance Efficiency? Some Lessons from Climate Negotiations

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Author Info
Bosello, Francesco
Buchner, Barbara
Carraro, Carlo
Raggi, Davide

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

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Find related papers by JEL classification:
C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
H00 - Public Economics - - General - - - General
H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)

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    Other versions:
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    Other versions:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  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. [Downloadable!]
    Other versions:
  2. Michael Finus & Ekko van Ierland, 2003. "Stability of Climate Coalitions in a Cartel Formation Game," Working Papers 2003.61, Fondazione Eni Enrico Mattei. [Downloadable!]
    Other versions:
  3. Carlo Carraro & Johan Eyckmans & Michael Finus, 2005. "Optimal Transfers and Participation Decisions in International Environmental Agreements," Working Papers 2005.50, Fondazione Eni Enrico Mattei. [Downloadable!]
    Other versions:
  4. 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. [Downloadable!]
  5. 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. [Downloadable!] (restricted)
  6. M Sáiz & Eligius Hendrix & Niels Olieman, 2006. "On the Computation of Stability in Multiple Coalition Formation Games," Computational Economics, Springer, vol. 28(3), pages 251-275, October. [Downloadable!] (restricted)
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