Turning the Tide against Inaction: Partial Climate Agreements with Open Entry

Given the current stalemate of international negotiations on climate change, with no global agreement at the horizon, we evaluate the possibility of a special partial agreement with only a subset of countries ratifying a treaty. In this framework, the non-signatory countries can decide to join or to leave a coalition of the willing at any point in time, benefiting from the revenues of the carbon market. The results of our work are very promising and indicate that a partial climate agreement with open membership is indeed able to engage the major developing economies in mitigation actions, and to relieve welfare losses of the signatory regions. In fact if we consider the case of a coalition of the willing formed by the OECD, an environmental treaty with (without) open entry is able to achieve a climate target of 2.7º (3.8º) in 2100 with an associated policy cost of 0.78% (3.16%) for the underwriter regions. Moreover, the transfer of money required to sustain the abatement actions in the non-OECD countries turns out to be politically feasible, as it does not exceed what is currently discussed in the climate change talks ($100 billion per year).