The theory of international environmental agreements
In: Handbook of Environmental Economics
This chapter presents the theory of international environmental agreements (IEAs). It explains what treaties do (or should do); when and why they succeed or fail; and whether they can be designed better. It focuses on the main questions that the literature on this topic has tried to answer, discusses the different methodological approaches that have been used, and shows how these approaches relate to one another. The chapter pays greatest attention to the constraint of self-enforcement and to the institutional aspects of IEAs. Topics discussed include: the relationship between international environmental cooperation problems and other cooperation problems; the problems IEAs are meant to address; the non-cooperative and full cooperative benchmarks; IEAs as stage games; the empirical implications of the theory; alternative equilibrium concepts; minimum participation in a treaty; pollution abatement as a strategic substitute and as a strategic complement; the difference between compliance and participation enforcement; IEAs as repeated games; the trade-off between the depth and breadth of cooperation; the distributive and strategic roles of side payments; issue linkage; trade leakage; and enforcement relying on trade restrictions. The chapter also shows how the theory can illuminate real problems, including acid rain, ozone depletion, and global climate change. The chapter concludes with suggestions for future research.
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