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Optimal Transfers and Participation Decisions in International Environmental Agreements

  • Carraro, Carlo
  • Eyckmans, Johan
  • Finus, Michael

The literature on international environmental agreements has recognized the role transfers play in encouraging participation in international environmental agreements (IEAs), but the few results achieved so far are overly specific and do not exploit the full potential of transfers for successful treaty-making. Therefore, in this paper, we develop a framework that enables us to study the role of transfers in a more systematic way. We propose a design for transfers using both internal and external financial resources and making 'welfare optimal agreements' self-enforcing. To illustrate the relevance of our transfer scheme for actual treaty-making, we use a well-known integrated assessment model of climate change to show how appropriate transfers may be able to induce almost all countries into signing a self-enforcing climate treaty.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5046.

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Date of creation: May 2005
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Handle: RePEc:cpr:ceprdp:5046
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  1. Chander, Parkash & Tulkens, Henry, 1994. "The Core of an Economy With Multilateral Environmental Externalities," Working Papers 886, California Institute of Technology, Division of the Humanities and Social Sciences.
  2. Parkash Chander & Henry Tulkens, 1995. "A core-theoretic solution for the design of cooperative agreements on transfrontier pollution," International Tax and Public Finance, Springer, vol. 2(2), pages 279-293, August.
  3. Michael Hoel, 1992. "International environment conventions: The case of uniform reductions of emissions," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 2(2), pages 141-159, March.
  4. Hans-Peter Weikard & Juan-Carlos Altamirano-Cabrera & Michael Finus, 2004. "The Impact of Surplus Sharing on The Stability of International Climate Agreements," Working Papers 2004.99, Fondazione Eni Enrico Mattei.
  5. Barrett, Scott, 2001. "International cooperation for sale," European Economic Review, Elsevier, vol. 45(10), pages 1835-1850, December.
  6. Martin L. Weitzman, 1998. "Gamma Discounting," Harvard Institute of Economic Research Working Papers 1843, Harvard - Institute of Economic Research.
  7. Eyckmans, Johan & Tulkens, Henry, 2003. "Simulating coalitionally stable burden sharing agreements for the climate change problem," Resource and Energy Economics, Elsevier, vol. 25(4), pages 299-327, October.
  8. Francesco Bosello & Barbara Buchner & Carlo Carraro, 2003. "Equity, Development, and Climate Change Control," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 601-611, 04/05.
  9. Nordhaus, William D & Yang, Zili, 1996. "A Regional Dynamic General-Equilibrium Model of Alternative Climate-Change Strategies," American Economic Review, American Economic Association, vol. 86(4), pages 741-65, September.
  10. Valentina Bosetti & Carlo Carraro & Massimo Tavoni, 2009. "Climate Policy after 2012," CESifo Economic Studies, CESifo, vol. 55(2), pages 235-254, June.
  11. TULKENS, Henry, 1997. "Cooperation vs. free riding in international environmental affairs: two approaches," CORE Discussion Papers 1997052, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  12. Carraro, Carlo & Siniscalco, Domenico, 1993. "Strategies for the international protection of the environment," Journal of Public Economics, Elsevier, vol. 52(3), pages 309-328, October.
  13. GERMAINÂ , Marc & TOINTÂ , Philippe & TULKENS, Henry, 1997. "Financial transfers to ensure cooperative international optimality in stock pollutant abatement," CORE Discussion Papers 1997001, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  14. repec:cor:louvrp:-1276 is not listed on IDEAS
  15. Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-94, Supplemen.
  16. Finus, Michael & Sáiz, M. Elena & Hendrix, Eligius M.T., 2009. "An empirical test of new developments in coalition theory for the design of international environmental agreements," Environment and Development Economics, Cambridge University Press, vol. 14(01), pages 117-137, February.
  17. Eyckmans, Johan & Finus, Michael, 2009. "An Almost Ideal Sharing Scheme for Coalition Games with Externalities," Stirling Economics Discussion Papers 2009-10, University of Stirling, Division of Economics.
  18. EYCKMANS, Johan & FINUS, Michael, 2003. "Coalition formation in a global warming game : how the design of protocols affects the success of environmental treaty-making," CORE Discussion Papers 2003088, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  19. Petrakis, Emmanuel & Xepapadeas, Anastasios, 1996. "Environmental consciousness and moral hazard in international agreements to protect the environment," Journal of Public Economics, Elsevier, vol. 60(1), pages 95-110, April.
  20. Claude d'Aspremont & Alexis Jacquemin & Jean Jaskold Gabszewicz & John A. Weymark, 1983. "On the Stability of Collusive Price Leadership," Canadian Journal of Economics, Canadian Economics Association, vol. 16(1), pages 17-25, February.
  21. Kaitala, Veijo & Maler, Karl-Goran & Tulkens, Henry, 1995. " The Acid Rain Game as a Resource Allocation Process with an Application to the International Cooperation among Finland, Russia and Estonia," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(2), pages 325-43, June.
  22. Bosello, Francesco & Buchner, Barbara & Carraro, Carlo & Raggi, Davide, 2003. "Can Equity Enhance Efficiency? Some Lessons from Climate Negotiations," CEPR Discussion Papers 3606, C.E.P.R. Discussion Papers.
  23. Johan Eyckmans & Michael Finus, 2004. "An Empirical Assessment of Measures to Enhance the Success of Global Climate Treaties," Energy, Transport and Environment Working Papers Series ete0406, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment.
  24. Juan-Carlos Altamirano-Cabrera & Michael Finus, 2006. "Permit trading and stability of international climate agreements," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 19-48, May.
  25. Michael Hoel & Kerstin Schneider, 1997. "Incentives to participate in an international environmental agreement," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 9(2), pages 153-170, March.
  26. Johan Eyckmans & Michael Finus, 2007. "Measures to enhance the success of global climate treaties," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 7(1), pages 73-97, March.
  27. Buchholz, Wolfgang & Konrad, Kai A., 1995. "Strategic transfers and private provision of public goods," Journal of Public Economics, Elsevier, vol. 57(3), pages 489-505, July.
  28. Carraro, Carlo & Siniscalco, Domenico, 1998. "International Institutions and Environmental Policy: International environmental agreements: Incentives and political economy1," European Economic Review, Elsevier, vol. 42(3-5), pages 561-572, May.
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