Decarbonization and non-cooperating strategies: a case for Mexico

Countries with a low share of global emissions may perceive their cooperation in decarbonization as less critical yet economically burdensome. While non-cooperating countries may benefit from reduced global emissions at lower direct costs, they can also face significant environmental consequences. This paper investigates an asymmetric scenario in which most countries engage in decarbonization efforts while a single country adopts a free-riding strategy, focusing on Mexico as a case study. Our study provides insights into investment needs compared to environmental implications for a country with a free-riding strategy. The investment needs under free-riding tend to be higher than a baseline scenario with globally low mitigation, and the environmental impacts significantly higher than initially considered. At the same time, the additional investment required in a globally coordinated decarbonization scenario may be smaller than expected: our results for Mexico show a Below 2C scenario requiring 20% more investment than the baseline, but only 11% more than the asymmetric scenario. These findings highlight the complex trade-offs faced by non-cooperating countries and emphasize the need to account for both economic and environmental dimensions along with global interactions when developing climate policy strategies.