Linking developing country's cooperation on climate control with industrialized country's R&D and technology transfer

Using a world multi-sectoral, multi-regional trade model, this paper has investigated the economic and environmental implications of climate control coalitions cooperating on R&D investment that triggers low cost environmentally friendly technologies. We start with the Kyoto scenario where all Annex B industrialized countries (including the US) are assumed to individually meet their mandatory Kyoto greenhouse gas emissions reduction targets. Next, we consider industrialized country's cooperating on climate control and R&D-induced technological innovations. We then expand climate control coalition to include developing countries. Finally, we investigate the implications of additional R&D investment from industrialized countries to developing countries. Our results clearly demonstrate that cooperation on climate control and R&D among industrialized countries induces technological innovations, lowers their compliance costs and thus places less strong economic burden on these countries. But without developing countries getting involved in climate control and R&D investment, such a cooperation alone is unable to completely offset negative economic effects of the emissions reduction commitments on both industrialized countries themselves and developing countries. Recognizing the importance of developing countries’ participation and their legitimate demand for adequate technology transfer and financing, the paper concludes that linking developing country's cooperation on climate control with industrialized country's R&D and technology transfer would produce win-win-win outcomes for both developing countries and industrialized countries and for the global environment.