Sticks and carrots for the design of international climate agreements with renegotiations

Abstract

This paper examines renegotiations of international climate agreements for carbon abatement. We explore coalition stability under 'optimal transfers' that have been suggested to stabilise international environmental agreements (e.g. McGinty in Oxford Economic Papers 59, [45][46][47][48][49][50][51][52][53][54][55][56][57][58][59][60][61][62] 2007). Such transfer schemes need to be refined when agreements are renegotiated. We determine the requirements that transfers between signatories of an international climate agreement must satisfy in order to stabilise the sequence of agreements that performs best in terms of provision of the public good 'carbon abatement'. If these requirements are met, no country wants to change its membership status at any stage. In order to demonstrate the applicability of our result we use the STACO model, a 12-regions global model, to assess the impact of well-designed transfer rules on the stability of an international climate agreement. Although there are strong free-rider incentives, we find a stable grand coalition in the first commitment period in a game with one round of renegotiations if renegotations take place sufficiently early.

Nash bargaining solutions for international climate agreements under different sets of bargaining weights

“…However, due to large free-riding incentives, the best-performing coalition is still of limited size. This enhancement of the abatement efficiency also confirms the numerical results of the optimal sharing scheme obtained by Carraro et al (2006) and Weikard and Dellink (2014). As shown in the last row of Table 4, we use an 'indicator of success' to represent the coalition's efficiency in closing the welfare (or abatement) gap between all singletons and grand coalition.…”

Low-Carbon Planning and Design in B&R Logistics Service: A Case Study of an E-Commerce Big Data Platform in China

“…Bernard [22] illustrated a strategy game between Russia and competitive developing countries on the basis of an international emission permit market in the Kyoto Protocol. Weikard et al [23] assessed a framework for carbon emission reduction negotiations based on carbon trading, guaranteeing the stability and feasibility of the international Sustainability 2017, 9, 2052 4 of 27 carbon emission reduction agreement. According to Egenhofer [24], the European Union's carbon emissions trading scheme and assessment confirmed that the mechanism was an effective economic tool.…”

“…Paltsev et al [28] evaluated the US greenhouse gas quota and trading plan and analyzed the Emissions Forecasting and Policy Analysis (EPPA) model. Quota transaction [19,22] CERs [21,23] Certified emission reduction EUAs [24][25][26][27] European Union emission quota AAUs [28] Assigned amount units Program trading [30] VERs [31][32][33][34][35] Voluntary emission reduction VCS [36][37][38] Voluntary carbon standard…”

The stability and effectiveness of international climate agreements : the role of carbon trade, bargaining power and enforcement

“…However, due to large free-riding incentives, the best-performing coalition is still of limited size. This enhancement of the abatement efficiency also confirms the numerical results of the optimal sharing scheme obtained by Carraro et al (2006) and Weikard and Dellink (2014). As shown in the last row of Table 4.4, we use an 'indicator of success' to represent the coalition's efficiency in closing the welfare (or abatement) gap between All…”