scholarly journals Designing the Optimal International Climate Agreement with Variability in Commitments

2021 ◽  
pp. 1-18
Author(s):  
Jordan H. McAllister ◽  
Keith E. Schnakenberg
Keyword(s):  
Individual Differences ◽  
Asymmetric Information ◽  
Free Rider ◽  
International Organization ◽  
Information Collection ◽  
Abatement Costs ◽  
Independent Information ◽  
International Climate ◽  
Mitigation Costs ◽  
International Climate Agreement

Abstract We analyze the design of an international climate agreement. In particular, we consider two goals of such an agreement: overcoming free-rider problems and adjusting for differences in mitigation costs between countries. Previous work suggests that it is difficult to achieve both of these goals at once under asymmetric information because countries free ride by exaggerating their abatement costs. We argue that independent information collection (investigations) by an international organization can alleviate this problem. In fact, though the best implementable climate agreement without investigations fails to adjust for individual differences even with significant enforcement power, a mechanism with investigations allows adjustment and can enable implementation of the socially optimal agreement. Furthermore, when the organization has significant enforcement power, the optimal agreement is achievable even with minimal investigative resources (and vice versa). The results suggest that discussions about institutions for climate cooperation should focus on information collection as well as enforcement.

scholarly journals Informational and Flexibility in the Design of International Climate Agreements

2020 ◽  
Author(s):  
Jordan H. McAllister ◽  
Keith Schnakenberg
Keyword(s):  
Free Rider ◽  
International Organization ◽  
Information Collection ◽  
Abatement Costs ◽  
Climate Agreements ◽  
Independent Information ◽  
International Climate Agreements ◽  
International Climate ◽  
Mitigation Costs ◽  
International Climate Agreement

We analyze the design of an international climate agreement. In particular, we consider two goals of such an agreement: overcoming free-rider problems and adjusting for differences in mitigation costs between countries. Previous work suggests that it is difficult to achieve both of these goals at once under asymmetric information because countries free ride by exaggerating their abatement costs. We argue that independent information collection (investigations) by an international organization can mitigate this problem. In fact, though the best implementable climate agreement without investigations fails to adjust for individual differences even with significant enforcement power, a mechanism with investigations allows such adjustment and can allow implementation of the socially optimal agreement. Furthermore, when the organization has significant enforcement power the optimal agreement is achievable with minimal investigation costs. The results suggest that discussions about institutions for climate cooperation should focus on information collection as well as enforcement.

scholarly journals The stability likelihood of an international climate agreement

2007 ◽  
Vol 39 (4) ◽  
pp. 357-377 ◽  
Author(s):  
Rob Dellink ◽  
Michael Finus ◽  
Niels Olieman
Keyword(s):  
International Climate ◽  
The Stability ◽  
International Climate Agreement

Simple Pricing Schemes for Pollution Control under Asymmetric Information

2010 ◽  
Vol 10 (1) ◽  
Author(s):  
Peter W Kennedy ◽  
Benoit Laplante ◽  
Dale Whittington
Keyword(s):  
Asymmetric Information ◽  
Optimal Schedule ◽  
Abatement Cost ◽  
Unit Price ◽  
Abatement Costs ◽  
Price Schedule ◽  
Marginal Abatement Costs ◽  
Marginal Prices ◽  
Limiting Case ◽  
Pricing Schemes

Abstract Most policies for pricing pollution under asymmetric information proposed in the literature to date are rarely – if ever – used in practice. This is likely due to their complexity. We investigate the scope for using somewhat simpler policies that are more closely related to pricing schemes already used by regulators in many jurisdictions. These schemes have a discrete block pricing (DBP) structure whereby a given unit price for pollution is applied up to a specified level of pollution for any given polluter, and a higher unit price is applied to any pollution from that polluter above the specified level. If the same price schedule is applied uniformly to all firms, we call it UDBP. We derive the optimal UDBP schedule for any given number of price blocks. We also derive the optimal limiting case of the UDBP schedule (with an infinite number of price blocks) as a uniform linear increasing marginal price schedule (ULIMP). The optimal ULIMP scheme strikes a balance between the information-related benefits of increasing marginal prices on one hand, and an increase in aggregate abatement cost, due to the non-equalization of marginal abatement costs across firms, on the other. In particular, the optimal schedule is steeper with larger aggregate uncertainty about marginal abatement costs, and flatter with more observable heterogeneity across firms. We then compare our price schemes with those proposed by Weitzman (1978) and Roberts and Spence (1976).

scholarly journals Climate policy and equity principles: fair burden sharing in a dynamic world

2013 ◽  
Vol 18 (5) ◽  
pp. 517-536 ◽  
Author(s):  
Lucas Bretschger
Keyword(s):  
Economic Development ◽  
Climate Policy ◽  
Cost Sharing ◽  
Negotiation Process ◽  
Burden Sharing ◽  
Carbon Budgets ◽  
International Climate Policy ◽  
International Climate ◽  
International Climate Agreement ◽  
Equity Principles

AbstractThe paper argues that negotiation costs can prevent the international community from finding a new international climate agreement. To define a feasible way of facilitating the negotiation process, I analyze basic equity principles and their relationship to climate policy and economic development. Based on the most relevant principles, I propose a general synthetic rule for burden sharing in international climate policy. The rule avoids complexity and comprises both egalitarian and cost-sharing aspects, which appears to be crucial for achieving a climate agreement. Carbon budgets for the different countries are calculated under different parameter assumptions.

AN EMPIRICAL ASSESSMENT OF COMPONENTS OF CLIMATE ARCHITECTURES

2017 ◽  
Vol 08 (04) ◽  
pp. 1750013
Author(s):  
MAX MEULEMANN
Keyword(s):  
Climate Change ◽  
Research And Development ◽  
Unique Data ◽  
Leading Role ◽  
Or Groups ◽  
The Usa ◽  
Personal Attitudes ◽  
International Climate ◽  
International Climate Agreement ◽  
The Eu

Based on unique data from a worldwide survey among participants of international climate conferences, I investigate the acceptance of the most discussed components of architectures for an international climate agreement, namely: global quantitative targets, sector targets, research and development, geoengineering, land use, and adaptation. Regional and economic differences as well as personal attitudes play an important role for the perception of the different components. Global quantitative targets and adaptation are the most accepted in contrast to a low acceptance of geoengineering. People that are more affected by climate change and value fairness a lot care more about global and sector targets and research and development. Surprisingly, being vulnerable to climate change does not increase the preference for adaptation by much. Furthermore, I analyze which countries or groups of countries are expected to play a leading role for each component. The EU is seen as a key player and not much is expected from the USA and China. I detect a normative bias that increases expectations on China, the EU, and the USA for some of the components.

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