Designing the Optimal International Climate Agreement with Variability in Commitments

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.

Informational and Flexibility in the Design of International Climate Agreements

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.

AN EMPIRICAL ASSESSMENT OF COMPONENTS OF CLIMATE ARCHITECTURES

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.

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

The 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.