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Discussion Paper Details

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Title: Can Equity Enhance Efficiency? Some Lessons from Climate Negotiations

Author(s): Francesco Bosello, Barbara Buchner, Carlo Carraro and Davide Raggi

Publication Date: February 2003

Keyword(s): agreements, climate, equity, incentives, negotiations, policy and tranfers

Programme Area(s): International Trade and Regional Economics

Abstract: This Paper analyses the relationship between different equity rules and the incentives to sign and ratify a climate agreement. A widespread conjecture suggests that a more equitable distribution of the burden of reducing emissions would enhance the incentives for more countries ? particularly big emitters ? to accept an emission reduction scheme defined within an international climate agreement. This Paper shows that this conjecture is only partly supported by the empirical evidence that can be derived from the recent outcomes of climate negotiations. Even though an equitable sharing of the costs of controlling GHG emissions can provide better incentives to sign and ratify a climate agreement than the burden sharing implicit in the Kyoto agreement, a stable global agreement cannot be achieved. A possible strategy to achieve a global agreement without free-riding incentives is a policy mix in which global emission trading is coupled with a transfer mechanism designed to offset incentives to free ride.

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Bibliographic Reference

Bosello, F, Buchner, B, Carraro, C and Raggi, D. 2003. 'Can Equity Enhance Efficiency? Some Lessons from Climate Negotiations'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=3606