Download
1 / 12
120 likes | 284 Vues
International Environmental Agreements: Politics, Economics, Law. Economics 331b Spring 2009. The Next Step: Effective International Agreements. Step 1. Understanding the science, impacts, potential remedies such as mitigation, geoengineering, etc.
E N D
International Environmental Agreements:Politics, Economics, Law Economics 331b Spring 2009
The Next Step: Effective International Agreements Step 1. Understanding the science, impacts, potential remedies such as mitigation, geoengineering, etc. Step 2. Undertaking economic/political analyses of efficient and equitable steps to meet environmental objectives at minimum cost Step 3. Design and agree to institutions and mechanisms that will attain objectives: - by obtaining the necessary agreement among nations - by ensuring that individual nations meet their agreements. In the case of global warming, this is about as difficult as can be envisioned because of (i) global public good, (ii) stock quality, and (iii) long time horizon.
Notes on International Agreements Potential mechanisms for reaching agreement: - markets: inefficient for public goods/externalities - within nations: autocracy, legislation (majority or supermajority): inefficient for global public goods/externalities - among nations: force, multinational institutions, treaties Note on treaties: these are legal “contracts” among govts Special problems with international governance under current norms of international law: - need for voluntary agreements - generally cannot bind countries over time
UN Framework Convention on Climate Change The FCCC is the underlying treaty that sets the framework of further agreements. Entered into force in 1994. Article 2. Objective “The ultimate objective … is to achieve … stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. Such a level should be achieved … to ensure that … economic development to proceed in a sustainable manner.” Article 4. Commitments. “2. The developed country Parties … commit themselves ... : (a) Each of these Parties shall adopt national policies … by limiting its anthropogenic emissions of greenhouse gases ... (b) [E]ach of these Parties shall communicate… information on its policies … with the aim of returning individually or jointly to their 1990 levels these anthropogenic emissions of carbon dioxide and other greenhouse gases …. “ Notes: - Essentially universally adopted. - No binding commitments. - Kyoto Protocol is an agreement within the Framework of the FCCC.
Some bargaining outcomes Y (Low income) • Low income countries benefits (Kyoto Protocol) • Low income countries hurt (Mickey Mouse/drug treaties) • Efficient with side payments Efficient with side payments A C B Market Y (High income)
Major Issues in Any International Climate-Change Regime 1. What should be the overall level of emissions reductions, and how should that change over time? 2. What should be the distribution of emissions or emissions reductions (or economic costs) among countries? 3. Should there by income transfers from high-income to low-income countries? 4. Design issues of how to coordinate international policies (quantities v. prices); enforcement; trade linkages; production v. consumption basis
The Kyoto Protocol Major provisions: - A “cap and trade” emissions reduction program - Protocol negotiated in 1997 - Limiting emissions to fraction of 1990 rates. - Limited to high-income countries - Only agreed for 2008-2012 period - Allows trading of emissions permits among countries - US Senate passed a resolution in 1997 by 95-0 to warn that Senate would not ratify. - Bush Administration withdrew in 2001. - Protocol went into effect in Feb 2005 after Russian ratification. Obama administration has proposed entering, but prospects in the Congress are uncertain in the near term. Important note: Virtually all US proposals are “cap and trade” like Kyoto Protocol
Economic Modeling of Alternative Policies • Recall that the modeling strategy is to use the Samuelson-Negishi theorems to simulate the behavior of market systems: 2. To analyze policies, we add auxiliary constraints (like Lagrange maximization) to these: 3. Note: The λ(t) are the Lagrange multipliers. They represent the “dual variables” or “shadow prices” on carbon emissions in each period. The market correspondence is the optimal carbon taxes or prices on emissions permits.
