Measures to enhance the effectiveness of international climate agreements: The case of border carbon adjustments
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Accepted version
Author(s)
Al Khourdajie, Alaa
Finus, Michael
Type
Journal Article
Abstract
Actions on climate change which are not supported by all countries are not very effective. However, full participation in a global climate treaty with meaningful emission reductions is difficult to achieve. The non-excludability of the public good mitigation provides an incentive to abstain from global action. Moreover, carbon leakage renders it unattractive to join a treaty without full participation. We study whether and under which conditions border carbon adjustments (BCAs) can mitigate free-riding and reduce carbon leakage in a simple strategic trade model. We show that BCAs can lead to large stable climate agreements, including full participation, associated with large global welfare gains if treaties do not restrict membership (open membership), as this is typical for environmental agreements. We caution against restricting accession to treaties (exclusive membership), as this is typical for trade agreements, which may serve individual but not global interests.
Date Issued
2020-05
Date Acceptance
2020-02-09
Citation
European Economic Review, 2020, 124
ISSN
0014-2921
Publisher
Elsevier
Journal / Book Title
European Economic Review
Volume
124
Copyright Statement
© 2020 Elsevier B.V. All rights reserved. This manuscript is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Licence http://creativecommons.org/licenses/by-nc-nd/4.0/
Subjects
14 Economics
Economics
Publication Status
Published
Article Number
103405
Date Publish Online
2020-02-21