Perspectives from Economics, Game Theory and Public Choice
- New Horizons in Environmental Economics series
Edited by Christoph Böhringer, Michael Finus and Carsten Vogt
Chapter 4: On the political economy of international environmental agreements – some theoretical considerations and empirical findings
4. On the political economy of international environmental agreements - some theoretical considerations and empirical findings Carsten Vogt 1. INTRODUCTION The problem of international cooperation in environmental affairs has been addressed during the last decade in a couple of models. Predominantly, the problem has been analyzed in a game-theoretic framework in which the main focus is on the underlying pure economic incentives for sovereign states to enter into international environmental agreements (IEAs). Combating global warming clearly constitutes the problem of providing a pure public good. Greenhouse gas emissions from one state are equally distributed in the atmosphere. Reductions in these emissions, thus not only benefit the country that undertakes the reduction, but also all other countries in the world that might otherwise suffer from more severe global warming.2 Thus, climate protection is a non-excludable good. Moreover, the consumption of one unit of climate protection by one country does not lower the consumption of other countries of this good; thus, climate protection is also a non-rival good. As is well known from standard economic theory, pure public goods are faced with severe incentive problems. Any rational acting country that only pursues its own interest will not take into account the positive externalities its reduction measures will have on other countries. Thus, the level of greenhouse gas (GHG)-emission reductions will be too low. The real tragedy that countries face is the fact that all countries would be better off if all of them behaved in a cooperative way, i.e. if all...
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