The political economy of international environmental agreements: a survey

This paper surveys the recent literature on the political economy of the formation of international environmental agreements. The survey covers theoretical modelling approaches and empirical studies including experimental work. Central to our survey is the question how the political process impacts different stages of agreement formation and stability. We distinguish the rules defined during pre-negotiations that govern negotiations, ratification and implementation. Strategic delegation and lobbying are directly relevant during the negotiation and ratification phases. Implementation, the choice of policy instruments at the national level, will also be impacted by lobbying and indirectly influence negotiations. We find that the basic theoretical framework for the analysis of international environmental agreements is largely unrelated to empirical approaches. Furthermore, we observe that models of the political process of agreement formation, like for example sequential game models, are yet to be developed.     

Technology investment, bargaining, and international environmental agreements

If countries are to engage in international environmental cooperation, they must bargain over the distribution of gains. When future bargaining over pollution abatement is expected, how should a country decide on public technology investments to reduce the domestic cost of pollution abatement? I find that while countries tend to underinvest because they fail to internalize the global benefits of new technology, the magnitude of the problem depends on a country’s bargaining power. Powerful countries underinvest less frequently, because they expect to reap most of the global benefits from new technology in the international negotiations. I also investigate the effectiveness of a simple reciprocal technology agreement. I find that it can help solve the underinvestment problem, and this beneficial effect is particularly pronounced in the case of powerful countries. These findings imply that changing the bargaining protocol on climate change to the benefit of powerful countries may help secure the necessary technology investments.     

Enforcing compliance with international environmental agreements using a deposit-refund system

Whether nations are able to cooperatively manage shared resources through international environmental agreements (IEAs) depends on whether compliance with voluntary commitments can be enforced. Given that nations are sovereign enforcing compliance with IEAs cannot rely on the presence of a strong sanctioning body. Nonetheless, enforcement provisions must be effective in the sense that they will deter non-compliance and credible in the sense that they will actually be imposed. In this paper, we address the problem of enforcing compliance with IEAs by examining one promising mechanism—a deposit-refund system—that exhibits the necessary features for effective enforcement. We analyze a simple model to demonstrate the desirable properties of the mechanism and then consider the effects of imperfect monitoring, uncertainty, partial participation and reputation on the effectiveness of a deposit-refund system.     

The self-selection of democracies into treaty design: insights from international environmental agreements

Generally, democratic regime type is positively associated with participating in international environmental agreements. In this context, this study focuses on the legal nature of an agreement, which is linked to audience costs primarily at the domestic level that occur in case of non-compliance and are felt especially by democracies. Eventually, more legalized (“hard-law”) treaties make compliance potentially more challenging and as democratic leaders may anticipate the corresponding audience costs, the likelihood that democracies select themselves into such treaties decreases. The empirical implication of our theory is that environmental agreements with a larger share of democratic members are less likely to be characterized by hard law. Results from quantitative analyses strongly support our argument, shed new light on the relationship between participation in international agreements and the form of government, and also have implications for the “words-deeds” debate in international environmental policy-making.     

Lessons learnt from two decades of international environmental agreements: law

International Environmental Agreements: Politics, Law and Economics - As Patricia Birnie cautiously and prophetically put it in the inaugural issue of this journal (INEA 1, January 2001, p. 74),...     

Military spending,liberal institutions and state compliance with international environmental agreements

The current paper examines the dynamics of state security behavior and international environmental protection. In particular, the study provides a liberal institutional approach in identifying a “guns and butter” relationship between military spending and state participation with international environmental agreements. This cross-national study employs both bivariate and multivariate regression models to analyze the relationship between military expenditures and state participation with international environmental agreements, particularly examining the Convention on International Trade in Endangered Species of Wild Fauna and Flora. The empirics of the study suggest that states with higher military expenditures as a percent of GDP are less likely to comply with international environmental agreements. Theoretical and empirical implications are presented in the conclusion section.     

Signaling in international environmental agreements: the case of early and delayed action

This paper presents a stylized international environmental agreements game with two regions differing in their preference for environmental quality. If side payments are allowed, cooperation can increase the payoffs accruing to both regions. However, cooperation can be impeded by asymmetric information about the regions’ types and only become feasible once a region has credibly revealed its type. We show how in a two-stage game early (delayed) action can act as a credible signal to reveal private information on high (low) benefits. Yet, the cooperative solution with asymmetric information is Pareto-dominated by the outcome with perfect information.     

The effectiveness of UN environmental institutions

This is a study of the effectiveness of key UN institutions focussing on environment and sustainable development: the global conferences on development and the environment, the CSD and UNEP, primarily its co-ordinating functions. According to the indicators used to measure effectiveness here, it is concluded that the overall effectiveness of these institutions is quite low. This particularly applies to the CSD. UNEP has been quite effective in creating new institutions but has been less effective in co-ordinating them. As to the global conferences, their significance has been reduced over time.

International environmental agreements with agenda and interaction between pollutants

This paper analyzes how the sequence of negotiating agreements on each pollutant affects coalition behavior in international environmental agreements (IEAs) when multiple and correlated pollutants exist. I consider a model in which countries suffer from two pollutants with different externality characteristics and attempt to cooperate by sequentially negotiating on IEAs. The membership outcome depends on the environmental concern, abatement technology, spillover effect and most importantly the correlation between pollutants as either substitutes or complements. I find that cooperation in the first stage can facilitate later negotiations and that countries are prone to cooperate on a pollutant of common concern. Moreover, except for symmetric countries, different negotiation agendas may result in distinctive participation outcomes when pollutants are complements. Therefore, with systematic policy design, the negotiation sequence can serve as another method to encourage participation and cooperation in IEAs.     

Effects of funding mechanisms on participation in multilateral environmental agreements

International Environmental Agreements: Politics, Law and Economics - The “rational design approach” to studying international agreements holds that policy-makers evaluate costs and...     

The politics of multilateral environmental agreements lessons from 20 years of INEA

International Environmental Agreements: Politics, Law and Economics - This review article addresses the question: What lessons can we learn from work published in International Environmental...     

Risk-sharing agreements to cover environmental damage: theory and practice

Mordernization has witnessed increasingly new industrial sectors which have the potential to create environmental disasters. The insolvency of risk creators in case of such disasters may lead to insufficient compensation as well as to a dilution of preventive incentives. Insurance is a traditional instrument to address these problems, but is subject to limitations such as the lack of information by the insurers on the risk and limited insurance capacity. The risk-sharing agreement is an alternative which is widely used in high-risk sectors but it received relative little attention in academic literature. This paper analyses the potential of risk-sharing agreements in minimizing total social costs of environmental harmful activities, in comparison with insurance. The comparison shows the advantage of risk-sharing agreements in terms of less demanding information requirements, allowing for mutual monitoring and the potential to reduce administrative costs. However, the analysis also shows that a few conditions need to be met for such advantages to be materialized. This paper then discusses a typology of various risk-sharing agreements and illustrates the different categories with examples from the maritime and nuclear sectors. Based on these experiences, this paper explores the possibilities to expand risk-sharing agreements to other policy areas where environmental risks may emerge.     

Nash bargaining solutions for international climate agreements under different sets of bargaining weights

Bargaining is a tool to share collaborative gains and to facilitate reaching agreement. To improve incentives to join an international climate agreement (ICA), the Nash bargaining solution can be used to distribute cooperative gains across signatories. In this paper, we examine how the formation of ICAs and their mitigation efficiency are impacted by the use of the Nash bargaining solution. In a Nash bargaining game with heterogeneous players, bargaining powers are unequal and may be driven by different characteristics of the players. We employ different sets of asymmetric bargaining weights in order to examine the effectiveness of climate coalitions that emerge as stable agreements. Using the Nash bargaining solution, we obtain results from the stability of coalition model (STACO). We find that the Nash bargaining solution can improve the participation incentives and performances of ICAs as compared to agreements that do not redistribute gains from cooperation, but its capacity to overcome free-riding incentives is limited. However, if Nash bargaining accounts for outside options of players, we find larger stable coalitions and higher global abatement levels. In fact, Nash bargaining with outside options can stabilise the largest coalitions that can possibly be stable in our game.     

Environmental policy integration among multilateral environmental agreements: the case of biodiversity

The system of multilateral environmental agreements (MEAs) comprises hundreds of conventions and protocols designed to protect the environment. Institutional interaction within the MEA system raises issues of environmental policy integration (EPI), i.e. balancing different environmental objectives and considerations. Mainstream proposals for enhancing EPI in environmental governance build upon the assumption that environmental institutions are fragmented. However, recent research reveals that the MEA system has been defragmenting over the years such that EPI is less a problem of institutional fragmentation than of effective management of institutional interplay. This paper examines the factors affecting EPI among MEAs by looking at experiences in the cluster of biodiversity-related multilateral agreements. The analysis is based on a series of interviews with MEA secretariat officials and international experts conducted between September 2011 and January 2012. The paper identifies institutional, political and cognitive barriers constraining interplay management efforts. While some have proposed regulatory changes in the cluster, national-level co-ordination appears to be the best way to advance EPI.     

Correction to: Effects of funding mechanisms on participation in multilateral environmental agreements

International Environmental Agreements: Politics, Law and Economics - In the original publication of the article, there were few mistakes in the text, tables and figure. The corrected text has been...     

The effectiveness of Kyoto Protocol and the legal institution for international technology transfer

Kyoto Protocol has certain provisions concerning environmentally sound technologies (ESTs) transfer, primarily including the direct provisions, the clean development mechanism and the fund mechanism, which are supposed to favor technology transfer for reducing the emission of greenhouse gases (GHG) in the world. However, mainly due to the flaws of these provisions, ESTs have not been transferred as smoothly as possible to realize the Kyoto Protocol’s objectives. Therefore, the international community shall take the effectiveness of Kyoto Protocol as a fresh impetus to consummate the legal system of international technology transfer, that is, to develop a uniform technology transfer agreement under the WTO with a focus on promoting ESTs transfer, which may make the developing countries to acquire the technologies they need under the fair terms and help them build their capacities for sustainable development. China does not need to perform the obligation of reducing GHG emissions until 2013 according to Kyoto Protocol, but precautions shall be taken to improve its legal systems on technology transfer to make preparations for implementing the policy of scientific development and playing significant roles in related international legislation.