Negotiating effective institutions against climate change

Christian Gollier, Jean Tirole

Research output: Contribution to journalArticle

29 Scopus citations

Abstract

In environmental matters, the free riding generated by the lack of collective action is aggravated by concerns about leakages and by the desire to receive compensation in future negotiations. The dominant "pledge and review" approach to mitigation will deliver appealing promises and renewed victory statements, only to prolong the waiting game. The climate change global commons problem will be solved only through coherent carbon pricing. We discuss the roadmap for the negotiation process. Negotiators must return to the fundamentals: the need for uniform carbon pricing across countries, for verification, and for a governance process to which countries would commit. Each country would enjoy subsidiarity in its allocation of efforts within the country. We suggest an enforcement scheme based on financial and trade penalties to induce all countries to participate and comply with the agreement. Finally, the choice among economic approaches, whether a carbon price commitment or a cap-and-trade, is subject to trade-offs, on which alternative reasonable views may co-exist. We discuss monitoring reasons for why we personally favor an international cap-and-trade agreement.

Original languageEnglish (US)
Pages (from-to)5-27
Number of pages23
JournalEconomics of Energy and Environmental Policy
Volume4
Issue number2
DOIs
StatePublished - 2015

Keywords

  • COP
  • Cap-and-trade
  • Carbon price
  • Climate change
  • Global warming
  • International public goods
  • Pledge-and-review
  • Prices versus quantities
  • UN climate negotiations

ASJC Scopus subject areas

  • Economics and Econometrics
  • Energy (miscellaneous)
  • Management, Monitoring, Policy and Law

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