Project
InFairCom
During the United Nations Climate Change Conference in December 2015 (COP21) and in its resulting Paris Agreement, 195 countries agreed to set out a global action plan to avoid dangerous climate change by limiting global warming to well below 2°C above pre-industrial levels. However, the commitments are still insufficient to achieve this target. The project “Incentives, Fairness and Compliance in International Environmental Agreements” (InFairCom) examines the Paris Agreement and, in particular, the necessary conditions both for adequate compliance mechanisms and for strategies to approach this long-term climate objective. In order to receive valuable insights and robust results, InFairCom employs several distinct but complementary methodological approaches including (i) meta-analyses of existing agreements, (ii) qualified judicial assessments, (iii) theoretical economic models linked with (iv) experimental and (v) empirical applications.
Project results
The legally indeterminate burden-sharing criteria of the Paris Agreement are dominated by discretionary criteria. This is why national responsibilities for non-compliance cannot yet be derived.
Fairness plays a key role in enhancing compliance of international environmental agreements. In practice, a formulaic approach to interpreting the CBDR-RC principle is recommended for the future of the Paris Agreement.
In the absence of stricter requirements for development aid to be counted as climate transfers, transfers might result in emissions increase in recipient countries.
Experiments suggest the ratchet-up mechanism in the Paris Agreement might result in lower contributions to the global public good of climate change mitigation, if repeated over time. Including a system of minimum binding contributions would address this.
The results of a survey among climate delegates show a relationship between the mindset of delegates and recommended climate policies.
Illustration of project results
The figure summarizes the results of a laboratory public good experiment designed to test the Paris Agreement’s Ratchet Mechanism that prescribes that NDCs have to increase over time. As key indicator for successful cooperation, we use participants’ cooperation rates. In terms of climate policy, a cooperation rate of 100 percent corresponds to a globally optimal level of climate action. We cover three different decision-making scenarios: First, a control group (base) that represents a hypothetical world without ratcheting. Second, the weak ratcheting scenario (weakR) works the same as base, except that each participant’s cooperation rate must be at least as high as in the previous round. Third, the strong ratcheting scenario (strongR) work the same as base, except that each participant’s cooperation rate must be higher than in the previous period. At the beginning, cooperation rates in weakR and strongR are lower than in base. While ratcheting leads to an increase in cooperation rates over time, this increase is not strong enough to compensate for the initial loss in efficiency. On average, cooperation rates are lower in weakR and strongR compared to base.
Main Findings
- A unique applicable benchmark would be wishable to define the CBDR RC principle.
- Financial support from developed countries could be specified in their NDCs.
- Stricter conditions for reporting development aid as climate finance are needed.
- Appropriately designed transfer payments may provide an alternative to a climate club with trade sanctions.
- Ratcheting alone will not solve the cooperation problem in global climate policy.
Flagship-Paper
Gallier, C., Sturm, B. (2021):
The Ratchet Effect in Social Dilemmas. Journal of Economic Behavior & Organization 186: 251-268.
Gavard, C., Schoch, N. (2021):
Climate Finance and Emission Reducions: What Do the Last Twenty Years Tell Us? ZEW Discussion Paper.
Kesternich, M., Löschel, A., Ziegler, A. (2021):
Negotiating Weights for Burden Sharing Rules in International Climate Negotiations: An Empirical Analysis. Environmental Economics and Policy Studies 23 (2): 309-331.
Mahabadi, D. (forthcoming):
Enhancing Fairness in the Paris Agreement: Lessons from the Montreal and Kyoto Protocols and the Path Ahead. International Journal of Environment and Sustainable Development.
Rogna, M., Vogt, C. (2020):
Coalition Formation with Optimal Transfers when Players are Heterogeneous and Inequality Averse. Ruhr Economic Papers No. 20-865.
Will, U., Manger-Nestler, C. (2021):
Fairness, Equity and Justice in the Paris Agreement. Terms and Operationalization of Differentiation. Leiden Journal of International Law 34 (2): 397-420.