BC3 Seminars: David M. McEvoy, “Effective Climate Agreements under Uncertainty”

BC3 Seminars
“Effective Climate Agreements under Uncertainty“

David M. McEvoy

Associate Professor, Economics Department, Appalachian State University, Boone, NC, USA.

Abstract

Meaningful international cooperation on climate change requires countries to overcome a social dilemma; collectively, countries are better off reducing greenhouse-gas emissions, but individually they are better off increasing their emissions. An effective climate agreement must motivate sovereign countries to both voluntarily agree to reduce their emissions and then comply with their commitments. Moreover, this must take place under a great deal of uncertainty regarding the damages from climate change. Our existing institutions designed to manage climate change have failed. Here we use experimental methods to test a climate agreement structure that, in theory, encourages meaningful participation and compliance. One of the defining features of the agreement is that it requires members to pay refundable deposits upon ratification. Our results show that this agreement structure can be successful at significantly reducing emissions. Most importantly, the agreement remains highly effective even in the face of uncertainty regarding the damages from a changing climate. Our results suggest that making ex ante deposits, even relatively small ones, serves as a coordination device that allows countries to achieve meaningful climate cooperation.

Lecturer

Referenced paper: Effective Climate Agreements under Uncertainty (with Todd L. Cherry)