A spatial econometric model for transboundary air pollution control treaties: an analysis of noncooperative international behavior

Keith Sargent

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: This dissertation develops a theoretical model that explains differences in emission reductions of transboundary air pollutants among nations based on national income, political freedom, the cost of emission reductions, emissions from other countries, the type of pollutant, and the pollutant's dispersion characteristics. The model is based on the theory of the private provision of impure public goods. This theoretical model is then used to derive a reduced form demand equation for emission reductions that can be econometrically estimated using spatial autoregressive techniques for time-series cross-section data;The econometric model is applied to 25 European nations and covers the period from 1980 to 1990. These nations were signatories to the 1985 Helsinki Protocol, which mandated reductions in sulfur dioxide (SO2), and the 1988 Sofia Protocol, which limited emissions of nitrogen oxides (NO x). The signing of these treaties indicated a recognition of the problems caused by acid rain and ozone pollution, yet the two treaties had very different requirements regarding emission reductions. By taking into account the differences between nations and the different characteristics of the pollutants, my model allows a closer examination of the reasons for the differences in treaty requirements and treaty adherence;The results indicate that nations follow a Nash-subscription model in choosing their emission reductions. In other words, nations tend to free ride on the emission reductions of other nations. The spatial autoregressive model performs convincingly for SO2, but the model for NO x is less satisfying. While nations continue to exhibit Nash behavior, other variables fail to be significant or have the wrong sign. However, these results may be explained as resulting from the characteristic nature of NO x as compared with SO2. Since it originates from a larger number of sources, it is harder to control than SO2 emissions;A better understanding of the factors that influence a nation's decision to reduce its emissions may provide a foundation for the negotiation of future transboundary pollution control treaties. New treaties could require some nations to make greater (or smaller) cuts in emissions, but by taking into account differences among the nations, larger total reductions and greater compliance might result.

Date: 1997-01-01
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