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US, China and the economics of climate negotiations

Carlo Carraro () and Barbara Buchner
Additional contact information
Barbara Buchner: Fondazione Eni Enrico Mattei

No 2006_07, Working Papers from Department of Economics, University of Venice "Ca' Foscari"

Abstract: Despite the entry into force of the Kyoto Protocol, the US decision not to comply with its Kyoto commitments seems to drastically undermine the effectiveness of the Protocol in controlling GHG emissions. Therefore, it is important to explore whether there are economic incentives that might help the US to modify its current decision and move to a more environmentally effective climate policy. For example, can an increased participation of developing countries induce the US to effectively participate in the effort to reduce GHG emissions? Is a single emission trading market the appropriate policy framework to increase the signatories of the Kyoto Protocol? This paper addresses the above questions by analysing whether the participation of China in the cooperative effort to control GHG emissions can provide adequate incentives for the US to re-join the Kyoto process and eventually ratify the Kyoto Protocol. This paper analyses three different climate regimes in which China could be involved and assesses the economic incentives for the major world countries and regions to participate in these three regimes. The main conclusion is that the participation of the US in a climate regime is not likely, at least in the short run. The US is more likely to adopt unilateral policies than to join the present Kyoto coalition (even when it includes China). However, a two bloc regime would become the most preferred option if both China and the US, for some political or environmental reasons, decide to cooperate on GHG emission control. If the US decides to cooperate, the climate regime that provides the highest economic incentives to the cooperating countries is the one in which China and the US cooperate bilaterally, with the Annex B-US countries remaining within the Kyoto framework.

Keywords: Agreements; Climate; Incentives; Negotiations; Policy (search for similar items in EconPapers)
JEL-codes: C72 H23 Q25 Q28 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Journal Article: US, China and the Economics of Climate Negotiations (2006) Downloads
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