1001
13
International Cooperation:
Agreements & Instruments
Coordinating Lead Authors:
Robert Stavins (USA), Zou Ji (China)
Lead Authors:
Thomas Brewer (USA), Mariana Conte Grand (Argentina), Michel den Elzen (Netherlands), Michael
Finus (Germany / UK), Joyeeta Gupta (Netherlands), Niklas Höhne (Germany), Myung-Kyoon Lee
(Republic of Korea), Axel Michaelowa (Germany / Switzerland), Matthew Paterson (Canada),
Kilaparti Ramakrishna (Republic of Korea / USA), Gang Wen (China), Jonathan Wiener (USA), Harald
Winkler (South Africa)
Contributing Authors:
Daniel Bodansky (USA), Gabriel Chan (USA), Anita Engels (Germany), Adam Jaffe (USA / New
Zealand), Michael Jakob (Germany), T. Jayaraman (India), Jorge Leiva (Chile), Kai Lessmann
(Germany), Richard Newell (USA), Sheila Olmstead (USA), William Pizer (USA), Robert Stowe
(USA), Marlene Vinluan (Philippines)
Review Editors:
Antonina Ivanova Boncheva (Mexico / Bulgaria), Jennifer Morgan (USA)
Chapter Science Assistant:
Gabriel Chan (USA)
This chapter should be cited as:
Stavins R., J. Zou, T. Brewer, M. Conte Grand, M. den Elzen, M. Finus, J. Gupta, N. Höhne, M.-K. Lee, A. Michaelowa, M. Pat-
erson, K. Ramakrishna, G. Wen, J. Wiener, and H. Winkler, 2014: International Cooperation: Agreements and Instruments.
In: Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth Assessment Report
of the Intergovernmental Panel on Climate Change [Edenhofer, O., R. Pichs-Madruga, Y. Sokona, E. Farahani, S. Kadner, K.
Seyboth, A. Adler, I. Baum, S. Brunner, P. Eickemeier, B. Kriemann, J. Savolainen, S. Schlömer, C. von Stechow, T. Zwickel and
J.C. Minx (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA.
10021002
International Cooperation: Agreements & Instruments
13
Chapter 13
Contents
Executive Summary � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1005
13�1 Introduction � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1007
13�2 Framing concepts for an assessment of means for international cooperation � � � � � � � � � � � � � � � � � � � 1007
13�2�1 Framing concepts and principles
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1007
13.2.1.1 The global commons and international climate cooperation
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1007
13.2.1.2 Principles
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1008
13�2�2 Potential criteria for assessing means of international cooperation
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1009
13.2.2.1 Environmental effectiveness
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1009
13.2.2.2 Aggregate economic performance
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1009
13.2.2.3 Distributional and social impacts
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1009
13.2.2.4 Institutional feasibility
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1010
13.2.2.5 Conflicts and complementarities
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1012
13�3 International agreements: Lessons for climate policy � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1012
13�3�1 The landscape of climate agreements and institutions
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1012
13�3�2 Insights from game theory for climate agreements
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1012
13�3�3 Participation in climate agreements
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1014
13�3�4 Compliance
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1015
13�4 Climate policy architectures � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1016
13�4�1 Degrees of centralized authority
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1016
13.4.1.1 Centralized architectures and strong multilateralism
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1018
13.4.1.2 Harmonized national policies
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1018
13.4.1.3 Decentralized approaches and coordinated policies
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1018
13.4.1.4 Advantages and disadvantages of different degrees of centralization
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1018
13�4�2 Current features, issues, and elements of international cooperation
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1019
13.4.2.1 Legal bindingness
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1019
13.4.2.2 Goals and targets
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1020
13.4.2.3 Flexible mechanisms
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1020
13.4.2.4 Equitable methods for effort sharing
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1021
13�4�3 Recent proposals for future climate change policy architecture
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1022
10031003
International Cooperation: Agreements & Instruments
13
Chapter 13
13�4�4 The special case of international cooperation regarding carbon dioxide removal and
solar radiation management
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1022
13�5 Multilateral and bilateral agreements and institutions across different scales � � � � � � � � � � � � � � � � � 1023
13�5�1 International cooperation among governments
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1024
13.5.1.1 Climate agreements under the UNFCCC
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1024
13.5.1.2 Other UN climate-related forums
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1025
13.5.1.3 Non-UN forums
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1026
13�5�2 Non-state international cooperation
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1027
13.5.2.1 Transnational cooperation among sub-national public actors
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1027
13.5.2.2 Cooperation around human rights and rights of nature
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1027
13�5�3 Advantages and disadvantages of different forums
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1028
13�6 Linkages between international and regional cooperation � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1028
13�6�1 Linkages with the European Union Emissions Trading Scheme
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1028
13�6�2 Linkages with other regional policies
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1029
13�7 Linkages between international and national policies � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1029
13�7�1 Influence of international climate policies on domestic action
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1029
13�7�2 Linkages between the Kyoto mechanisms and national policies
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1029
13�7�3 International linkage among regional, national, and sub-national policies
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1030
13�8 Interactions between climate change mitigation policy and trade � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1030
13�8�1 WTO-related issues
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1032
13�8�2 Other international venues
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1034
13�8�3 Implications for policy options
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1034
13�9 Mechanisms for technology and knowledge development, transfer, and diffusion � � � � � � � � � � � � 1035
13�9�1 Modes of international incentive schemes to encourage technology-investment flows
� � � � � � � � � � � � � � � � � 1035
13�9�2 Intellectual property rights and technology development and transfer
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1036
13�9�3 International collaboration to encourage knowledge development
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1037
13.9.3.1 Knowledge sharing, R&D coordination, and joint collaboration
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1037
13.9.3.2 International cooperation on domestic climate technology R&D funding
. . . . . . . . . . . . . . . . . . . . . . . . . . . 1037
10041004
International Cooperation: Agreements & Instruments
13
Chapter 13
13�10 Capacity building � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1037
13�11 Investment and finance � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1038
13�11�1 Public finance flows
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1038
13.11.1.1 Public funding vehicles under the UNFCCC
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1038
13.11.1.2 Multilateral development banks
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1039
13�11�2 Mobilizing private investment and financial flows
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1039
13�12 The role of public and private sectors and public-private partnerships � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1040
13�12�1 Public-private partnerships
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1040
13�12�2 Private sector-led governance initiatives
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1040
13�12�3 Motivations for public-private sector collaboration and private sector governance
� � � � � � � � � � � � � � � � � � � � � 1041
13�13 Performance assessment on policies and institutions including market mechanisms � � � � � � � � � 1041
13�13�1 Performance assessment of existing cooperation
� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1041
13.13.1.1 Assessment of the UNFCCC, the Kyoto Protocol, and its flexible mechanisms
. . . . . . . . . . . . . . . . . . . . . . 1041
13.13.1.2 Assessment of the Kyoto Protocol’s Clean Development Mechanism
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1045
13.13.1.3 Assessment of further agreements under the UNFCCC
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1047
13.13.1.4 Assessment of envisioned international cooperation outside of the UNFCCC
. . . . . . . . . . . . . . . . . . . . . . 1049
13�13�2 Performance assessment of proposed international climate policy architectures
� � � � � � � � � � � � � � � � � � � � � � � � 1051
13.13.2.1 Strong multilateralism
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1051
13.13.2.2 Harmonized national policies
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1052
13.13.2.3 Decentralized architectures and coordinated national policies
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1052
13�14 Gaps in knowledge and data � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1053
13�15 Frequently Asked Questions � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1053
References � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1055
10051005
International Cooperation: Agreements & Instruments
13
Chapter 13
Executive Summary
This chapter critically examines and evaluates the ways in which agree-
ments and instruments for international cooperation to address global
climate change have been and can be organized and implemented,
drawing upon evidence and insights found in the scholarly literature.
The retrospective analysis of international cooperation in the chapter
discusses and quantifies what has been achieved to date and surveys
the literature on explanations of successes and failures.
International cooperation is necessary to significantly miti-
gate climate change impacts (robust evidence, high agreement).
This is principally due to the fact that greenhouse gases (GHGs) mix
globally in the atmosphere, making anthropogenic climate change a
global commons problem. International cooperation has the potential
to address several challenges: multiple actors that are diverse in their
perceptions of the costs and benefits of collective action, emissions
sources that are unevenly distributed, heterogeneous climate impacts
that are uncertain and distant in space and time, and mitigation costs
that vary. [Section 13.2.1.1, 13.15]
International cooperation on climate change has become more
institutionally diverse over the past decade (robust evidence, high
agreement). The United Nations Framework Convention on Climate
Change (UNFCCC) remains a primary international forum for climate
negotiations, but other institutions have emerged at multiple scales:
global, regional, national, and local, as well as public-private initiatives
and transnational networks. [13.3.1, 13.4.14, 13.5, 13.12] This insti-
tutional diversity arises in part from the growing inclusion of climate
change issues in other policy arenas (e. g., sustainable development,
international trade, and human rights). These and other linkages cre-
ate opportunities, potential co-benefits, or harms that have not yet
been thoroughly examined. Issue linkage also creates the possibility of
forum shopping and increased negotiation costs, which could distract
from or dilute the performance of international cooperation toward cli-
mate goals. [13.3, 13.4, 13.5]
Existing and proposed international climate agreements vary
in the degree to which their authority is centralized (robust
evidence, high agreement). The range of centralized formalization
spans: strong multilateral agreements (such as the Kyoto Protocol tar-
gets), harmonized national policies (such as the Copenhagen / Cancún
pledges), and decentralized but coordinated national policies (such
as planned linkages of national and sub-national emissions trading
schemes). [13.4.1, 13.4.3] Additionally, potential agreements vary in
their degree of legal bindingness [13.4.2.1]. Three other design ele-
ments of international agreements have particular relevance: goals
and targets, flexible mechanisms, and equitable methods for effort
sharing. [13.4.2]
The UNFCCC is currently the only international climate policy
venue with broad legitimacy, due in part to its virtually univer-
sal membership (robust evidence, medium agreement). The UNFCCC
continues to develop institutions and systems for governance of cli-
mate change. [13.2.2.4, 13.3.1, 13.4.1.4, 13.5]
Non-UN forums and coalitions of non-state actors, such as pri-
vate businesses and city-level governments, are also contrib-
uting to international cooperation on climate change (medium
evidence, medium agreement). These forums and coalitions address
issues including deforestation, technology transfer, adaptation, and
fossil fuel subsidies. However, their actual mitigation performance is
unclear. [13.5.1.3, 13.13.1.4]
International cooperation may have a role in stimulating pub-
lic investment, financial incentives, and regulations to promote
technological innovation, thereby more actively engaging the
private sector with the climate regime (medium evidence, medium
agreement). Technology policy can help lower mitigation costs, thereby
increasing incentives for participation and compliance with interna-
tional cooperative efforts, particularly in the long run. Equity issues can
be affected by domestic intellectual property rights regimes, which can
alter the rate of both technology transfer and the development of new
technologies. [13.3, 13.9, 13.12]
In the absence of or as a complement to a binding, inter-
national agreement on climate change, policy linkages among
existing and nascent regional, national, and sub-national cli-
mate policies offer potential climate change mitigation and
adaptation benefits (medium evidence, medium agreement) [13.3.1,
13.5.1.3]. Direct and indirect linkages between and among sub-
national, national, and regional carbon markets are being pursued
to improve market efficiency. Yet integrating climate policies raises a
number of concerns about the performance of a system of linked legal
rules and economic activities. Linkage between carbon markets can
be stimulated by competition between and among public and private
governance regimes, accountability measures, and the desire to learn
from policy experiments. [13.3.1, 13.5.3, 13.6, 13.7, 13.13.2.3, Figure
13.4]
While a number of new institutions are focused on adaptation
funding and coordination, adaptation has historically received
less attention than mitigation in international climate policy,
but inclusion of adaptation is increasingly important to reduce
damages and may engage a greater number of countries (robust
evidence, medium agreement). Other possible complementarities and
tradeoffs between mitigation and adaptation, particularly the temporal
distribution of actions, are not well-understood. [13.2, 13.3.3, 13.5.1.1,
13.14]
Participation in international cooperation on climate change
can be enhanced by monetary transfers, market-based mecha-
nisms, technology transfer, and trade-related measures (robust
evidence, medium agreement). These mechanisms to enhance partici-
pation, along with compliance, legitimacy, and flexibility, affect the
10061006
International Cooperation: Agreements & Instruments
13
Chapter 13
institutional feasibility of international climate policy. [13.2.2.4, 13.3.3,
13.8.1, 13.9.2]
International trade can offer a range of positive and negative
incentives to promote international cooperation on climate
change (robust evidence, medium agreement). Three issues are key to
developing constructive relationships between international trade and
climate agreements: how existing trade policies and rules can be modi-
fied to be more climate friendly; whether border adjustment measures
(BAMs) or other trade measures can be effective in meeting the goals
of international climate agreements; whether the UNFCCC, World
Trade Organization (WTO), hybrid of the two, or a new institution is the
best forum for a trade-and-climate architecture. [13.8]
Climate change policies can be evaluated using four criteria:
environmental effectiveness, aggregate economic performance,
distributional impacts, and institutional feasibility. These criteria
are grounded in several principles: maximizing global net benefits;
equity and the related principles of distributive justice and common but
differentiated responsibilities and respective capabilities (CBDRRC);
precaution and the related principles of anticipation, and prevention of
future risks; and sustainable development. These criteria may at times
conflict, forcing tradeoffs among them. [13.2.1, 13.2.2]
International cooperation has produced political agreement
regarding a long-term goal of limiting global temperature
increase to no more than 2 °C above pre-industrial levels, but
the overall level of mitigation achieved to date by cooperation
appears inadequate to achieve this goal (robust evidence, medium
agreement). Mitigation pledges by individual countries in the Copen-
hagen-Cancún regime, if fully implemented, will help reduce emissions
in 2020 to below the projected business-as-usual level, but are unlikely
to attain an emission level in 2020 consistent with cost-effective path-
ways, based on the immediate onset of mitigation, that achieve the
long-term 2 °C goal with a greater than 50 % probability. The contribu-
tion of international cooperation outside of the UNFCCC is largely not
quantified. [13.2.2.1, 13.13.1]
The Kyoto Protocol was the first binding step toward imple-
menting the principles and goals provided by the UNFCCC, but
it has had limited effects on global emissions because some
countries did not ratify the Protocol, some Parties did not meet
their commitments, and its commitments applied to only a por-
tion of the global economy (medium evidence, low agreement).
The Parties collectively surpassed their collective emission reduc-
tion target in the first commitment period, but the Protocol credited
emissions reductions that would have occurred even in its absence.
The Kyoto Protocol does not directly influence the emissions of non-
AnnexI countries, which have grown rapidly over the past decade.
[13.13.1.1]
The flexible mechanisms under the Kyoto Protocol have gener-
ally helped to improve its economic performance, but their envi-
ronmental effectiveness is less clear (medium evidence, medium
agreement). The Clean Development Mechanism (CDM) created a mar-
ket for emissions offsets from developing countries, generating credits
equivalent to nearly 1.4billion tCO
2
eq as of October 2013, many of
which have been generated by low-cost mitigation technologies. The
CDM showed institutional feasibility of a project-based market mecha-
nism under widely varying circumstances. The CDM’s environmental
effectiveness has been mixed due to concerns about the additionality
of projects, the validity of baselines, the possibility of emissions leak-
age, and recent price decreases. Its distributional impacts were limited
due to the concentration of projects in a limited number of countries.
The Protocol’s other flexible mechanisms, Joint Implementation and
International Emissions Trading, have been undertaken both by gov-
ernments and private market participants, but have raised concerns
related to government sales of emission units. [13.7.2, 13.13.1.2]
Recent UNFCCC negotiations have sought to include more
ambitious mitigation commitments from countries with com-
mitmments under the Kyoto Protocol, mitigation contributions
from a broader set of countries, and new finance and technol-
ogy mechanisms (medium evidence, low agreement). Under the
2010 Cancún Agreement, developed countries formalized voluntary
pledges of quantified, economy-wide emission reduction targets and
some developing countries formalized voluntary pledges to mitigation
actions. The distributional impact of the Agreement will depend in part
on the magnitude and sources of financing, including the successful
fulfilment by developed countries of their expressed joint commit-
ment to mobilize 100 billion USD per year by 2020 for climate action
in developing countries. Under the 2011 Durban Platform for Enhanced
Action, delegates agreed to craft a future legal regime that would be
‘applicable to all Parties … under the Convention’ and would include
substantial new financial support and technology arrangements to
benefit developing countries, but the delegates did not specify means
for achieving those ends. [13.5.1.1, 13.11, 13.13.1.3]
The Montreal Protocol, aimed at protecting the stratospheric
ozone layer, has also achieved significant reductions in global
GHG emissions (robust evidence, high agreement). The Montreal Pro-
tocol set limits on emissions of ozone-depleting gases that are also
potent GHGs, such as chlorofluorocarbons (CFCs) and hydrochlorofluo-
rocarbons (HCFCs). Substitutes for those ozone-depleting gases (such
as hydrofluorocarbons (HFCs), which are not ozone-depleting) may
also be potent GHGs. Lessons learned from the Montreal Protocol, for
example, about the effect of financial and technological transfers on
broadening participation in an international environmental agreement,
could be of value to the design of future international climate change
agreements. [13.3.3, 13.3.4, 13.13.1.4]
Assessment of proposed cooperation structures reinforces the
finding that there will likely be tradeoffs between the four cri-
teria, as they will inevitably conflict in some elements of any
agreement (medium evidence, high agreement). Assessment of pro-
posed climate policy architectures reveals important tradeoffs that
10071007
International Cooperation: Agreements & Instruments
13
Chapter 13
depend on the specific design elements and regulatory mechanisms
of a proposal. For example, there is a potential tradeoff between broad
participation and the institutional feasibility of an ambitious environ-
mental performance goal. The extent of this tradeoff may depend on
financial transfers, national enforcement mechanisms, and the distri-
bution and sharing of mitigation efforts. [13.2.2.5, 13.3.3, 13.13.1.4,
13.13.2]
Increasing interest in solar radiation management (SRM) and
carbon dioxide removal (CDR) as strategies to mitigate the
harms of climate change, pose new challenges for international
cooperation (medium evidence, high agreement). Whereas emissions
abatement poses challenges of engaging multilateral action to cooper-
ate, SRM may pose challenges of coordinating research and restrain-
ing unilateral deployment of measures with potentially adverse side-
effects. [13.4.4]
Gaps in knowledge and data: (1) comparisons among proposals in
terms of aggregate and country-level costs and benefits per year, with
incorporation of uncertainty; (2) assessment of the overall effect of
emerging intergovernmental and transnational arrangements, includ-
ing ‘hybrid’ approaches; (3) understanding of complementarities and
tradeoffs between policies affecting mitigation and adaptation; (4)
understanding how international cooperation on climate change can
help achieve co-benefits and development goals, including capacity
building approaches; (5)understanding the factors that affect national
decisions to join and form agreements.
13.1 Introduction
Due to global mixing of greenhouse gases (GHGs) in the atmosphere,
anthropogenic climate change is a global commons problem. For this
reason, international cooperation is necessary to achieve significant
progress in mitigating climate change. Drawing on published research,
this chapter critically examines and evaluates the ways in which agree-
ments and instruments for international cooperation have been and
can be organized and implemented. The retrospective analysis of inter-
national cooperation in the chapter quantifies and discusses what has
been achieved to date, and surveys the literature on explanations of
successes and failures.
The scope of the chapter is defined by the range of feasible interna-
tional agreements and other policy instruments for cooperation on cli-
mate-change mitigation and adaptation. The disciplinary scope spans
the social sciences of economics, political science, international rela-
tions, law, public policy, psychology, and sociology; relevant humani-
ties, including history and philosophy; and where relevant to the
discussion the natural sciences. Where appropriate, the chapter
synthesizes literature that utilizes econometric modelling, integrated
modelling, game theory, comparative case studies, legal analysis, and
political analysis. This chapter focuses on research and policy develop-
ments since the Fourth Assessment Report (AR4) of the Intergovern-
mental Panel on Climate Change (IPCC, 2007).
13.2 Framing concepts for an
assessment of means for
international cooperation
This section introduces the concept of a global commons problem to
frame the challenge of international cooperation on climate change,
principles for designing effective international climate policy, and crite-
ria for evaluating these policies.
13�2�1 Framing concepts and principles
13�2�1�1 The global commons and international climate
cooperation
Climate change is a global commons problem, meaning reduction in
emissions by any jurisdiction carries an economic cost, but the ben-
efits (in the form of reduced damages from climate change) are spread
around the world although unevenly due to GHG emissions mix-
ing globally in the atmosphere. Mitigation of climate change is non-
excludable, meaning it is difficult to exclude any individual or institu-
tion from the shared global benefits of emissions reduction undertaken
by any localized actor. Also, these benefits are non-rival, meaning they
may be enjoyed by any number of individuals or institutions at the
same time, without reducing the extent of the benefit any one of them
receives. These public good characteristics of climate protection (non-
excludability and non-rivalry) create incentives for actors to ‘free ride’
on other actors’ investments in mitigation. Therefore, lack of ambition
in mitigation and overuse of the atmosphere as a receptor of GHGs are
likely.
Incentives to free ride on climate protection have been analyzed exten-
sively and are well-understood (Gordon, 1954; Hardin, 1968; Stavins,
2011). The literature suggests that in some cases, effective common
property management of local open-access resources can limit or even
eliminate overuse (Ostrom, 2001; Wiener, 2009). Effective common
property management of the atmosphere would require applying such
management at a global level, by allocating rights to emit and provid-
ing disincentives for overuse through sanctions or pricing emissions
(Byrne and Glover, 2002; Wiener, 2009).
Enhancing production of public goods may be achieved by internaliz-
ing external costs (i. e., those costs not incorporated into market prices)
or through legal remedies. Economic instruments can incorporate
10081008
International Cooperation: Agreements & Instruments
13
Chapter 13
external costs and benefits into prices, providing incentives for private
actors to more optimally reduce external costs and increase external
benefits (Baumol and Oates, 1988; Nordhaus, 2006; Buchholz etal.,
2012). Legal remedies may include seeking injunctive relief or com-
pensatory payments (IPCC, 2007, Chapter 13; Faure and Peeters, 2011;
Haritz, 2011)
International cooperation is necessary to significantly mitigate climate
change because of the global nature of the problem (WCED, 1987;
Kaul etal., 1999, 2003; Byrne and Glover, 2002; Barrett, 2003; Stew-
art and Wiener, 2003; Sandler, 2004) Cooperation has the potential
to address several challenges: multiple actors that are diverse in their
perceptions of the costs and benefits of collective action; emissions
sources that are unevenly distributed; heterogeneous climate impacts
that are uncertain and distant in space and time; and mitigation costs
that vary (IPCC, 2001, pp. 607 608).
In the absence of universal collective action, smaller groups of indi-
vidual actors may be able to organize schemes to supply public goods,
particularly if actors know each other well, expect repeated interac-
tions, can exclude non-members, and can monitor and sanction non-
compliance in the form of either overconsumption or underproduction
(Eckersley, 2012; McGee, 2011; Nairn, 2009; Ostrom, 1990, 2010a;
b, 2011; Weischer etal., 2012). Some authors are optimistic regard-
ing such ‘minilateralism’ (e. g., Keohane and Victor, 2011; on the term,
see Eckersley, 2012) and others are more sceptical (e. g., Depledge and
Yamin, 2009; Winkler and Beaumont, 2010) . Section13.3 discusses
the literature on coalitions in more detail.
Because there is no world government, each country must volun-
tarily consent to be bound by any international agreement. If these
are to be effective, the agreements must be attractive enough to gain
broad participation (Barrett, 2003, 2007; Stewart and Wiener, 2003;
Schmalensee, 2010; Brousseau etal., 2012). Considering the relation-
ship between mitigation costs and climate benefits discussed above,
there is insufficient incentive for actors at any level to reduce emissions
significantly in the absence of international cooperation. Behavioural
research, however, indicates that individuals are sometimes motivated
to cooperate (and to punish those who do not) to a degree greater
than strict rational choice models predict (Camerer, 2003; Andreoni
and Samuelson, 2006). This may explain some of the observed policies
being adopted to reduce GHG emissions at the national, subnational,
firm, and individual level. Moreover, even under the assumption of
rational action, some emission reductions can occur without coopera-
tion due to positive externalities of otherwise self-beneficial actions,
or co-benefits, such as actions to reduce energy expenditures, enhance
the security of energy supply, reduce local air pollution, improve land
use, and protect biodiversity (Seto etal., 2012). Co-benefits of climate
protection are receiving increasing attention in the literature (Rayner,
2010; Dubash, 2009; UNEP, 2013b). However, policies designed to
address climate change mitigation may also have adverse side-effects.
See Section 4.8 and 6.6 for an overview of the discussion of co-bene-
fits and adverse side-effects throughout this report.
13�2�1�2 Principles
Several principles have been advanced to shape international climate
change policies. The IPCC Third Assessment Report (TAR) (IPCC, 2001)
discusses principles and mentions some criteria for evaluation of poli-
cies, whereas the AR4 (IPCC, 2007), clearly differentiates principles
from criteria. Principles serve as guides to design climate policies,
while criteria are specific standards by which to evaluate them. The
roles and applications of principles and criteria are further elaborated
in Chapter 3 of this report.
Sets of principles are enumerated and explained in multiple interna-
tional climate change fora, including the Rio Declaration on Environ-
ment and Development (UNEP, 1992) and the United Nations Frame-
work Convention on Climate Change (UNFCCC) (UNFCCC, 1992). In the
latter, the principles listed explicitly include: ‘equity’ and ‘common but
differentiated responsibilities and respective capabilities’ (CBDRRC)
(Article 3(1)), relative needs, vulnerability, burdens in countries of dif-
fering wealth (Article 3(2)), precaution and ‘cost-effective[ness] so as
to ensure global benefits at the lowest possible cost’ (Article 3(3)),
‘sustainable development’ (Article 3(4)), and cooperation (Article 3(5)).
Principles of climate change policy relevant for international coopera-
tion can be grouped into several broad categories. First, the principle
of maximizing global net benefits makes the tradeoff between aggre-
gate compliance costs and aggregate performance benefits explicit.
The principle also incorporates the notion of maximizing co-benefits
of climate action (Stern, 2007; Nordhaus, 2008; Bosetti et al., 2010;
Rayner, 2010; Dubash, 2009) (see also Section 3.6.3). A related concept
is that of cost-effectiveness, which allows for policies with the same
level of performance in terms of aggregate benefits to be compared on
the dimension of aggregate cost (IPCC, 2001, 2007, Chapter 13). See
Section 6.6 for applied scenario studies.
Second, equity is a principle that emphasizes distributive justice across
and within countries and across and within generations (Vanderheiden,
2008; Baer etal., 2009; Okereke, 2010; Posner and Sunstein, 2010; Pos-
ner and Weisbach, 2010; Somanathan, 2010; Cao, 2010c). It includes
evaluating the procedures used to reach an agreement as well as the
achieved outcomes. This principle may also apply in a broader assess-
ment of well-being (Sen, 2009; Cao, 2010a). The principle of CBDRRC
has been central in international climate negotiations (Rajamani, 2006,
2011a; Gupta and Sanchez, 2013). The literature refers to the varied
historic responsibility and current capability and capacity of coun-
tries with regard to impacts of and action to address climate change
(Jacoby etal., 2010; Rajamani, 2006, 2012b; Höhne etal., 2008; Del-
link etal., 2009; den Elzen etal., 2013b). Some literature assesses how
the principle might be applied to actors’ diverse needs (Jonas, 1984;
Dellink etal., 2009), including the specific needs and vulnerabilities
of developing countries (Rong, 2010; Smith etal., 2011; Bukovansky
etal., 2012). Recent literature suggests that this principle’s applica-
tion may be more nuanced as patterns of development, emissions,
and impacts evolve (Bukovansky etal., 2012; Deleuil, 2012; Müller and
10091009
International Cooperation: Agreements & Instruments
13
Chapter 13
Mahadev, 2013; Winkler and Rajamani, 2013). The literature describes
competing views regarding the meaning of this principle in terms of its
legal status, operational significance, and the obligations it may entail
(Höhne etal., 2006; Halvorssen, 2007; O’Brien, 2009; Winkler etal.,
2009; Winkler, 2010; Hertel, 2011). The principle of CBDRRC is further
analyzed in Sections 3.3 and 4.6.
Third, the principle of precaution emphasizes anticipation and preven-
tion of future risks, even in the absence of full scientific certainty about
the impacts of climate change (Bodansky, 2004; Wiener, 2007; Urueña,
2008). Some see precaution as a strategy for effective action across
diverse uncertain scenarios (Barrieu and Sinclair-Desgagné, 2006; World
Bank, 2010), although the application of precaution varies across risks
and countries (Hammitt, 2010). A key ongoing debate concerns whether
or not this principle implies the need for stringent climate change poli-
cies as an insurance against potentially catastrophic outcomes, even
if they may have very low probability (Weitzman, 2007, 2009, 2011;
Pindyck, 2011; Nordhaus, 2011). The application of the precautionary
principle to climate risk is further discussed in Section 2.5.5.
Fourth, the principle of sustainable development, broadly defined,
emphasizes consideration of the socioeconomic needs of future gen-
erations in making decisions about current resource use (IPCC, 2007,
Chapter 12; World Bank, 2010). For a detailed discussion of the litera-
ture on sustainable development, see Section 4.2.1.
13�2�2 Potential criteria for assessing means of
international cooperation
The principles elaborated above can be translated into criteria to eval-
uate forms of international cooperation, thereby assisting in the design
of a distribution of efforts intended to solve the collective action prob-
lem of climate protection. The AR4 put forth one set of criteria: environ-
mental effectiveness, cost-effectiveness, distributional considerations,
and institutional feasibility (IPCC, 2007, pp. 751 752). As ‘metrics of
success’, these evaluation criteria can be applied in the context of
both ex-post evaluations of actual performance and ex-ante assess-
ments of proposed cooperation (Hammitt, 1999; Fischer and Morgen-
stern, 2010). Below, this section describes four evaluation criteria that
are applied in Section 13.13 to assess existing and proposed forms of
international cooperation to address climate change mitigation. These
criteria are subject to caveats, which are detailed in Section 13.13.
13�2�2�1 Environmental effectiveness
The environmental effectiveness of a climate change mitigation policy
is the extent to which it achieves its objective to reduce the causes
and impacts of climate change. Environmental effectiveness can be
achieved by reducing anthropogenic sources of GHG emissions, remov-
ing GHGs from the atmosphere, or reducing the impacts of climate
change directly through increased resilience. A primary objective of
international cooperation has been to stabilize GHG concentrations
at levels sufficient to “prevent dangerous anthropogenic interfer-
ence with the climate system,” in the words of the UNFCCC Article
2 (1992). This would require action within a time-frame sufficient to
“allow ecosystems to adapt naturally to climate change, to ensure that
food production is not threatened and to enable economic develop-
ment to proceed in a sustainable manner” (UNFCCC, 1992), Article 2).
The Kyoto Protocol established specific emission-reduction targets for
developed countries, while the Copenhagen Accord and Cancún Agree-
ments expressed the environmental objective in terms of global aver-
age temperature increase. In addition to endorsing mitigation targets
by developed countries and mitigation actions by developing countries,
the Copenhagen and Cancún agreements recognized a goal of limiting
increases in average global temperature to 2 °C above pre-industrial
levels (UNFCCC, 2009a, 2010, 2011a).
13�2�2�2 Aggregate economic performance
Measuring the aggregate economic performance of a climate policy
requires considering both its economic efficiency and its cost-effec-
tiveness. Economic efficiency refers to the maximization of net ben-
efits, the difference between total social benefits and total social costs
(Stern, 2007; Nordhaus, 2008; Bosetti etal., 2010).
Cost-effectiveness refers to the ability of a policy to attain a pre-
scribed level of environmental performance at least cost, taking
into account impacts on dynamic efficiency, notably technological
innovation (Jaffe and Stavins, 1995). Unlike net benefit assessment,
cost-effectiveness analysis takes the environmental performance of a
policy as given and seeks the least-cost strategy to attain it (Ham-
mitt, 1999). While analysis of a policy in terms of its cost-effectiveness
still requires environmental performance of the policy to be quanti-
fied, it does not require environmental performance benefits to be
monetized. Thus, analysis of a policy’s cost-effectiveness may be more
feasible than analysis of a policy’s economic efficiency in the case of
climate change, as some social benefits of climate-change mitigation
are difficult to monetize.
13�2�2�3 Distributional and social impacts
Distributional equity and fairness may be considered important attri-
butes of climate policy because of their impact on measures of well-
being (Posner and Weisbach, 2010) and political feasibility (Jacoby
etal., 2010; Gupta, 2012). Distributional equity relates to burden- and
benefit-sharing across countries and across time. Section 4.2.2 puts for-
ward three justifications for considering distributional equity legal,
environmental effectiveness, and moral. The framing in Section 4.2 also
identifies a relatively small set of core equity principles: responsibil-
ity, capacity, the right to sustainable development, and equality. These
may be modelled with quantitative indicators, as discussed in Section
6.3.6.6. The moral justification draws on ethical principles, which are
10101010
International Cooperation: Agreements & Instruments
13
Chapter 13
reflected in the principles of the Convention (see Section 13.2.1.2; and
detailed treatment of the literature on ethics in Section 3.2).
Another dimension of distributional equity is the possibility for miti-
gation actions in one jurisdiction to have positive or negative conse-
quences in another jurisdiction. This phenomenon, sometimes referred
to as ‘response measures’ or as ‘spillover effects’ (see WGIII AR4 Glos-
sary), can lead to an unequal distribution of the impacts of climate
change mitigation actions themselves. A plausible example of a spill-
over effect is the impact of emissions reductions in developed countries
lowering the demand for fossil fuels and thus decreasing their prices,
leading to more use of such fuels and greater emissions in developing
nations, partially off-setting the original cuts (Bauer etal., 2013) This
dynamic can also be important for countries with large endowments
of conventional oil and gas that depend on export revenues. These
countries may lose energy export revenue as a result of climate poli-
cies enacted in other countries (Kalkuhl and Brecha, 2013; Bauer etal.,
2013). Additionally, climate policies could also reduce international coal
trading (Jewell etal., 2013). See also Sections6.3.6, 14.4.2, and 15.5.2
for further discussion of spillover effects.
13�2�2�4 Institutional feasibility
The institutional feasibility of international climate policy may depend
upon agreement among national governments and between govern-
ments and intergovernmental bodies (Wiener, 2009; Schmalensee,
2010). Institutional feasibility is closely linked to domestic political
feasibility, because domestic political conditions affect participation
in, and compliance with, international climate policies. This has been
addressed in the literature on ‘two-level’ games (Kroll and Shogren,
2009; Hafner-Burton etal., 2012). Four sub-criteria of institutional fea-
sibility can also be considered: participation, compliance, legitimacy,
and flexibility.
First, participation in an international climate agreement might refer
to the number of parties, geographical coverage, or the share of global
GHG emissions covered. Participating parties might vary with regard
to the nature and specificity of their commitments (e. g., actions ver-
sus quantitative emissions-reduction targets). Sovereign states are not
bound by an international treaty or other arrangement unless they
consent to participate. The literature has examined a broad array of
incentives to promote breadth of participation in international agree-
ments (Barrett, 2003; Barrett and Stavins, 2003; Stewart and Wiener,
2003; Hall etal., 2010; Victor, 2010; World Bank, 2010; Olmstead and
Stavins, 2012). These incentives can be positive (e. g., financial sup-
port or technology transfers) or negative (e. g., trade sanctions). Some
authors have suggested that participation limited to countries with the
highest emissions enhances institutional feasibility (Leal-Arcas, 2011)
and that incentive-based emissions-permit allocations, or rules requir-
ing participation of key players, may enable larger coalitions (Dellink
etal., 2008; Dellink, 2011).
Second, institutional feasibility is also partly determined by the com-
pliance of participating countries with an agreement’s provisions.
Mechanisms to ensure compliance, in turn, affect decisions to partici-
pate, as well as long-term performance (Barrett, 2003). Incentives for
encouraging compliance can be built into flexible mechanisms, such
as tradable permit systems (Wiener, 2009; Ismer and Neuhoff, 2009;
Keohane and Raustiala, 2010). Compliance is fundamentally prob-
lematic in international agreements, as it is difficult to establish an
authority that can legitimately and effectively impose sanctions upon
sovereign national governments. Despite that, indirect negative con-
sequences of non-compliance can arise within the regime established
by the agreement, or in other regimes, for example, adverse voting
behaviour in international forums or reduction in foreign aid (Heitzig
etal., 2011).
Third, legitimacy is a key component of institutional feasibility. Parties
to a cooperative agreement must have reason to accept and imple-
ment decisions made under the agreement, meaning they must believe
that the relevant regime represents them fairly. Legitimacy depends on
the shared understanding both that the substantive rules (outputs) and
decision-making procedures (inputs) are fair, equitable, and beneficial
(Scharpf, 1999), and thus that other regime members will continue to
cooperate (Ostrom, 1990, 2011). In practice, the legitimacy of substan-
tive rules is typically based on whether parties evaluate positively the
results of an authority’s policies, while procedural legitimacy is typi-
cally based on the existence of proper input mechanisms of partici-
pation and consultation for the parties participating in an agreement
(Stevenson and Dryzek, 2012).
Finally, the institutional feasibility of international climate policy
depends in part on whether the institutions relevant for a policy can
develop flexibility mechanisms which typically require that the
institutions themselves are flexible or adjustable. It may be important
to be able to adapt to new information or to changes in economic
and political circumstances. The institutionalization of learning among
actors, which is referred to as ‘social learning’ in the literature of envi-
ronmental governance (Pahl-Wostl et al., 2007), is an important
aspect of success, enabling adaptation to changing circumstances.
While institutional arrangements that incorporate a purposive pro-
cess of experimentation, evaluation, learning, and revision may be
costly, policies that do not incorporate these steps may be overly rigid
in the face of change and therefore potentially even more costly
(Greenstone, 2009; Libecap, 2011). Another area of current debate
and research is the question of whether increased flexibility in design-
ing obligations for states helps them align their international obliga-
tions more readily with domestic political constraints (von Stein,
2008; Hafner-Burton etal., 2012). This suggests that designing inter-
national climate policies involves a balance between the benefits of
flexibility and the costs of regulatory uncertainty (Goldstein and Mar-
tin, 2000; Brunner etal., 2012). Chapter 2, for example in Section
2.6.5.1, goes into more depth on problems related to regulatory
uncertainty.
Box 13�1 | International agreements and developing countries
The United Nations Framework Convention on Climate Change
(UNFCCC) is a statement of aspirations, principles, goals, and the
means to meet commitments. The Kyoto Protocol of the UNFCCC
included, for the first time, binding mitigation commitments for
nations listed in its AnnexB. Other countries may assist Annex B
Parties in meeting their mitigation commitments via the Clean
Development Mechanism (CDM), under the Protocol’s Article 12.
AnnexI countries under the UNFCCC, which include all Annex
B countries under the Kyoto Protocol, are largely the wealthi-
est countries and largest historical emitters of GHGs. However,
AnnexI countries’ share of historical cumulative GHG emissions
in 2010 is close to the share of the non-AnnexI countries (Section
13.13.1.1). Thus, the Kyoto Protocol’s mitigation commitments
were initially consistent with the UNFCCC principle of ‘common
but differentiated responsibilities and respective capabilities’
(CBDRRC). However, since the UNFCCC divided countries into two
categories in 1992, both income patterns and the distribution of
GHG emissions have changed significantly, even as variations in
income and per capita responsibility for emissions remain sub-
stantial both within and between countries. Between Conference
of Parties (COP)-13 (Bali) in 2007 and COP-16 (Cancún) in 2010,
many developing countries put forward quantifiable mitigation
actions (as contrasted with quantified, economy-wide emissions
reductions targets assumed by Annex B parties under the Kyoto
Protocol) and agreed to more frequent reporting and enhanced
transparency of those actions. Further pledges of actions have
been made since Cancún. (Section 13.13)
For many developing countries, adaptation can have comparable
priority to mitigation. This may be because countries are especially
vulnerable to climate change damages or they lack confidence in
progress with mitigation efforts. These countries are often the least
able to finance adaptation, leaving cooperative agreements to
attempt to identify sources of support. (See Chapter 16 for detail.)
International collaboration regarding public climate finance under
the UNFCCC dates back to 1991, when the Climate Change Pro-
gram of the Global Environment Facility (GEF) was established. The
literature reflects mixed evidence on the scale and environmental
effectiveness of such funding. Funding for reporting and mitigation
flows through four primary vehicles: the GEF, which focuses on
mitigation; the Least Developed Country Fund (LDCF) and Special
Climate Change Fund (SCCF), created in 2001 for adaptation
purposes and operated by the GEF; the Adaptation Fund set up in
2008; and the Green Climate Fund (GCF), established in 2010 for
mitigation and adaptation. (Section 13.11, see also Section 16.2)
The Copenhagen Accord set a goal to jointly mobilize 100 billion
USD / yr by 2020 to address the needs of developing countries.
(Section 13.11) Article 4.5 of the UNFCCC also calls for technology
transfer from developed to developing countries. The Technology
Mechanism, with an Executive Committee and Climate Technology
Centre and Network, is seeking to fulfil this goal.
Research indicates that adaptation assistance, such as that pro-
vided by the Kyoto Protocol’s Adaptation Fund, can be crucial for
inclusion of developing countries in international climate agree-
ments. Further research into the distribution of adaptation finance
across countries from both UNFCCC and non-UNFCCC sources
is required to assess the equity, efficiency, effectiveness, and
environmental impacts of the Adaptation Fund and other funding
mechanisms. Many developing countries have created institutions
to coordinate adaptation finance from domestic and international
funding sources. (Sections 13.3, 13.5)
The literature identifies several models for equitable burden
sharing among both developed and developing countries in
international cooperation for climate change mitigation. The prin-
ciples on which burden sharing arrangements may be based are
described in Section 4.6.2, and the implications of these arrange-
ments are discussed in Section 6.3.6.6. Distributional impacts from
agreements will depend on the approach taken, criteria applied
to operationalize equity, and the manner in which developing
countries’ emissions plans are financed; studies suggest potential
approaches (Section 13.4, UNFCCC Secretariat 2007b, 2008). A
major distributional issue is how to account for emissions from
goods produced in a developing country, but consumed in an
industrialized country. Such emissions have increased rapidly since
1990, as developed countries have typically been importers of
embodied emissions, while many developing countries have large
shares of emissions embodied in exports. (Sections 13.8, 14.3.4)
New and existing coalitions of countries have engaged in the
UNFCCC negotiations, each presenting coordinated positions.
Several distinct coalitions of developing countries have formed to
negotiate their divergent priorities. Examples include the Group of
77 (G-77) and China, which contains sub-groups such as the Afri-
can Group, the Least Developed Countries, and the Arab Group;
the Alliance of Independent Latin American and Caribbean states;
and a ‘like-minded developing country’ group that included China,
India, and Saudi Arabia. Other coalitions organized to influence
UNFCCC negotiations include the Alliance of Small Island States
(AOSIS); various groupings of industrialized countries, including
the Umbrella Group; the Environmental Integrity Group; the BASIC
countries (Brazil, South Africa, India, and China); the Coalition of
Rainforest Nations; and other active coalitions not limited to the
climate context, for example, the Comision Centroamericana de
Ambiente y Desarollo and the Bolivarian Alliance for the Americas.
10111011
International Cooperation: Agreements & Instruments
13
Chapter 13
Second, institutional feasibility is also partly determined by the com-
pliance of participating countries with an agreement’s provisions.
Mechanisms to ensure compliance, in turn, affect decisions to partici-
pate, as well as long-term performance (Barrett, 2003). Incentives for
encouraging compliance can be built into flexible mechanisms, such
as tradable permit systems (Wiener, 2009; Ismer and Neuhoff, 2009;
Keohane and Raustiala, 2010). Compliance is fundamentally prob-
lematic in international agreements, as it is difficult to establish an
authority that can legitimately and effectively impose sanctions upon
sovereign national governments. Despite that, indirect negative con-
sequences of non-compliance can arise within the regime established
by the agreement, or in other regimes, for example, adverse voting
behaviour in international forums or reduction in foreign aid (Heitzig
etal., 2011).
Third, legitimacy is a key component of institutional feasibility. Parties
to a cooperative agreement must have reason to accept and imple-
ment decisions made under the agreement, meaning they must believe
that the relevant regime represents them fairly. Legitimacy depends on
the shared understanding both that the substantive rules (outputs) and
decision-making procedures (inputs) are fair, equitable, and beneficial
(Scharpf, 1999), and thus that other regime members will continue to
cooperate (Ostrom, 1990, 2011). In practice, the legitimacy of substan-
tive rules is typically based on whether parties evaluate positively the
results of an authority’s policies, while procedural legitimacy is typi-
cally based on the existence of proper input mechanisms of partici-
pation and consultation for the parties participating in an agreement
(Stevenson and Dryzek, 2012).
Finally, the institutional feasibility of international climate policy
depends in part on whether the institutions relevant for a policy can
develop flexibility mechanisms which typically require that the
institutions themselves are flexible or adjustable. It may be important
to be able to adapt to new information or to changes in economic
and political circumstances. The institutionalization of learning among
actors, which is referred to as ‘social learning’ in the literature of envi-
ronmental governance (Pahl-Wostl et al., 2007), is an important
aspect of success, enabling adaptation to changing circumstances.
While institutional arrangements that incorporate a purposive pro-
cess of experimentation, evaluation, learning, and revision may be
costly, policies that do not incorporate these steps may be overly rigid
in the face of change and therefore potentially even more costly
(Greenstone, 2009; Libecap, 2011). Another area of current debate
and research is the question of whether increased flexibility in design-
ing obligations for states helps them align their international obliga-
tions more readily with domestic political constraints (von Stein,
2008; Hafner-Burton etal., 2012). This suggests that designing inter-
national climate policies involves a balance between the benefits of
flexibility and the costs of regulatory uncertainty (Goldstein and Mar-
tin, 2000; Brunner etal., 2012). Chapter 2, for example in Section
2.6.5.1, goes into more depth on problems related to regulatory
uncertainty.
Box 13�1 | International agreements and developing countries
The United Nations Framework Convention on Climate Change
(UNFCCC) is a statement of aspirations, principles, goals, and the
means to meet commitments. The Kyoto Protocol of the UNFCCC
included, for the first time, binding mitigation commitments for
nations listed in its AnnexB. Other countries may assist Annex B
Parties in meeting their mitigation commitments via the Clean
Development Mechanism (CDM), under the Protocol’s Article 12.
AnnexI countries under the UNFCCC, which include all Annex
B countries under the Kyoto Protocol, are largely the wealthi-
est countries and largest historical emitters of GHGs. However,
AnnexI countries’ share of historical cumulative GHG emissions
in 2010 is close to the share of the non-AnnexI countries (Section
13.13.1.1). Thus, the Kyoto Protocol’s mitigation commitments
were initially consistent with the UNFCCC principle of ‘common
but differentiated responsibilities and respective capabilities’
(CBDRRC). However, since the UNFCCC divided countries into two
categories in 1992, both income patterns and the distribution of
GHG emissions have changed significantly, even as variations in
income and per capita responsibility for emissions remain sub-
stantial both within and between countries. Between Conference
of Parties (COP)-13 (Bali) in 2007 and COP-16 (Cancún) in 2010,
many developing countries put forward quantifiable mitigation
actions (as contrasted with quantified, economy-wide emissions
reductions targets assumed by Annex B parties under the Kyoto
Protocol) and agreed to more frequent reporting and enhanced
transparency of those actions. Further pledges of actions have
been made since Cancún. (Section 13.13)
For many developing countries, adaptation can have comparable
priority to mitigation. This may be because countries are especially
vulnerable to climate change damages or they lack confidence in
progress with mitigation efforts. These countries are often the least
able to finance adaptation, leaving cooperative agreements to
attempt to identify sources of support. (See Chapter 16 for detail.)
International collaboration regarding public climate finance under
the UNFCCC dates back to 1991, when the Climate Change Pro-
gram of the Global Environment Facility (GEF) was established. The
literature reflects mixed evidence on the scale and environmental
effectiveness of such funding. Funding for reporting and mitigation
flows through four primary vehicles: the GEF, which focuses on
mitigation; the Least Developed Country Fund (LDCF) and Special
Climate Change Fund (SCCF), created in 2001 for adaptation
purposes and operated by the GEF; the Adaptation Fund set up in
2008; and the Green Climate Fund (GCF), established in 2010 for
mitigation and adaptation. (Section 13.11, see also Section 16.2)
The Copenhagen Accord set a goal to jointly mobilize 100 billion
USD / yr by 2020 to address the needs of developing countries.
(Section 13.11) Article 4.5 of the UNFCCC also calls for technology
transfer from developed to developing countries. The Technology
Mechanism, with an Executive Committee and Climate Technology
Centre and Network, is seeking to fulfil this goal.
Research indicates that adaptation assistance, such as that pro-
vided by the Kyoto Protocol’s Adaptation Fund, can be crucial for
inclusion of developing countries in international climate agree-
ments. Further research into the distribution of adaptation finance
across countries from both UNFCCC and non-UNFCCC sources
is required to assess the equity, efficiency, effectiveness, and
environmental impacts of the Adaptation Fund and other funding
mechanisms. Many developing countries have created institutions
to coordinate adaptation finance from domestic and international
funding sources. (Sections 13.3, 13.5)
The literature identifies several models for equitable burden
sharing among both developed and developing countries in
international cooperation for climate change mitigation. The prin-
ciples on which burden sharing arrangements may be based are
described in Section 4.6.2, and the implications of these arrange-
ments are discussed in Section 6.3.6.6. Distributional impacts from
agreements will depend on the approach taken, criteria applied
to operationalize equity, and the manner in which developing
countries’ emissions plans are financed; studies suggest potential
approaches (Section 13.4, UNFCCC Secretariat 2007b, 2008). A
major distributional issue is how to account for emissions from
goods produced in a developing country, but consumed in an
industrialized country. Such emissions have increased rapidly since
1990, as developed countries have typically been importers of
embodied emissions, while many developing countries have large
shares of emissions embodied in exports. (Sections 13.8, 14.3.4)
New and existing coalitions of countries have engaged in the
UNFCCC negotiations, each presenting coordinated positions.
Several distinct coalitions of developing countries have formed to
negotiate their divergent priorities. Examples include the Group of
77 (G-77) and China, which contains sub-groups such as the Afri-
can Group, the Least Developed Countries, and the Arab Group;
the Alliance of Independent Latin American and Caribbean states;
and a ‘like-minded developing country’ group that included China,
India, and Saudi Arabia. Other coalitions organized to influence
UNFCCC negotiations include the Alliance of Small Island States
(AOSIS); various groupings of industrialized countries, including
the Umbrella Group; the Environmental Integrity Group; the BASIC
countries (Brazil, South Africa, India, and China); the Coalition of
Rainforest Nations; and other active coalitions not limited to the
climate context, for example, the Comision Centroamericana de
Ambiente y Desarollo and the Bolivarian Alliance for the Americas.
10121012
International Cooperation: Agreements & Instruments
13
Chapter 13
13�2�2�5 Conflicts and complementarities
Criteria may be mutually reinforcing (Cao, 2010a; c), but there may
also be conflicts, forcing tradeoffs between and among them. For
example, maximizing global net benefits or attaining cost-effective-
ness may lead to actions that decrease distributional equity (van Asselt
and Gupta, 2009), which could lead to low participation. Posner and
Weisbach (2010) and Baer (2009) argue that efficiency and distribution
can be reconciled by either normatively adjusting the net benefit or
cost calculations to account for changes in relative utility, or by adopt-
ing redistributive policy in addition to cost-effective climate policy.
Different approaches to meet the same criteria (for example, equity)
may also conflict with each other when operationalized (Fischer and
Morgenstern, 2010) or lead to different results (Dellink etal., 2009).
Simultaneously, there are relations among sub-criteria: excessive
flexibility may undermine incentives to invest in long-term solutions,
and may also increase the likelihood of participation. Compromises
to enable institutional feasibility of an agreement may weaken per-
formance along other dimensions. The environmental performance of
an international agreement depends largely on tradeoffs among the
ambition of an agreement with regards to mitigation goals and par-
ticipation, and compliance (Barrett, 2003; Bodansky, 2011a; Rajamani,
2012a). For further discussion of potential tradeoffs between participa-
tion and environmental effectiveness, see Section 13.3.3.
13.3 International agreements:
Lessons for climate policy
Several lessons from research on existing international agreements, as
well as game-theoretic models of such agreements, can be applied to
climate change institutions. This section briefly summarizes some of
the key lessons, which are addressed in more detail in subsequent sec-
tions of this chapter.
13�3�1 The landscape of climate agreements
and institutions
Since the publication of IPCC AR4 in 2007, the landscape of interna-
tional institutions related to climate policy has become significantly
more complex. Climate change is addressed in a growing number of
fora and institutions and across a wider range of scales (Keohane and
Victor, 2011; Bulkeley etal., 2012; Biermann etal., 2009, 2010; Barrett,
2010; Abbott, 2011; Hoffmann, 2011; Zelli, 2011; Rayfuse and Scott,
2012).
Figure 13.1 illustrates the variety of international, transnational, regional,
national, sub-national, and non-state agreements and other forms of
cooperation, many of which have emerged since the mid-2000s. Some
regimes that previously focused on other issues, e. g., trade (see Sec-
tion 13.8), energy (see Chapter 7), biodiversity, and human rights have
begun to address climate change. For a more detailed discussion of
these initiatives, see also Section 13.5.
Future efforts for international cooperation on climate policy will need
to account for this wide variety of agreements and institutions. Careful
design of linkages and cooperative arrangements will be needed to
manage the increasingly fragmented regime complex to prevent con-
flicts among institutions (Biermann etal., 2010; Keohane and Victor,
2011; Zelli, 2011), avoid gaps or loopholes (Downs, 2007), and maxi-
mize potential institutional synergies (Hoffmann, 2011; Rayfuse and
Scott, 2012).
13�3�2 Insights from game theory for climate
agreements
Game theory provides insights into international cooperation on cli-
mate policy, from research communities in environmental economics
(Ward, 1993; Finus, 2001, 2003; Wagner, 2001; Barrett, 2003, 2007)
and in the rationalist school of political science (Sjostedt, 1992; Downs
etal., 1996; Underdal, 1998; Koremenos etal., 2001; Avenhaus and
Zartman, 2007; Hafner-Burton etal., 2012). These researchers analyze
the incentives and motivations of actors to join and comply with inter-
national environmental agreements (IEAs).
The game-theoretic literature on climate change agreements has
grown substantially in the last two decades (Barrett, 2007; Rubio
and Ulph, 2007; Chambers, 2008; Froyn and Hovi, 2008; Bosetti etal.,
2009a; Asheim and Holtsmark, 2009; Dutta and Radner, 2009; Muñoz
etal., 2009; Carbone etal., 2009; Weikard etal., 2010; Bréchet etal.,
2011; Wood, 2011; Heitzig etal., 2011; Dietz and Zhao, 2011; Bréchet
and Eyckmans, 2012; Pittel and Rübbelke, 2012). It is important, how-
ever, to treat with caution any general conclusions from recent game
theory literature on climate change agreements, as many have been
criticized for their simplicity. In this section, we refrain from listing
assumptions in detail, and restrict attention to the most general and
policy-relevant discussions. See Finus (2001, 2003) for a more detailed
review of the relevant game theory literature.
By and large, the game-theoretic literature assumes actors to be states
that are maximizing the welfare of their citizens (Ward, 1993; Carraro
and Siniscalco, 1998; Grundig, 2006). A central premise is that there
is currently no supranational institution that can impose an IEA on
governments and subsequently enforce it (see Section 13.2.1.1). Thus,
IEAs must be self-enforcing to engage and maintain participation
and compliance (Finus, 2001; Barrett, 2007; Dutta and Radner, 2009;
Rubio and Casino, 2005; Heitzig etal., 2011). Nevertheless, in theory
and practice, international institutions can help to promote, negotiate,
and administer an IEA. They can do so by serving to coordinate and
moderate negotiations and implementation, reducing transaction costs
10131013
International Cooperation: Agreements & Instruments
13
Chapter 13
UNFCCC Kyoto Protocol, Clean Development Mechanism, International Emissions Trading
Other UN Intergovernmental
organizations
Intergovernmental Panel on Climate Change, UN Development Programme, UN Environment Programme, UN Global Compact, International Civil Aviation
Organization, International Maritime Organization, UN Fund for International Partnerships
Non-UN IOs World Bank, World Trade Organization
Other environmental treaties Montreal Protocol, UN Conference on the Law of the Sea, Environmental Modification Treaty, Convention on Biological Diversity
Other multilateral ‘clubs’ Major Economies Forum on Energy and Climate, G20, REDD+ Partnerships
Bilateral arrangements e. g., US-India, Norway-Indonesia
Partnerships Global Methane Initiative, Renewable Energy and Energy Efficiency Partnership, Climate Group
Offset certification systems e. g., Gold Standard, Voluntary Carbon Standard
Investor governance initiatives Carbon Disclosure Project, Investor Network on Climate Risk
Regional governance e. g., EU climate change policy
Subnational regional initiatives Regional Greenhouse Gas Initiative, California emissions-trading system
City networks US Mayors’ Agreement, Transition Towns
Transnational city networks C40, Cities for Climate Protection, Climate Alliance, Asian Cities Climate Change Resilience Network
NAMAs, NAPAs Nationally Appropriate Mitigation Actions (NAMAs) of developing countries; National Adaptation Programmes of Action (NAPAs)
Figure 13�1 | The landscape of agreements and institutions on climate change. Lines connecting different types of agreements and institutions indicate different types of links. In
some cases, lines represent a formal agreement of a division of labour (e. g. between the UNFCCC and ICAO concerning aviation emissions). In other cases, lines represent a more
simple mutual recognition (e. g. the accreditation of C40 cities by the UNFCCC). In others still, lines represent a functional linkage without any formal relationship (e. g. the relation-
ship between the CDM and the NGO certification of carbon offsets). This is a rapidly-changing landscape and not all links may be captured.
UNFCCC
Transnational City
Networks
Investor Governance
Initiatives
Offset Certification
Systems
Subnational
Regional Initiatives
Regional
Governance
NAMAs,
NAPAs
Non-
UN IOs
Other
UN IOs
City
Networks
Partnerships
Other
Multilateral
Clubs
Other
Environmental
Treaties
Bilateral
Arrangements
National/Regional
Subnational
International
10141014
International Cooperation: Agreements & Instruments
13
Chapter 13
of negotiations, and generating trust (Keohane, 1984, 1989; Finus and
Rundshagen, 2006); changing the interests of actors by providing new
information or building capacity (Haas etal., 1993); enlisting actors in
domestic politics within and across states (Abbott and Snidal, 2010;
Hafner-Burton etal., 2012); and inculcating norms (Bodansky, 2010a).
Alternative perspectives on game theory weaken the assumption of
rationality and emphasize the roles of legitimacy, norms, and accul-
turation in shaping behaviour under international law and institutions
(Goodman and Jinks, 2004; March and Olsen, 2008; Brunnée and
Toope, 2010; Bernauer et al., 2010; Hafner-Burton etal., 2012). See
Chapter 2 for a discussion of behavioural approaches in the literature.
13�3�3 Participation in climate agreements
Greater participation in climate change agreements, all else equal,
improves environmental effectiveness by covering a larger share of
global emissions and reducing potential leakage to non-participating
areas. Greater participation may also improve aggregate economic
performance by enabling lower-cost emissions abatement and reduc-
ing leakage. An international climate agreement regime might achieve
depth (ambition of emissions reduction) and breadth (of participation)
in different sequence. Schmalensee (1998) argues for breadth of par-
ticipation first, with less emphasis on ambition. He argues that this
approach allows time to develop correspondingly broad-based insti-
tutions that can potentially facilitate substantial aggregate emissions
reductions over time (Schelling, 1992; Barrett, 2003). Conversely, pur-
suing an arrangement with depth before breadth can be motivated
by the urgency of the climate-change problem. However, such an
approach may make broadening participation more difficult later on
(Schmalensee, 1998), and this type of agreement could induce emis-
sions leakage, undermining effectiveness (Babiker, 2005).
In the theoretical literature, the tradeoff between the level of abate-
ment by a sub-set of actors and participation in an IEA has been ana-
lyzed as a comparison between an ‘ambitious versus a modest treaty’
(Finus and Maus, 2008; Courtois and Haeringer, 2011) or between a
focal (deep and narrow) versus a consensus (broad but shallow) treaty
(Barrett, 2002; Hafner-Burton et al., 2012). Scholars conclude that,
overall, a consensus treaty may achieve more in terms of emission
reductions and global welfare than a focal treaty. Further analysis has
investigated the tradeoff between breadth and depth, and how broad
participation can increase environmental effectiveness (by covering
more emissions and reducing leakage), and reduce costs (by encom-
passing more low-cost abatement options in a larger market). Through
these plausible mechanisms, greater breadth enables greater ambition
(subject to the costs of attracting participants) (Battaglini and Harstad,
2012).
While most existing IEAs feature open membership, some theoretical
literature finds that exclusive membership can help to stabilize IEAs,
prevent defection, and lead to better environmental outcomes, even
in the context of a global public good such as climate protection (Car-
raro and Marchiori, 2003; Eyckmans and Finus, 2006; Finus, 2008a;
Finus and Rundshagen, 2009). In practice, exclusive membership may
reduce supply of a public good such as global emissions abatement,
may increase emissions leakage (unless non-members are covered by
their own coalition in a system of multiple agreements), and may con-
flict with norms of institutional legitimacy. Multiple agreements (i. e.,
multiple coalitions) may be a pragmatic, short- to mid-term strategy
for achieving more effective cooperation if a universal treaty of all
countries to limit emissions is not stable or attainable in the short-run
(Finus and Rundshagen, 2003; Stewart and Wiener, 2003; Asheim etal.,
2006; Eyckmans and Finus, 2006; Bosetti et al., 2009b; Bréchet and
Eyckmans, 2012). Multiple coalition agreements involving all major
emitters could potentially achieve better environmental effectiveness
than a partial coalition acting while other countries do not act at all.
However, for protecting a global public good, separate coalitions could
forego some of the cost-effectiveness gains of a broader regime, and
they could face questions of legitimacy (Karlsson-Vinkhuyzen and
McGee, 2013). It remains unclear whether partial coalitions for climate
policy will accelerate momentum for a more universal global agree-
ment in the future, or undermine such momentum (Brewster, 2010).
International transfers can also attract participation in climate agree-
ments, balancing the asymmetric gains from cooperation. These
transfers can either be direct monetary transfers (e. g., contributions
to a fund from which developing countries can draw), in-kind trans-
fers (e. g., technology transfer), or indirect transfers via market-based
mechanisms (e. g., through the initial allocation of tradable emission
permits) (Carraro etal., 2006; Barrett, 2007; Bosetti etal., 2009a; Fuen-
tes-Albero and Rubio, 2010; Bréchet and Eyckmans, 2012; Stewart and
Wiener, 2003). Historically, transfers have been important for building
participation in past international agreements (Hafner-Burton et al.,
2012; Bernauer etal., 2013). The experience of the Montreal Protocol
illustrates how transfers can engage participation by major develop-
ing countries through financial and technological assistance (Sandler,
2010; Kaniaru, 2007; Zhao, 2005, 2002; Andersen et al., 2007). The
role of technology transfer in international cooperation is discussed in
greater detail in Section 13.9, and the role of finance is discussed in
Section 13.11.
Linkages across issues may also help encourage participation. Many
linkages exist between climate change and other issues, such as
energy, water, agriculture, sustainable development, poverty allevia-
tion, public health, international trade, human rights, foreign direct
investment, biodiversity, and national security (see Sections 3.4, 5.7,
6.6, and Section 13.2.1.1). Such linkages may create opportunities, co-
benefits, or adverse side-effects, not all of which have been thoroughly
examined. However, the advantages of issue linkage may diminish as
the number of parties and issues increase, raising the transaction costs
of negotiations (Weischer etal., 2012).
A different instrument to encourage participation is trade sanctions
against non-parties to an IEA. The threat of trade sanctions can moti-
10151015
International Cooperation: Agreements & Instruments
13
Chapter 13
vate participation (Barrett, 2003; Victor, 2011), as exemplified by the
Montreal Protocol. However, since participation in an international
treaty is voluntary, sanctions for non-participation may be difficult to
justify (see Section 13.3.4). Similar to trade sanctions are ‘offsetting
border adjustment measures’ (BAMs) (see Section 13.8 for further dis-
cussion).
Particularly vulnerable countries may be more likely to participate in
agreements that address and fund adaptation activities (Huq et al.,
2004; Mace, 2005; Ayers and Huq, 2009; Denton, 2010; Smith etal.,
2011). Benefits of adaptation are often local, and these local benefits
may be more effective incentives for countries vulnerable to climate
damages to participate in an IEA relative to the benefits of mitiga-
tion and support for technological development or deployment. Both
of these alternative possible incentive mechanisms are less-excludable
and are of potentially less value to lower-emitting countries, compared
with adaptation benefits. Recent game theoretic analyses suggest
that private co-benefits from mitigation actions may not substantially
increase participation in international climate agreements (Pittel and
Rübbelke, 2008; Finus and Rübbelke, 2012).
A final key issue related to participation is the role played by uncer-
tainty. Earlier research suggested that reducing uncertainty about
the benefits and costs of mitigation can render IEAs less effective,
showing that as parties learn of the actual costs and benefits of
mitigation, their incentive to participate may shrink (Na and Shin,
1998; Kolstad, 2005; Kolstad and Ulph, 2008). However, more recent
work (Finus and Pintassilgo, 2012, 2013; Dellink and Finus, 2012) has
qualified this conclusion by showing that removing uncertainty only
has a negative impact on cooperation in certain cases. Recent experi-
mental evidence suggests that if there is uncertainty in the likelihood
of tipping points of disastrous climate change impacts, this may
reduce the success of cooperation (Dannenberg etal., 2011); con-
versely, reducing uncertainty about the likelihood of tipping points
can increase prospects for collective action (Barrett and Dannenberg,
2012).
13�3�4 Compliance
As noted in Section 13.2.1.1, in the absence of a supranational author-
ity, compliance with international agreements must be verified by
parties to the agreement or through a related collaborative body they
perceive as legitimate. Barrett (2003) sees compliance as a dimension
of participation, in the sense that incentives to comply are incentives
to continue participating in the agreement. The reputational costs
of being a non-compliant party may differ from those of withdraw-
ing altogether, but the magnitude of the difference is not clear. For
example, there is only one case of withdrawal from the Kyoto Protocol,
that of Canada in December 2011, but more than one case in which
countries have not met their agreed emission targets (see Section
13.13.1.1).
Compliance does not necessarily equate with success because coun-
tries choose whether to become party to an agreement, compliance
may only reflect what countries would have done without the agree-
ment (Downs etal., 1996). One measure of effectiveness is the extent
to which the agreement changed countries’ behaviour, compared to
what they would have done in the absence of the agreement (the
counterfactual baseline scenario) (Hafner-Burton etal., 2012). Evaluat-
ing an agreement’s effectiveness is difficult because the counterfactual
is not observed (Simmons and Hopkins, 2005; Mitchell, 2008; Hafner-
Burton etal., 2012).
A necessary condition for successful compliance strategies is an inde-
pendent and effective regime of ‘measurement (or monitoring), report-
ing, and verification’ (MRV) with a high frequency of reporting (as
documented in the IPCC TAR; see also Section 2.6.4.3). Provisions for
greater transparency in MRV are being developed with regard to (1)
countries’ GHG emissions, and (2)international financial flows from
developed countries to developing countries for mitigation and adap-
tation measures (Winkler, 2008; Breidenich and Bodansky, 2009; Ellis
and Larsen, 2008; Ellis and Moarif, 2009; Clapp etal., 2012). Lessons
on MRV from other multilateral regimes such as International Mon-
etary Fund (IMF) consultations, Organisation for Economic Co-opera-
tion and Development (OECD) economic policy reviews, World Trade
Organization (WTO) trade policy reviews, and arms control agree-
ments include attention to accuracy, evolution over time, combining
self-reporting with third-party verification, including independent tech-
nical assessment as well as some form of political or peer review, the
potential use of remote sensing or other technical means, and public
domain outputs (Cecys, 2010; Pew Center, 2010; Bell etal., 2012).
Technical capabilities for monitoring emissions now include remote
sensing from satellites which themselves pose new issues about the
availability, diffusion, and governance of MRV capabilities for greater
transparency. Greater transparency about financial flows requires
detailed analysis of donor government budgeting in their legislative
and administrative processes (Clapp etal., 2012; Falconer etal., 2012;
Brewer and Mehling, 2014).
Measurement, reporting, and verification may be beneficially comple-
mented by enforcement strategies, which are comprised of positive
inducements such as international transfers, financing, capacity-
building, and technology transfer and credible threats of sanctions
for violating emissions commitments or reporting requirements. From
a rationalist perspective, compliance will occur if the discounted net
benefits from cooperation (including direct climate benefits, co-bene-
fits, reputation, transfers, and other elements) exceed the discounted
net benefits of defection (including avoided mitigation costs, avoided
adverse side-effects, and expected sanctions). The institutional and
behavioural reality of ensuring compliance can be more complicated.
Moreover, the theoretical literature has stressed the difficulty of
designing credible sanctions that are renegotiation-proof (Finus, 2001,
2003; Barrett, 2002; Asheim etal., 2006; Froyn and Hovi, 2008).
10161016
International Cooperation: Agreements & Instruments
13
Chapter 13
Some research suggests that the Kyoto Protocol is unusual among
IEAs in that it established an ‘elaborate and multifaceted’ compli-
ance system, which has been successful in assuring compliance with
MRV requirements (Finus, 2008b; Oberthür and Lefeber, 2010; Brunnée
etal., 2012), while many other IEAs rely on self-reporting of domes-
tic actions. Compliance with MRV requirements can in turn improve
detection of other forms of noncompliance. Even if the Kyoto Protocol
compliance regime has been imperfect, it can offer lessons for future
regimes, in particular with regard to MRV. The design of sanction mech-
anisms currently in place under the Kyoto Protocol, however, has also
been criticized for not being fully credible (Halvorssen and Hovi, 2006;
Barrett, 2009; Vezirgiannidou, 2009), though possibilities for improve-
ment through modification have been identified (Finus, 2008b). For
example, a sanction could take the form of a temporary suspension of
monetary and technological transfers if recipient countries are found in
non-compliance (Finus, 2008b). It has also been shown that a deposit
system can be effective to enforce compliance: treaty members lodge
a deposit into a fund from which they receive interest as long as they
comply. In case of non-compliance, parts of the deposit are forfeited to
compliant countries (Gerber and Wichardt, 2009, 2013).
Trade sanctions, such as those employed under the Montreal Protocol,
are frequently put forward as a possible compliance mechanism (Bar-
rett, 2003; Victor, 2011) (see Section 13.8 for institutional details and
further discussion). A general reservation about trade sanctions is that
they often not only affect the agreement-violator but also compliant
countries, and hence this threat is not credible. Barrett (2009), Victor
(2010), and others argue that trade sanctions are neither a feasible nor
a desirable option for enforcing compliance with a climate agreement
because trade sanctions may not be compatible with WTO rules. A WTO-
compatible design may be feasible in the case of border adjustments
with obligations to buy allowances (Ismer and Neuhoff, 2007; Monjon
and Quirion, 2011). Meanwhile, imposition of trade sanctions would
pose some risks of reducing cooperation by undermining capacity for
compliance in targeted countries and could be burdensome to low-
income populations in targeted countries (Murase, 2011). Especially
if applied to embedded carbon (carbon from energy used to produce
traded goods), the number of goods affected by the sanctions could
be large, potentially fuelling a trade war that may negatively affect
even those countries that intend to be the punishers (McKibbin and
Wilcoxen, 2009) (see Sections 13.8 and 5.4.1 for further discussion).
Finally, there is a considerable literature on the potential use of legal
remedies (such as civil liability) to address climate damages (Penalver,
1998; Grossman, 2003; Allen, 2003; Gillespie, 2004; Hancock, 2004;
Burns, 2004; Verheyen, 2005; Jacobs, 2005; Smith and Shearman, 2006;
Lord et al., 2011; Farber, 2011; Faure and Peeters, 2011). There has
been little suggestion that such liability remedies be formally incorpo-
rated into climate agreements as compliance mechanisms, and there
would be significant obstacles to doing so (including the lack of a
robust international civil liability system). Nonetheless, this is a poten-
tial avenue for encouraging compliance, perhaps indirectly. The IPCC
AR4 (IPCC, 2007) reported on evidence from various legal actions and
potential actions that have been considered in the theoretical litera-
ture. Haritz (2011) has argued, based on an analysis of the literature
and court cases, that it is theoretically possible to link the IPCC scale
of likelihood with a scale based on legal standards of proof required
for various kinds of legal action. Liability for climate change damage
at the supranational level (de Larragán, 2011; Gouritin, 2011; Peeters,
2011), and at the national level in the United Kingdom (Kaminskaite-
Slaters, 2011), the United States (Kosolapova, 2011), and the Nether-
lands (van Dijk, 2011), has been explored. Climate litigation and legal
liability may put additional pressure on corporations and govern-
ments to be more accountable (Smith and Shearman, 2006; Faure and
Peeters, 2011). However, there are key analytical hurdles to establish-
ing important legal facts, such as causation and who is to be held liable
(Gupta, 2014). While not framed in terms of liability or compensation,
the UNFCCC negotiations in Doha decided to establish institutional
arrangements associated with Loss and Damage (UNFCCC, 2013a).
13.4 Climate policy
architectures
‘Policy architecture’ for global climate change refers to “the basic
nature and structure of an international agreement or other mul-
tilateral (or bilateral) climate regime” (Aldy and Stavins, 2010a).
The term includes the sense of durability, with regard to both policy
structure and the institutions to implement and support that struc-
ture (Schmalensee, 1998, 2010), which is appropriate to the long-term
nature of the climate-change problem.
13�4�1 Degrees of centralized authority
Absent the emergence of a global authority that has the capacity to
impose an allocation of emissions rights on countries, as advocated
by Tickell (2008), approaches to international cooperation all arise out
of negotiated agreements among independent participants. However,
they vary in the degree to which they confer authority on multilateral
institutions to manage the rules and processes agreed to. On one end
of the spectrum of possible approaches, referred to by some as ‘top-
down’ (Dubash and Rajamani, 2010), actors agree to a high degree of
mutual coordination of their actions with, for example, fixed targets
and a common set of rules for specific mechanisms, such as emissions
trading. On the other end of the spectrum, sometimes known as ‘bot-
tom-up’ (Victor etal., 2005; Dubash and Rajamani, 2010), national pol-
icies are established that may or may not be linked with one another.
Figure 13.2 illustrates how existing and proposed international agree-
ments can be placed on this spectrum (see IPCC, 2007, pp. 770 773 for
a detailed list of many proposals that could be placed in this grid). The
level of centralization refers to the authority an agreement confers on
10171017
International Cooperation: Agreements & Instruments
13
Chapter 13
an international institution, not the process of negotiating the agree-
ment. It shows that many proposals can be more or less centralized
depending on the specific design. It also shows that the three idealized
types discussed in the following sections have more blurred boundar-
ies than their titles suggest. The figure also divides them into agree-
ments focused on specific ends (emissions targets, for example) and
those that focus on means (specific policies, or technologies, for exam-
ple). Finally, it should be understood that these are idealized types, and
in practice there will be considerable additional complexity in how the
basic design of agreements connect the actions of the various actors
that make them up. There are distinct limits to what can be gleaned
from the ‘top-down vs bottom-up’ metaphor or the degrees-of-central-
ization notion employed here (Dai, 2010) as, for example, emphasized
in Ostrom’s (2012) accounts of ‘polycentric governance’.
As one prominent example, the Cancún Agreements are a ‘hybrid’ of
top-down and bottom-up. They include voluntary mitigation pledges
from many (but not all) UNFCCC parties, together with additional or
elaborated common goals and centralized UNFCCC functions (e. g.,
with regard to adaptation, see Part II of the Cancún Agreements
(UNFCCC, 2010)). It is quite possible that the agreement mandated by
the Durban Platform on Enhanced Action, to be completed by 2015,
will also be such a hybrid.
Figure 13�2 | Alternative forms of international cooperation. The figure represents a compilation of existing and possible forms of international cooperation, based upon a survey
of published research, but is not intended to be exhaustive of existing or potential policy architectures, nor is it intended to be prescriptive. Examples in orange are existing agree-
ments. Examples in blue are structures for agreements proposed in the literature. The width of individual boxes indicates the range of possible degrees of centralization for a particu-
lar agreement. The degree of centralization indicates the authority an agreement confers on an international institution, not the process of negotiating the agreement.
UNFCCC Objective
Other IO GHG Regulation
Linked Cap-and-Trade Systems
and Harmonized Carbon Taxes
Multilateral Clubs
Green Climate
Fund
Bilateral Financial/
Technology Transfers
International Cooperation
for Supporting Adaptation Planning
Kyoto
Targets
Kyoto Flexibility Mechanisms
Loose Coordination of Policies
Offset Certification Systems
UNFCCC/Kyoto/Copenhagen MRV Rules
R&D Technology Cooperation
Regional ETS
Pledge and Review
Copenhagen/
Cancún Pledges
Centralized AuthorityDecentralized Authority
Cooperation
over Means
Cooperation
over Ends
Loose coordination of policies: examples include transnational city networks and Nationally Appropriate Mitigation Actions (NAMAs);
R&D technology cooperation: examples include the Major Economies Forum on Energy and Climate (MEF), Global Methane Initiative (GMI),
or Renewable Energy and Energy Efficiency Partnership (REEEP); Other international organization (IO) GHG regulation:
examples include the Montreal Protocol, International Civil Aviation Organization (ICAO), International Maritime Organization (IMO).
10181018
International Cooperation: Agreements & Instruments
13
Chapter 13
13�4�1�1 Centralized architectures and strong
multilateralism
A centralized architecture, such as that generated by strong commit-
ments to multilateral processes and institutions, is an agreement that
establishes goals, targets, or both which are generally binding, for par-
ticipating countries, within a specific time-frame, and establishes col-
lective processes for monitoring progress towards meeting those goals.
The Kyoto Protocol adopted targets and timetables for participating
Annex B countries, one realisation of strong multilateralism (Bodan-
sky, 2007). Other centralized approaches to international cooperation
could expand on targets-and-timetables by also specifying the mecha-
nism for implementation of the goals and / or targets of the agreement.
Such an approach could establish, for example, a global cap-and-trade
system or global carbon tax.
In the literature, targets-and-timetables have been coupled with spe-
cific notions of fairness, prospective conditions for political acceptance,
or both to establish quantitative targets and timetables for all coun-
tries and all years in a potential international agreement (Agarwala,
2010; Frankel, 2010; Höhne etal., 2008; Bosetti and Frankel, 2011; Cao,
2010c; IPCC, 2007, Chapter 13).
13�4�1�2 Harmonized national policies
A less-centralized approach would be to structure international cooper-
ation around policies that would be harmonized, such as via collective
monitoring, but where relatively little centralized authority is estab-
lished or employed. In this class of approaches, aspects of national
policies are made similar or even equivalent to one another. Examples
include the G20 and Asia-Pacific Economic Cooperation (APEC) agree-
ment in 2009 to phase out fossil fuel subsidies that encourage waste-