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Additional info for Argument in the Greenhouse: The International Economics of Controlling Global Warming
Some countries, such as Canada, may even think that a small rise in temperatures will be beneficial, so achieving consensual obligations may be highly difficult. To make such countries join a binding agreement it may even be necessary to compensate them for their abatement efforts. g. sulphur dioxide in the European Union, or between Canada and the USA). The above view of the FCCC process stems from an economic theory of negotiation where consensual, non-coercive, co-operative action is only considered likely to be sustained if it is in the interests of all parties, and none can gain by leaving, or threatening to leave, the agreement (so-called ‘free-riding’).
Different policy instruments will have different strengths in each category and finding the most effective policy will involve trade-offs between characteristics such as efficiency and stability. There are four main classes of policy instrument that have been suggested to operationalise international co-operation on CO2 emissions: International emission targets This is the co-ordination mechanism currently implied by the FCCC, and commits countries to achieve specific CO2 emissions targets by a specific date.
The concept of co-operation used by economists in these studies is a very limited one, and involves all countries acting as if they shared a common welfare function, implying a single government. In the real world there are many different degrees of co-ordinated action which are termed ‘co-operation’, and great care must be taken to specify exactly what is being enacted in an international agreement. In this chapter co-operation will be used in a broad sense to indicate any solution countries reach which involves a negotiated agreement codified in a treaty valid under international law.