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  3. American Economic Review
  4. April 2015
  5. Climate Clubs: Overcoming Free-Riding in International Climate Policy

Climate Clubs: Overcoming Free-Riding in International Climate Policy

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Abstract

Notwithstanding great progress in scientific and economic understanding of climate change, it has proven difficult to forge international agreements because of free-riding, as seen in the defunct Kyoto Protocol. This study examines the club as a model for international climate policy. Based on economic theory and empirical modeling, it finds that without sanctions against non-participants there are no stable coalitions other than those with minimal abatement. By contrast, a regime with small trade penalties on non-participants, a Climate Club, can induce a large stable coalition with high levels of abatement. (JEL Q54, Q58, K32, K33)

Citation

Nordhaus, William. 2015. "Climate Clubs: Overcoming Free-Riding in International Climate Policy." American Economic Review, 105 (4): 1339-70. DOI: 10.1257/aer.15000001

Additional Materials

JEL Classification

  • K32 Environmental, Health, and Safety Law
  • K33 International Law
  • Q54 Climate; Natural Disasters and Their Management; Global Warming
  • Q58 Environmental Economics: Government Policy