The Failure of the latest International Agreements on Climate Change has shown the hardness to
keep and preserve stability in coalitions made on differently orientated Countries.
Since there are no international authorities who can enforce the agreement, the task of the present
study is to assess the Paris Agreement in both its aspired effectiveness of its targets and in its stability and self-enforceability by confronting the Paris Coalition design with a game-theoretical outcome.
In order to do so, we proceed by applying the econometric methods of Almer and Winkler (JEEM, 2017) and Abadie et al. (J. Am. Stat. Assoc., 2010) to project carbon dioxide emissions for 2020 and 2030.
Then, we assess the submitted Intended Nationally Determined Commitments of the Paris Agreement against the probability density functions of our forecasts.
Finally, we insert a game-theoretical evaluation of the Agreement by applying the methods of Murdoch and Sandler (JPubE, 1997) to assess whether or not the aspired emission reduction is a voluntary contribution to the public good. We then derive the marginal costs of emission reduction from the econometric model to test whether Paris is a cooperative or a non-cooperative agreement.
The behaviour of the United States of America, both in the Kyoto Protocol and Paris Agreement, clearly show that the topic of self-enforcement and stability of International Treaties is still relevant nowadays.
The ethical and political implications of the results of the Paris Agreement is absolutely essential for the survival of our Planet.
Since the Paris Agreement has been signed just in 2015, the present literature just focus on the previous Agreements and very few scholars have started to address the latest Treaty.
Moreover, previous studies on Climate Policy evaluation consider either assessments on the effectiveness of the final targets or the game-theoretical result of the coalitions designed in the Agreement.
There are no studies in the present literature that combine in only one assessment both the two dimensions described above.
In our analysis, not only the object under investigation (i.e. Paris Agreement) has not been carefully addressed by the literature, due to the small timeframe, but we combine also two different approaches in order to provide a broader assessment of the Agreement.
In particular, our contributions to the present literature are the following:
1. Regarding the projections of the future patterns of carbon dioxide emissions reduction, we introduce an empirical-based methodology into the Integrated Assessment Model evaluation. Indeed, most of the critics regarding these type of models refer to the fact that the outcomes are in general model-dependent and they do not provide an objective forecast of future emission reductions. In our study, the synthetic control method (Abadie, J. Am. Stat. Assoc., 2010) can help providing adequate counterfactuals even in an ex-ante assessment as the one we focus on. This could reduce the volatility of the projections while controlling for more observables characteristics.
2. None of the assessments done for the Paris Agreement combines evaluations both of the effectiveness of the final targets and the cooperative outcome of the Treaty. The introduction of game-theoretical considerations in this specific framework has never been explored before by the economic literature, especially under the Paris Agreement Case study.
3. Contrary to many previous studies, we do not burden our analysis to the mere assessment of the Agreement, but we provide possible suggestions for the policy makers by underlying the areas of possible amendments of the Treaty¿s design.
Moreover, the policy implications of our study are extremely relevant for the today international debate.
The continuous failure of the former agreements (and, recently, the Paris Agreement as well) clearly shows that the way this topic has been addressed in the past has not been conclusive, yet.
Our research try to answer to the question of stability of Climate Change Agreements by combining the latest methodologies, both empirical and theoretical, explored by the economic literature and, at the same time, it tries to keep a look at the policy making level.