Financial incentives to poor countries promote net emissions reductions in multilateral climate agreements

Yali Dong,Shuangmei Ma,Boyu Zhang,Wen-Xu Wang,Jorge M Pacheco

doi:10.1016/j.oneear.2021.07.006

Abstract

Financial incentives to poor countries promote net emissions reductions in multilateral climate agreements

Highlights

The Paris Agreement (PA), signed in 2015, resulted in an inclusive, binding treaty that succeeds the Kyoto Protocol and the Copenhagen Accord
Here we explore the impact of implementing a financial incentive (FI) mechanism inspired by what the United Nations Framework Convention on Climate Change (UNFCCC) designates as ‘‘Financial Mechanism’’ (FM), whose operating entities were included as an important aspect of the PA.[1,11,12]
Success rates and relative emissions reductions (ER) We start by investigating possible scenarios that may result from the experiments by carrying out a game theoretical analysis of the subgame perfect Nash equilibria (SPNE; which is a refinement of Nash equilibria for a multi-period game) stemming from modeling the experimental setting, as well as an targets and relative ER at the group level (A) Aggregated data stemming from all the experimdeevniatsti.oDnata(daerfienepdresaesnteqd affiN1ffiffiP sffiffiffiffitffiNihffi=ffiffieffi1ffiffiðffimffixffiffiiffieffiffiÀffiaffiffinffixffiffiffiÞ±ffiffi2ffi standard ), where fx[1]; x2; .; xNg are the observed values, xis the mean value of these observations, and N is the sample size)

Summary

Introduction

The Paris Agreement (PA), signed in 2015, resulted in an inclusive, binding treaty that succeeds the Kyoto Protocol and the Copenhagen Accord. Given the disparities between high-income and middle- and low-income countries, cooperation on ER constitutes a highly non-trivial problem, and more so when we take into consideration that global cooperation must be achieved through international agreements whereby sanctioning mechanisms are very difficult to implement. Here we explore the impact of implementing a financial incentive (FI) mechanism inspired by what the UNFCCC designates as ‘‘Financial Mechanism’’ (FM), whose operating entities were included as an important aspect of the PA (see Note S1.2 for detailed discussions).[1,11,12] According to the FM in the PA, developed country parties shall provide financial resources to assist developing country parties, and in our experimental design, subjects with high endowment can incentivize subjects with low endowment to contribute to ER through an FI, which mimics the FM in the PA. A natural question is whether FIs can help to promote ER

Results

Discussion

Conclusion