Abstract
Theoretical analyses of international environmental agreements (IEAs) have often employed the concept of self-enforcing agreements to predict the number of parties to such an agreement. The term self-enforcing, however, is a bit misleading. The concept refers to the stability of cooperative agreements, not to enforcing compliance with these agreements once they are in place. In this paper we analyze an IEA game in which parties to an agreement finance an independent monitor who audits the compliance performance of the members of an agreement. These audits reveal instances of noncompliance so they can be sanctioned. We find that costly monitoring of compliance limits the circumstances under which international cooperation to protect the environment is worthwhile, but when IEAs do form they will often involve greater participation than IEAs that do not require costly monitoring. Consequently, costly monitoring of IEAs can produce higher international environmental quality. Moreover, under certain conditions, aggregate welfare is higher when IEAs require costly monitoring.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Arguedas C (2007) To comply or not to comply? Pollution standard setting under costly monitoring and sanctioning. Forthcoming in Environ Resour Econ
Barrett S (1994) Self-Enforcing International Environmental Agreements. Oxf Econ Pap 46(1): 878–894
Barrett S (1997a) The strategy of trade sanctions in international environmental agreements. Resour Energy Econ 19(1): 345–361. doi:10.1016/S0928-7655(97)00016-X
Barrett S (1997b) Heterogeneous international environmental agreements. In: Carraro Carlo(eds) International Environmental Negotiations. Edward Elgar, Cheltenham, UK and Northampton, MA
Barrett S (1998a) On the theory and diplomacy of environmental treaty making. Environ Resour Econ 11(1): 317–333. doi:10.1023/A:1008243528330
Barrett S (1998b) Political economy of the Kyoto protocol. Oxf Rev Econ Policy 14(4): 20–39. doi:10.1093/oxrep/14.4.20
Barrett S (2003) Environment and statecraft: the strategy of environmental treaty-making. Oxford University Press, Oxford and New York
Benedick RE (1998) Ozone diplomacy: new directions in safeguarding the planet, enlarged edition. Harvard University Press, Cambridge, MA and London, England
Botteon M, Carraro C (1998) Strategies for environmental negotiations: issue linkage with heterogeneous countries. In: Hanley N, Folmer H(eds) Game Theory and the Environment. Edward Elgar, Cheltenham, UK and Northampton, MA
Carraro C, Siniscalco D (1993) Strategies for the international protection of the environment. J Public Econ 52(3): 309–328. doi:10.1016/0047-2727(93)90037-T
Carraro C, Botteon M (1997) Burden sharing and coalition stability in environmental negotiations with asymmetric countries. In: Carraro C(eds) International environmental negotiations. Edward Elgar, Cheltenham, UK and Northampton, MA
Carraro C, Siniscalco D (1997) R&D Cooperation and the stability of international environmental agreements. In: Carraro C(eds) International environmental negotiations. Edward Elgar, Cheltenham, UK and Northampton, MA, pp 1–2
Carraro C, Siniscalco D (1998) International environmental agreements: incentives and political economy. Eur Econ Rev 42(3–5): 561–572. doi:10.1016/S0014-2921(97)00118-9
Carraro C, Marchiori C, Oreffice S (2003) Endogenous minimum participation in international environmental treaties. Nota Di Lavaro 113.2003. Fondazione Eni Enrico Mattei Working Paper
Chandler P, Tulkens H (1995) A core-theoretic solution for the design of cooperative agreements on transfrontier pollution. Int Tax Public Finance 2(2): 279–293. doi:10.1007/BF00877502
Chandler P, Tulkens H (1997) The core of an economy with multilateral environmental externalities. Int J Game Theory 26(3): 379–401
Chayes A, Chayes AH (1991) Compliance without enforcement: state behavior under regulatory treaties. Negotiation J 7(1): 311–330. doi:10.1111/j.1571-9979.1991.tb00625.x
D’Aspremont C, Jacquemin A, Gabszewicz JJ, Weymark JA (1983) On the stability of collusive price leadership. Can J Econ 16(1): 17–25. doi:10.2307/134972
Downs GW, Rocke DM, Barsoom PM (1996) Is the good news about compliance good news about cooperation?. Int Organ 50(3): 379–340
Finus M (2004) International cooperation to resolve international pollution problems. Fondazione Eni Enrico Mattei Working Paper
Finus M, Rundshagen B (1998) Toward a positive theory of coalition formation and endogenous instrument choice in global pollution control. Public Choice 96(1–2): 145–186. doi:10.1023/A:1005016623915
Folmer H, van Mouche P, Ragland S (1993) Interconnected games and international environmental problems. Environ Resour Econ 3(4): 313–335. doi:10.1007/BF00418815
Friends of the Earth (2006) Climate treaty one year old, but emissions still rising. Press Release, February 15, 2006 http://www.foe.co.uk/resource/press_releases/climate_treaty_one_year_ol_14022006.html
Heister J, Mohr E, Stahler F, Stoll P-T, Wolfum R (1997) Strategies to enforce compliance with an international CO2 Treaty. Int Environ Aff 9(1): 22–53
Hoel M (1992) International environment conventions: the case of uniform reductions of emissions. Environ Resour Econ 2(2): 141–159
Hoel M, Schneider K (1997) Incentives to participate in an international environmental treaty. Environ Resour Econ 9(2): 153–170
Kaplow L, Shavell S (1994) Accuracy in the determination of liability. J Law Econ 37(1): 1–16. doi:10.1086/467304
Keohane RO (1986) Reciprocity in international relations. Int Organ 40(1): 1–27
Kolstad C (2007) Systematic uncertainty in self-enforcing international environmental agreements. J Environ Econ Manage 53(1): 68–79. doi:10.1016/j.jeem.2006.08.001
Macho-Stadler I, Perez-Castrillo D (2006) Optimal enforcement policy and firm’s emissions and compliance with environmental taxes. J Environ Econ Manage 51(1): 110–131. doi:10.1016/j.jeem.2005.06.001
Oberthur S (1998) The International convention for the regulation of whaling: from over-exploitation to total prohibition. Yearbook of international co-operation on environment and development. Earthscan Publishers, London
Osmani D, Tol RSJ (2007) Toward farsightedly stable international environmental agreements: part one. Hamburg University Working Papers, FNU-140
Polinsky AM, Shavell S (2000) The economic theory of public enforcement of law. J Econ Lit 38(1): 45–76
Simmons BA (1998) Compliance with international agreements. Annu Rev Polit Sci 1(1): 75–93. doi:10.1146/annurev.polisci.1.1.75
Stranlund JK (2007) The regulatory choice of noncompliance in emissions trading programs. Environ Resour Econ 38(1): 99–117. doi:10.1007/s10640-006-9058-3
Swanson T, Johnston S (1999) Global environmental problems and international environmental agreements: the economics of international institution building. Edward Elgar, Cheltenham, UK and Northampton, MA
Ulph A (2004) Stable international environmental agreements with a stock pollutant, uncertainty and learning. J Risk Uncertain 29(1): 53–73. doi:10.1023/B:RISK.0000031445.13939.e4
United Nations Framework Convention on Climate Change (2002) Report on the conference of the parties: VII session. Part Two: actions taken by the conference of the parties. Marrakesh, January 2002
Wagner UJ (2001) The design of stable international environmental agreements: economic theory and political economy. J Econ Surv 15(3): 377–411. doi:10.1111/1467-6419.00143
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
McEvoy, D.M., Stranlund, J.K. Self-enforcing International Environmental Agreements with Costly Monitoring for Compliance. Environ Resource Econ 42, 491–508 (2009). https://doi.org/10.1007/s10640-008-9220-1
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10640-008-9220-1