Working Papers
Agree to Disagree? Making Sense of Vagueness in International Environmental Agreements
No.
1405
Publisher
ERF
Date
October, 2020
Topic
H8. Miscellaneous Issues
E5. Monetary Policy, Central Banking, and the Supply of Money and Credit
Q5. Environmental Economics
This paper explains vagueness in International Environmental Agreements (IEAs) by the heterogeneity in institutional capacities of the negotiating countries. Using a game-theoretic model, where information regarding institutional capacities of potential participants is asymmetric, this paper endogenizes countries’ participation and compliance behavior and explains the level of ambiguity in the IEA design, thus contributing to a more realistic modeling of the treaty formation. It is shown that (1) generally, a country is more likely to ratify a given agreement the larger the number of its ratifiers and the closer its institutional capacity relative to that of the other ratifiers, (2) countries with higher institutional capacities are more likely to ratify precise agreements and to comply to their obligations therein, (3) an increased level of precision in the agreement is likely to increase participation when the distribution of institutional capacities of negotiating countries is skewed to the right or slightly skewed to the left, and (4) in the case where institutional capacities are quite skewed to the left or uniformly distributed, more ambiguity is required to increase participation; this is the case where countries agree to disagree regarding the implementation of the IEA. To test our theoretical predictions, we use a dataset with information on countries’ ratification behavior towards five climate change-related IEAs (Vienna Convention, Montreal Protocol, United Nations Framework Convention on Climate Change, Kyoto Protocol and Paris Agreement) from 1980 to 2018 and construct our own index of agreements precision by focusing on six criteria (specifity of controlled substances and time schedule; numerical mitigation targets; clarity of implementation mechanism; reporting, monitoring and review process; sanctions for noncompliance and incentives for developing countries). Our empirical results show that (i) there exists a band-wagon effect in countries’ ratification decisions, (ii) large institutional differences reduce this bandwagon effect and hence the likelihood of ratification, (iii) vagueness reduces countries’ incentives to ratify, yet, (iv) when countries ratify vague agreements, the latter are likely to be less binding and consequently are associated to more CO2 emissions.
Research Associates
Dina Kassab
Assistant Professor, Faculty of Economics and Political...
Research Fellows
Chahir Zaki
Chaired Professor of Economics, University of Orléans