Environmental effectiveness and economic consequences of fragmented versus universal regimes: what can we learn from model studies?

Abstract

A post-2012 regime aimed at reducing greenhouse gas (GHG) emissions could develop towards a universal or fragmented regime. The fundamental difference between a universal and a fragmented regime is that the first involves a single comprehensive climate regime in which all countries participate, whereas the second involves either multiple treaties or a single treaty in which not all countries participate. This study assesses the literature on a wide range of different model studies concerning the environmental effectiveness and economic consequences of various universal and fragmented climate regimes.

The most important conclusions (e.g. relative position of regions in terms of costs) are generally consistent across different studies, despite the differences in methodology. We conclude that stabilising GHG concentrations at low levels is more costly with a fragmented regime than with a universal regime, because reduction targets must be achieved by a smaller number of countries or because fragmented treaties may prevent reducing GHGs where it is cheapest to do so.

However, establishing a universal regime will be challenging due to cost differences between regions if emissions are allocated based on specific allocation rules and incentives to free-ride on a universal regime. Even though alternative behaviours such as responsibility, the implementation of transfer schemes or exclusive membership can increase the likelihood of achieving a universal regime, a fragmented regime seems more feasible. Therefore, a transitional fragmented ‘coalition of the willing’ could be established first, which could provide the basis for a larger, universal regime in the long term.