Accord, the Cancun Agreements, and Beyond: An Economic and Game Theoretical Exploration and Interpretation

The paper is not intended for game theorists – unless they are interested in learning how their theories, and the theory of environmental games as developed in a forthcoming book, are being used for studying the current problem of climate change. Similarly for economists. In general, the presentation is addressed to those who have an interest in seeing how theory can shape policy in the area of climate change. After a summary presentation of the relevant features of the Protocol, followed by the sketching out of an economic model serving as support for the theoretical construct, we consider a series of aspects of it – such as reference emissions, efficiency and stability, competitive trading, desirability of free trade in emissions and the clean development mechanism –, not to defend it and independently of the subsequent developments, but rather as a benchmark for understanding the various issues concerning the climate change problem in general. Then, we extend this exercise to an appraisal of the situation of the world climate regime that is currently prevailing, after the Protocol has entered into force. Finally, we discuss four aspects of the world climate regime that is likely to prevail after the expiry of the Kyoto commitment period 2008-2012. Our message is a non-conventional one, compared with the common wisdom of commentaries of the Kyoto Protocol and of its follow-ups. It is inspired by research on the foundations of international cooperation in general and on climate change in particular.