Essays on international environmental policy

Abstract

With the growing talk about the need to establish a new framework to deal with international environmental governance, it becomes relevant to shed some light on the interconnected landscape that characterizes environmental policy making. This three-essay dissertation deals with the impact of issue linkage among other factors on the outcome of international environmental policies. In what follows is a brief summary of my dissertation. My first essay, which is entitled "Regulating Man-Made Sedimentation in Riverways", deals with the problem of river bed sedimentation. Such sedimentation negatively affects downstream water delivery and related ecosystem services, and is often the outcome of land erosion caused by agricultural activities along waterways. My essay, investigates one possible market-based remedy to this problem, namely a "spatial" tax on farming activities which decreases as such activities take place farther upstream away from the population center. Also, this tax highlights important `eco-conditionality' aspects and the trade-off that exists between land productivity and soil erosion as farming activities are moved away from the riverbank. My second essay, which is entitled "A Trade-Environment Coalition Came", deals with interconnections between international environmental problems and trade blocks in a multilateral context. I identify several interconnections between international environmental problems and trade issues. Inspired by the work of Barrett (1997), I propose a model that links the problem of forming International Environmental Agreements (IEAs) with International Trade Agreements. I broaden Barrett's model by considering a more general form of trade coalition with trade sanctions in the form of differential tarif treatment instead of complete trade-bans. Such scenario is currently under discussion as a potential post-Kyoto framework after the year 2012. I introduce a linked-game with two stages. The first one is an environmental coalition formation game. The second one is a trade-production game. I compute the stability function of the IEA, and I find that the existence of positive spillovers (public good effect) when IEAs are formed exacerbates free riding incentives and leads to less cooperation. However, since countries are linked via trade, tying-in environmental and trade agreements generates negative spillovers over defectors. I find that these negative spillovers can potentially neutralize the perverse free riding incentives and as such sustain larger environmental coalitions. Finally, my third essay, which is entitled "2 x 2 Axiomatic Bargaining in Trade-Environment Negotiations", deals with issue linkages in the context of bilateral bargaining among nations. I develop a two-issue-two-players axiomatic bargaining model to explore and formalize the concepts of cross-issue concessions and gains. Unlike what has been done so far in the literature, I consider normalized bargaining sets with non-normalized disagreement points. I propose two cornplementary solutions. My first solution describes the case where linked bargaining results in gains on both issues, while the second one describes the case where gains entail partial concessions over the other. I find that the relative size of disagreement points (e.g. trade versus environment) plays an important role in determining under which issue it pays more to have an improvement in negotiation power. I discuss my results in the light of international trade and environmental negotiations, which are often put on the bargaining table in a linked fashion. My results capture important features in international trade-environment negotiations, and help clarify some of the mechanisms behind the outcome of those negotiations.