Equity and International Agreements for CO2 Containment

It is almost axiomatic that an effective international agreement to limit emissions of ${\mathrm{CO}}_2$ (or other greenhouse gases) will not be undertaken unless the agreement is considered fair by participants. In this paper, our aim is to elucidate some basic concepts regarding equity and burden‐sharing in ${\mathrm{CO}}_2$ limitation agreements. We first examine the consequences of different a priori sharing rules, which have some claim to credibility as so‐called focal points for greenhouse gas negotiations. We find the case for a focal point solution to be limited, because plausible alternatives for focal points lead to widely divergent cost allocations. We offer a synthesis of focal point equity theory and strategic bargaining theory in a principal‐agent framework for international negotiations. We also examine the question of linking ${\mathrm{CO}}_2$ agreement to other international policy issues.