Common Contracts
1 similar International Environmental Agreements contracts
Constitutional Choice, Fiscal Federalism, and International Environmental AgreementsInternational Environmental Agreements • February 17th, 2011
In this paper, we analyse how the prospect of international negotiations over trans- boundary pollution shape the countries' constitutional and political decisions that precede the bargaining process. We show that the countries' dominant strategy at the constitutional stage is to assign the authority over environmental policy and international negotiations to a subsidiary government in that region where the pol- lution has its origin. Although this decentralization of power is usually accompanied by a federal transfer scheme, there is no ‘fair' cost sharing within each country. The negotiating regions' shares of the national damage falls short of the corresponding shares of costs. This depresses the bargaining incentives of the regional negotiators and leads to a suboptimal international environmental agreement from the perspec- tive of the countries as a whole.
