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A Decentralised Approach to Emissions Reductions

Christopher Napoli


This paper evaluates whether border tax adjustments (BTAs) might be a more successful tool for achieving pollution abatement than the current Kyoto Protocol framework, which was recently extended to 2020. To examine this question, the paper does two things. First, it seeks to understand the specific collective action problem plaguing pollution abatement by employing Elinor Olstrom’s framework for disaggregating common goods. Second, the paper matches the disaggregated common good with both the BTA and Kyoto Protocol governance structures. The matching exercise builds on research that suggests for a regime tasked with commons governance to function, there must be an appropriate fit between its institutional structure and the specific collective action problem it seeks to overcome. The paper’s conclusions are twofold. First, Kyoto is failing because its structure is ill-equipped to combat the specific collective action problem facing pollution abatement, as defined by the disaggregated nature of the common good produced. Second, a BTA structure would circumvent the problems inhibiting Kyoto’s functionality by increasing the incentives countries have to contribute to pollution abatement, and decreasing the options countries have for free riding. Given this, BTAs may offer an effective alternative for achieving global emissions reductions.


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