We have seen in the previous post that from a country’s standpoint, it is more advantageous to do nothing for the climate. And let others work for the betterment of you! We’ve also seen that others, too, playing their little games, will follow suit, each finding their equilibrium to the detriment of the whole planet. In other words, individual rationality leads to collective irrationality.
The Paris Climate Accord
The role of the Paris Accord is to force countries and bring them to the non-dominant strategy {contribute, contribute}. It can be done in the following ways.
First, the Paris Agreement is legally binding. So all the signees have to contribute. But here is the catch: the amount of contribution is determined by the individual country through what is known as Nationally Determined Contributions (NDC).
The second option is to provide incentives. The Paris Agreement provides the framework for financial, technical, and capacity building for those who need it. Financial support is necessary to achieve capacity building, which, in turn, will reduce the cost through a feature known as the learning rate.
The third option is to impose a cost on non-compliance. As part of the Enhanced Transparency Framework (ETF), countries are required to report back in 2024 and show the actions taken. The process can induce a moral cost to the participating countries, inducing the required push to follow up on promises with actions. Moreover, the measurement, reporting, and verification are legally binding.
Paris Agreement: UNFCC
