The Consequences of Unilateral Withdrawals from the Paris Agreement
CESifo, Munich, 2019
CESifo Working Paper No. 7804
![](https://cesifo.org/DocImg/cesifo1_wp7804.jpg?c=1689236969)
International cooperation is at the core of multilateral climate policy. How is its effectiveness harmed by individual countries dropping out of the global mitigation effort? We develop a multi-sector structural trade model with emissions from production and a constant elasticity of fossil fuel supply function to simulate the consequences of unilateral withdrawals from the Paris Agreement. Taking into account both direct and leakage effects, we find that a US withdrawal would eliminate more than a third of the world emissions reduction (31.8% direct effect and 6.4% leakage effect), while a potential Chinese withdrawal lowers the world emission reduction by 24.1% (11.9% direct effect and 12.2% leakage effect). The substantial leakage is primarily driven by technique effects induced by falling international fossil fuel prices.
Energy and Climate Economics
Empirical and Theoretical Methods