International Environmental Agreements: Doomed to Fail or Destined to Succeed? A Review of the Literature

We survey the economics literature on International Environmental Agreements (IEAs). We classify the extant literature into the following categories: pure IEA games without linkages, which focus on a single externality stemming from global pollution; IEA games with side payments and issue linkages, which consider carrot or stick mechanisms to lure cooperators or punish defectors; political economy models, which examine intra- and inter-governmental issues that affect international negotiations; design issues of IEAs; behavioral factors, which affect the willingness of countries to cooperate; and additional externalities resulting from open economy issues and adaptation, which interact with the global pollution externality and affect the free-riding incentives of countries. Based on this classification of the literature, we attempt to identify conditions under which an international environmental agreement would be sustainable and effective.