The Consequences of Unilateral Withdrawals from the Paris Agreement

39 Pages Posted: 14 Oct 2019

See all articles by Mario Larch

Mario Larch

University of Bayreuth - Faculty of Law, Business and Economics; University of Bayreuth; CESifo; Ifo Institute for Economic Research; GEP at the University of Nottingham; Centre d'Etudes Prospectives et d'Info. Internationales (CEPII)

Joschka Wanner

University of Bayreuth

Date Written: 2019

Abstract

We develop a multi-sector structural trade model with emissions from production and a con- stant 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 a third of the world emissions reduction (25.7% direct effect and 7% leakage effect), while a potential Chinese withdrawal lowers the world emission reduction by 19.4% (8.2% direct effect and 11.2% leakage effect). The substantial leakage is primarily driven by technique effects induced by falling international fossil fuel prices.

Keywords: climate change, international trade, carbon leakage, fossil fuel supply

JEL Classification: F140, F180, Q560

Suggested Citation

Larch, Mario and Wanner, Joschka, The Consequences of Unilateral Withdrawals from the Paris Agreement (2019). CESifo Working Paper No. 7804. Available at SSRN: https://ssrn.com/abstract=3467937

Mario Larch (Contact Author)

University of Bayreuth - Faculty of Law, Business and Economics ( email )

Universit├Ątsstra├če 30
Bayreuth, 95447
Germany
0049 / (0) 921 - 55 6240 (Phone)

University of Bayreuth ( email )

Universitatsstr 30
Bayreuth, D-95447
Germany

CESifo ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Ifo Institute for Economic Research ( email )

Poschinger Str. 5
Munich, 01069
Germany

GEP at the University of Nottingham ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

Centre d'Etudes Prospectives et d'Info. Internationales (CEPII) ( email )

9 rue Georges Pitard
Paris Cedex 15, F-75015
France

Joschka Wanner

University of Bayreuth ( email )

Universitatsstr 30
Bayreuth, D-95447
Germany

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