Environmental transfers against global warming: a credit-based program

Abstract

This paper investigates the impacts of institutionalising a credit-based transfer program between developing and developed countries. Such a program is expected to become an essence of the Clean Development Mechanism in the Kyoto protocol. The provisions of financial and technological transfers are incorporated simultaneously into a dynamic game model of global stock pollution, where the efficiency in emission abatement is also described as a stock variable. Our numerical simulation indicates that a credit-based transfer program can be more beneficial for a recipient country as well as for a donor country, than a non-credit-based transfer program.global warming; international environmental transfers; clean development mechanism; differential game; open-loop Stackelberg equilibrium; credit-based transfer; Kyoto protocol; dynamic game modelling; global stock pollution; emission abatement; simulation; greenhouse gases.