case study kyoto protocol

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6 Case Study: The Kyoto Protocol on Climate Change

• Published: December 2011
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In the negotiations preceding the adoption of the Kyoto Protocol, the European Union accommodated US demands for softer emission reduction targets and flexibility provisions to win its backing. Yet when the new Bush administration rejected the agreement, the EU took the leadership to bring it in force without US participation. The chapter shows that these responses to US climate policy are well explained by concerns for treaty effectiveness. While accommodating the US in the original negotiations came at a high environmental cost, it would have been more detrimental to lose the largest emitter of greenhouse gases. After the US withdrawal, however, non-hegemonic cooperation was more beneficial than the alternative of abandoning the protocol, particularly because European negotiators hoped for an eventual US return to the Kyoto framework. The perception that the US withdrawal violated norms of equity and appropriate diplomatic conduct additionally hardened the European resolve to rescue Kyoto, despite business concerns about potential competitive disadvantages.

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Environmental and economic effectiveness of the Kyoto Protocol

1 Department of Public Administration, Ewha Womans University, Seoul, Republic of Korea

Katsuya Tanaka

2 Research Centre for Sustainability and Environment, Shiga University, Shiga, Japan

Shunji Matsuoka

3 Graduate School of Asia-Pacific Studies (GSAPS), Waseda University, Tokyo, Japan

Associated Data

All relevant data sources are provided within the manuscript.

This study investigates the environmental and economic impacts of the Kyoto Protocol on Annex I parties through an impact assessment by combining the propensity score matching and the difference-in-difference methods. We establish a country-level panel data set including CO 2 emissions, gross domestic product (GDP), and other socioeconomic data for 1997–2008 and 2005–2008. Based on the impact evaluation, we conduct the simulation predicting the impacts of the Protocol to capture the differences of marginal damage cost of carbon emissions between the actual and counterfactual situations. The results suggest that participating as an Annex I party has a significant positive impact on CO 2 emission reductions, but a negative impact on the GDP of the participants in the long run. The predicted marginal benefit of the Protocol based on the marginal damage cost of carbon emissions shows that the marginal benefit of emission reductions mitigates a limited portion of the GDP loss. Future global climate change frameworks should focus on balancing the impact on economic and environmental performance in order to ensure sustainable development, especially for developing countries that have low capacity to mitigate emissions.

Introduction

The intensification of transboundary environmental issues in the past half century has underscored the need to establish effective international instruments [ 1 , 2 ]. International environmental agreements (IEA) help enhance transnational cooperation, such that global environmental degradation can be addressed [ 1 ]. States can commit to protect the environment by being a part of one or many IEAs [ 3 ].

The rise in the number of IEAs has led to a corresponding increase in the number of studies investigating and evaluating their effectiveness. Scholars have conducted quantitative analyses by applying diverse methodologies and establishing data sets to estimate the impact of IEAs. However, the results obtained in previous studies remain controversial. Proponents insist that an IEA has a significantly positive impact on improving environmental quality [ 4 , 5 ], while opponents consider it an empty promise that involves large expenses for implementation [ 6 – 9 ]. The endemic nature of international policy—for example, many actors, different socioeconomic conditions among parties, analysis, and data sets on this topic—has become limited.

The Kyoto Protocol (hereafter, “Protocol”) is a highly influential IEA affiliated with the United Nations Framework Convention on Climate Change (UNFCCC) regime. This Protocol aims to mitigate greenhouse gas (GHG) emissions. It was adopted in 1997 in Kyoto and came into force in 2005. As of 2016, there are 192 parties to this protocol. The parties consist of 191 states and the European Union (EU) [ 10 ]. In 2016, the Paris Agreement was also adopted under the UNFCCC regime to prepare for the next step in addressing climate change [ 11 ].

According to the main principle of the 1992 UNFCCC, called “common but differentiated responsibilities and respective capabilities,” the Protocol considers differences in emissions, wealth, and capacity for change when allocating obligations toward emission reductions among parties [ 12 ]. Under Annex I of the Protocol, the principal sources of GHG emissions are listed. The list comprises Organization for Economic Cooperation and Development member countries and countries with economies in transition, at the relevant time. Accordingly, a heavier burden of internationally binding targets for emission reductions were imposed on Annex I parties. Moreover, this Protocol introduces three market-based mechanisms—International Emissions Trading, the Clean Development Mechanism (CDM), and Joint Implementation—to help countries successfully achieve their emission reductions targets [ 13 , 14 ]. These flexible market mechanisms support Annex I parties in meeting their obligations toward reductions in a more cost-effective manner [ 15 ].

Previous studies have mostly analyzed the impacts of IEAs in terms of environmental aspects alone. While several studies indicate that carbon dioxide (CO 2 ) emissions have decreased under the Protocol [ 8 , 4 , 5 , 16 – 18 ], the environmental impact of the Protocol is still being disputed. Previous studies on the impact of the Protocol offer mixed results; most have failed to distinguish its impacts in terms of CO 2 emission reductions from those of other socioeconomic effects. A suitable model is therefore needed to investigate the impact of the Protocol alone. For example, studies by Aakvik and Tjøtta [ 19 ], Kim et al. [ 20 ], and Vollenweider [ 21 ] demonstrate that advanced microeconometric approaches can estimate the impact of the Protocol on emissions reductions while discarding the effects of other factors on emissions. It is, thus, relevant to carry out an impact assessment in order to investigate the Protocol’s effectiveness in improving the environmental quality of Annex I countries.

Another important aspect of analyzing the Protocol from the perspective of sustainable development is its impact on economic performance, since various kinds of economic activity produce GHGs. Annex I parties with binding obligations for emission reductions may suffer a degree of economic decline because of technical difficulties and economic constraints [ 22 ]. Research by Nordhaus and Boyer [ 9 ] find that the policy is highly cost-ineffective. Some insist that industrialized countries suffer economic losses because of carbon abatement; however, as the Protocol has tried to reduce the cost of emission reductions by adopting market-based mechanisms, it is expected to achieve its aim of reducing emissions more efficiently by mitigating the associated costs [ 7 , 23 , 24 ].

For example, the CDM, which is introduced in Article 12 of the Protocol, may be a contributing factor. Under the CDM, Annex I parties can achieve a part of their emission reductions obligations of the Protocol by purchasing Certified Emission Reductions (CER) resulting from CDM projects in developing countries [ 10 , 25 ]. In this case, buying CER can easily substitute their commitment toward meeting obligations within their own country, as comparatively lower capacity is effective in mitigating emissions in developing countries.

To summarize, it is difficult to grasp their net impact considering that various external factors, such as the socioeconomic conditions unique to each country, can influence the outcomes of the Protocol in the respective countries. Furthermore, although some previous studies have considered the economic consequences of the Protocol, none have analyzed its environmental and economic impacts under the same analytical framework. It is crucial to evaluate both the environmental and the economic impact to establish the most effective international environmental policies for achieving sustainable development.

Given this context, this study is the first to empirically investigate both the environmental and economic impacts of the Protocol on Annex I parties using the same microeconometric modeling approach. First, it investigates the Protocol’s environmental impact on CO 2 emission reductions, particularly the contribution of Annex I parties toward these. Second, it estimates the net differences in the economic performance of each country before and after agreeing to participate in the Protocol as an Annex 1 party. Combining the propensity score matching (PSM) and difference-in-difference (DID) methods, this study conducts an impact assessment to accomplish its aim. This approach helps control for any unobserved internal and external effects. Thus, the environmental and economic impacts of the non-Annex I and the Annex I countries can be compared accurately. This process facilitates a deeper understanding of the impact of the Protocol.

Materials and methods

Matched did model.

This study carries out an impact assessment by combining the PSM and DID methods. It is possible to obtain unbiased and consistent estimates that control for both the selection bias and the problem of unobserved heterogeneity by using this model [ 26 ]. As this technique helps evaluate the impact of a certain treatment or program, it is gaining attention in various fields such as medical science, economics, and political science [ 27 – 29 ]. Nevertheless, it has seldom been applied to test the effectiveness of IEAs, with few exceptions. Analyses by Aakvik and Tjøtta [ 19 ], Grunewald & Martinez-Zarzoso [ 17 ], Kim et al. [ 20 , 30 , 31 ], and Vollenweider [ 21 ], for instance, have deployed the method.

The empirical procedure is as follows: First, the PSM method is applied to construct a statistical comparison group to measure the probability of participating in a program with observed characteristics, since unobserved macroeconomic changes or unknown socioeconomic characteristics between participants and non-participants could cause selection bias [ 26 ]. The propensity score, P ^ , can be estimated based on observed characteristics of the research objects X : P ^ ( X | T = 1 ) = P ^ ( X ) . The matched observations derived by the PSM method can be used for the matched DID.

The variables, X , represent the observed characteristics of Annex I and non-Annex I parties in this study. Each country’s gross domestic product (GDP), population, CO 2 levels, and factors of production—capital, labor, and human capital—are included in the calculation of the propensity score. These variables are deemed to reflect the overall socioeconomic and environmental conditions in each country.

This study applies the DID matching algorithm to match participants to non-participants. To match participants with non-participants based on the propensity score, different matching algorithms can be used: nearest-neighbor matching, caliper or radius matching, stratification or interval matching, kernel and local linear matching, and DID matching. It uses country-level panel data that consists of observations in both the treatment and control group for time periods before and after the program. Thus, the DID matching algorithm can match the participant (treated) and non-participant (control) on the pre-program status, X . This matching algorithm assumes that the unobserved factors affecting participation are constant over time. Thus, the weights calculated by the propensity score for the base year are applied to the matched non-participants [ 26 ]. Country-level panel data on both Annex I and non-Annex I parties are available across the two time periods (i.e., before and after Protocol participation) to control for the selection of unobserved characteristics:

where Y i T is unintended environmental and economic impacts of the Protocol on Annex I countries, and Y i C is that of non-Annex I parties before and after participation. ω ( i , j ) is calculated propensity scores of participating ( i ) and nonparticipating countries ( j ).

It is crucial to compare the actual and counterfactual outcomes to accurately estimate the program’s effect. This can prove to be a complex task in social science research, particularly because the same observations cannot be found before and after (with and without) a program, simultaneously. This study can establish the counterfactuals quantitatively and eliminate the bias using the differencing process [ 26 ]. The fixed regression equation model compares the observed changes in the levels of CO 2 emissions and GDP for Annex I and non-Annex I parties. The coefficient of Δ T it (i.e., ∅) from the program dummy variable, which is 1 if a country is affiliated to Annex I parties and captures the impact of the Protocol as follows:

where Y it is the environmental or economic performance indicator of country i in year t , T it denotes the program impact, reflecting whether the country participates as an Annex I party. Other control variables are included in variable X it ; η i and ε it indicate the unobserved time-invariant individual heterogeneity and other unobserved characteristics, respectively. Finally, Δ indicates the first difference. This analysis process controls not only for the time-varying covariates, but also for the unobserved time-invariant individual heterogeneity [ 26 , 32 ].

Model specifications

Two models are proposed to investigate the consequences of the Protocol. The environmental as well as the economic equations contain a program impact variable—an Annex I dummy—to capture the impacts of the Protocol as an Annex I party. This variable takes 1 if a country is an Annex I party and 0 otherwise.

To investigate the environmental impact of the Protocol, this study uses the logarithmic variables of CO 2 emissions as the independent variable, as in the following equation:

where Ln ( GDP ), the logarithmic variable of GDP, estimates the relationship between CO 2 emissions and GDP. This study considers global and domestic energy, as well as commodity market volatility. The Oil variable is the national real oil price with regard to turbulence in the global energy market. The Recession dummy is added to reflect global market volatility, which is 1 if the sample participated in Annex I parties in the year of recession. This study regards 2008 as the year of recession, since the global financial crisis started from the summer of 2008. To reflect domestic energy policy, the EUSE and ETS dummy variables are included, which represent the amount of energy use and the status of participating in the emissions trading system (ETS), respectively. The ETS dummy variable takes 1 if a nation adopted the ETS in the year studied. Further, an error term ε is included.

Next, the economic impact model evaluates the impact of the Protocol on the GDP of each country:

This model is based on the Cobb–Douglas GDP production function which include the logarithmic variables of capital, labor, and human capital. Similar to the environmental impact model, this model includes the Protocol dummy for the program impact variable, Oil and EUSE variables, and ETS and Recession dummies to reflect global and domestic energy, as well as commodity market volatility.

These models are treated as a simultaneous equation system, namely, a two-stage least squares (2SLS) system, since the GDP variable in the CO 2 equation is endogenous (i.e., correlated) if the second equation holds [ 32 , 33 ]. The Hausman test for the first equation rejects the null hypothesis, that is, there is no correlation between GDP and the disturbance. Ln ( GDP ) is estimated by using the Anne x I dummy and other relevant variables, and then the first equation is estimated by using the fitted value of the second equation, L n ( G D ^ P ) , as well as the Ann ex I dummy and other variables:

This procedure provides consistent estimates when the appropriate instruments are used [ 33 ]. The empirical models are estimated by using Stata.

Selection of evaluation periods

The appropriate selection of the base and target year of the program is a crucial step in setting reliable counterfactual situations [ 26 ]. The base year is usually recognized as the year in which nations declare their commitment to the environment by officially signing a particular IEA. The Protocol has a relatively short history when compared with other IEAs. It was adopted in 1997 and was effective from 2005 onward. This study designates both the adoption year and the year of entry into force in order to observe the gap in the impact of the Protocol between the data adoption and entry into force.

Several scholars have used the target year for emission reductions as stipulated in the Protocol [ 19 , 30 , 34 ]. Previous literatures have estimated the impact of the Protocol by using data from before the end of the commitment period (e.g., analyses by Grunewald and Martínez-Zarzoso [ 4 ], Kim et al. [ 30 ], Kumazawa and Callaghan [ 8 ], and UNFCCC [ 5 ]). This study has set the target year as 2008 to focus on the impact of the Protocol before the commitment period. The target year was set as 2008, which is the start year of the first commitment period to secure a sufficient data for the impact evaluation.

To examine the environmental and economic effectiveness of the Kyoto Protocol, this study uses country-level panel data of 209 countries from 1997–2008. Based on this database, we conduct DID matching. Regarding the dependent variables of CO 2 emissions and GDP, this study accepts data from the World Development Indicators (WDI) by the World Bank as reliable data [ 35 ], although various sources provide country-level data on CO 2 emissions and GDP.

The empirical models contain the program impact variable to determine the effectiveness of the Protocol based on whether the parties belong to Annex I. Information on each country’s participation in the Protocol is extracted from the UNFCCC [ 10 ], the official site of the Secretariat of the Kyoto Protocol. The program effect variables of the models determine whether the parties belong to Annex I by allocating a value of 1 if the country is affiliated to Annex I in the focal year. For GDP function variables, this study uses gross fixed capital formation, the labor force participation rate (percentage of the population aged between 15 and 64 years), and adjusted savings–education expenditure (current United States Dollar (USD)). GDP and capital data are expressed in constant USD from 2000, while education expenditure is in current USD because of data limitations.

The Oil variables are based on annual data on the price of crude oil from the EIA [ 36 ], while the official exchange rate and consumer price index (CPI) of each country have been taken from the WDI [ 35 ]. We calculate the national real oil price with the price of crude oil, official exchange rate (Local Currency Unit (LCU) per USD, period average), and CPI, based on the following equation from previous studies: National real oil price for each country = [(Brent crude oil price (USD per barrel)) (Official exchange rate (LCU per USD, period average))] / (CPI (2010 = 100)) [ 37 – 39 ]. The ETS variable, which indicates the degree of domestic energy policy, is established based on the International Carbon Action Partnership (ICAP) Status Report 2015 [ 37 , 39 , 40 ]. This is also a dummy variable, which takes a value of 1, if we observe the status of adoption of the ETS in a certain year. The EUSE variable is from data on GDP per unit of energy used (constant at the 2011 purchasing power parity (PPP) in terms of $ per kg of oil equivalent) in the WDI [ 35 ]. Table 1 presents descriptive statistics of the relevant variables after the matching process. Using the matching process, the database is separated into two datasets, for 1997–2008 and 2005–2008.

Impact on CO 2 emissions

In Table 2 , the columns indicating environmental impact present the results of the impacts of Annex I parties on CO 2 emissions. The R 2 values are 0.870 for the 1997 base-year model and 0.749 for the 2005 base-year model.

***, **, and * denote the 1%, 5%, and 10% significance levels, respectively.

After eliminating the unmatched samples and missing values, 149 samples are used for the 1997 base-year model (two time pairs of 81 nations), and 99 samples are used for the 2005 base-year models (two time pairs of 52 nations).

First, the program impact variables—the Annex I dummies—show a negative sign in all models; however, only the coefficient of the 2005 base-year model exhibits statistical significance at the 1% level. These results indicate that, between 2005 and 2008, Annex I parties accomplished greater CO 2 emission reductions than non-Annex I parties. These highly significant results suggest that it takes time for the Protocol to reduce the emissions of Annex I parties. It also indicates that imposing emission reductions targets has a beneficial impact on reducing CO 2 emissions in the long run.

The above positive result of the 2005 base-year model is in accordance with previous discussions on the real impact of the Protocol [ 5 ], as well as previous studies that have showed that participating in IEAs has a positive impact on emission reductions [ 34 , 41 ]. These works have shown that participating in international governance could efficiently mitigate and reduce pollution. This study can overcome the limitations of previous studies by controlling for both pre-program and post-program and treated-group and control group differences. Therefore, the estimated impacts of the Protocol have become more reliable and clearer.

Second, the GDP variables, namely, the instrumental variables, used to solve the problem of endogenous variables are positive and statistically significant for all models. The coefficients for the 1997 and 2005 base-year models are statistically significant, confirming that CO 2 emissions increase with economic development. The empirical results imply that a 1% increase in GDP triggers an increase in CO 2 emissions by around 1%. This result shows that economic growth is positively related with CO 2 emissions. CO 2 emissions are reported to increase along with economic development primarily because of the increase in the use of fossil fuel for industrial development [ 32 – 44 ]. As an extension of the previous studies, significant evidence is found herein to support a monotonic relationship between GDP and CO 2 emissions.

This is in line with the result of the Recession dummy variable, which shows a significant and negative coefficient in the 1997 base-year model. Regarding the result of the Recession dummy, we expect an inverse relation in line with the result of the GDP variable because the Recession dummy reflects economic slowdown. In other words, there is a possibility that the economic depression may affect CO 2 emission reductions.

Finally, the EUSE variable, the control variable shows significant coefficients in the 2005 base-year models. However, these results of the control variables are not only limited but also restricted, and thus further studies are needed to confirm the impact of those factors on CO 2 emission reductions. The other control variables—national real oil price and status of participating in the ETS—show no statistically significant differences in CO 2 emission reductions between the base and target years.

Impact on GDP

The three columns from the left in Table 2 report the economic impacts of the Protocol. The R 2 values (0.985 for the 1997 base-year model and 0.917 for the 2005 base-year model) demonstrate that all three models can explain more than 90% of the variation in GDP.

First, the Annex I dummy variable is highly significant with a negative sign only in the 2005 model. This finding shows that the negative impact of being an Annex I party on economic performance takes effect after having participated for a certain period. The economic performance of Annex I parties deteriorated by approximately 7% in 2005–2008. This means that Annex I parties, which are bound by reduction obligations, recorded lower economic growth than other comparable non-Annex I countries.

These findings concur with the empirical findings of Nordhaus and Boyer [ 9 ], namely, that an economic burden is placed on Annex I parties. These authors argue that, although most Annex I parties are developed countries, economic growth may be curtailed because of the socioeconomic costs, investments, and implementation of corresponding policies for emission reductions. Therefore, the economic outputs of Annex I parties are reduced because of the need to reduce energy, thus leading to an increase in production costs.

Besides the costs of emission reductions, this negative economic impact can be explained by theoretical evidence. Institutional factors, such as enforcement and implementation procedures or sanctions, can influence the impacts of the Protocol. Some scholars insist that the legalization and flexibility in the institutional mechanisms of IEAs can either improve or worsen their effectiveness [ 31 , 45 – 47 ]. Legally binding environmental treaties or agreements are likely to have a positive impact on improving environmental performance. Further, flexibility mechanisms can facilitate rapid adjustments to new circumstances in the decision-making and implementation process.

Table 2 indicates that, while the coefficients of Capital in the 1997 base-year models and Human capital variables in all models are positive and statistically robust, those of Labor are not statistically significant in this analysis. With regard to the control variables for global and domestic energy and commodity market volatility, the Oil variable and EUSE dummy variables present no significant impact on the GDP of each country, similar to the environmental impact models. However, a negative impact of participating in the ETS and recession is observed in the 1997 base-year analysis. Hence, operating the ETS causes an economic burden. Moreover, economic performance in non-recession years is significantly higher than that of other countries from 1997 to 2008. The Recession dummy variable in the 2005 base-year model has positive signs with 1% significance level; however, it may take time to reflect the impact of recession in national economic performance.

Predicted CO 2 reductions and loss of GDP for Annex I parties

Table 3 provides the simulation results of predicting the impacts of the Protocol. These prediction values based on the 2005 base-year models, which have statistically significant Annex I dummy variables, are calculated for Annex I parties.

The actual measured CO 2 emissions were 26,423 MT in 2008 and 26,061 MT in 2007. The actual measured GDP was USD 35,327 billion in 2008 and USD 35,136 billion in 2007.

The values under the participating and non-participating columns help capture the differences between the actual and counterfactual situations. The CO 2 emissions and GDP values under the participating column are estimated under the assumption that all countries participated as Annex I countries, based on real data for the 2005 base year. Annex I dummy variables take the value of 1. However, the non-participating column represents the assumption that the countries did not participate as Annex I countries. Thus, Annex I dummy variables take the value of 0.

Table 3 indicates that participating as an Annex I party produces a beneficial impact on CO 2 emission reductions. The gap between participating and non-participating countries is 2,995 MT. Thus, if parties were not under the obligation to mitigate CO 2 emissions as Annex I countries were, they would have emitted as much as 14% more CO 2 , as per the 2005 base-year model. In this respect, participating as Annex I parties with reductions obligations significantly affects CO 2 emission reductions. In contrast, being an Annex I country has an adverse impact on economic growth. Approximately 7% of GDP growth—USD 2,273 billion—arises from the non-participating situation. This large gap indicates the considerable economic impacts of participating as Annex I parties.

Next, the economic loss and environmental benefit are directly compared using monetary measures. The total loss of GDP resulting from the participation in Annex 1 is as discussed above and is estimated to be USD 2,273 billion per year. For a direct comparison, the total CO 2 reduction, estimated to be 2,995 MT per year, can be transformed into a monetary value. Tol conducted a meta-analysis of the marginal damage cost of carbon emissions based on the calculated values from 28 published studies. He found that the median and mean of the cost of damage are USD 14 and 93 per ton, respectively [ 48 ]. Using the median value, the total marginal benefit from mitigating CO 2 emissions is approximately USD 42 billion, or approximately 2% of the total GDP loss. If the mean is used instead, the benefit increases to USD 279 billion or approximately 12% of the marginal damage to total GDP. This study applied the marginal damage cost of carbon emissions, which is effective for comparing costs and benefits of CO 2 mitigation within a monetary value. However, this marginal cost does not reflect the entire damage due to CO 2 emissions in the real world.

This study clarifies the impact of mitigating emissions and the economic burden on Annex I parties to the Protocol. The results indicate that although the impact of the Protocol on Annex I parties offsets economic growth; there are positive effects of emission reductions. The Protocol is unable to improve the performance of both the environmental and economic aspects. Moreover, in terms of the marginal benefit of the Protocol based on the marginal damage cost of carbon emission, the marginal benefit of emission reductions mitigates a limited portion of the GDP loss.

Since the adoption of the Kyoto Protocol in 1997, the international community has been paying close attention to its impact on both the environment and the economy [ 4 – 8 , 10 ]. The annual Conference of Parties (COP), which began in 1995 for reviewing the implementation of the UNFCCC, provides a global roadmap for climate change action. Specifically, the 2015 United Nations Climate Change Conference (COP21) laid a strong foundation for a universal agreement on climate change by providing a new direction. The negotiations at COP21 concluded with the decision to embark on a new political course of action, requiring that all countries make an effort to limit the global temperature. This had a significant effect on the Paris Agreement in 2015 [ 10 ]. The international community is considering the effectiveness of the new agreement and addressing ways to enhance and implement each party’s Nationally Determined Contributions (NDCs) by 2020. For example, the international community agreed to pledge 100 billion USD to developing countries, to support mitigation and adaptation costs [ 49 ].

Even though, after COP21, the international community has discussed the rules, financial issues, and technical issues related to the implementation plans for combating climate change after the Paris Agreement enters into force in 2020, major obstacles still persist [ 50 ]. One of the major obstacles to the mitigation of global warming is the failure to reach a consensus in the climate deal. The US withdrew from the Paris Agreement, while China and India are revisiting their emission commitments [ 51 – 55 ]. For instance, discussions about the carbon market and emissions reduction have been postponed to COP26, to be held in 2021, since the non-cooperative countries, such as US, Russia, India, China, Brazil, and Saudi Arabia took the opposite stance [ 56 ]. These non-cooperative countries concern the political dilemma, which includes the cost effectiveness and trade-offs engendered by the Protocol. However, the absence of emission reductions and financial contributions from these countries threaten global climate governance in the future [ 54 ].

Since there have always been questions about the effectiveness of the Protocol in recent years, and the situation worldwide surrounding the global warming issue is still complex, the objectification of its effect may help understand the possibility of sustainable development. In this regard our results have policy implications for the Paris Agreement, a post-Kyoto regime for global climate change, which aims to limit global temperature rise to well below the 2°C target [ 10 , 11 ]. The Paris Agreement adopted in December 2015 at COP 21 opens a new prospect in global climate efforts. This agreement is highly acclaimed, since it brings all parties into a common framework to mitigate CO 2 emissions. First, in the Paris Agreement, each country has to set a goal to reduce emissions through the principle of nationally determined contributions (NDCs); however, no party has legally binding targets for emission reductions. The results indicate that participating as an Annex I party has a beneficial impact on reducing CO 2 emissions. In other words, imposing a duty is an effective way of achieving UNFCCC’s global goal. Although the principle of NDCs that encourages all parties to improve their capacity to address climate change is a significant characteristic of the Paris Agreement, the principle of NDCs itself does not contain any obligations and sanctions. Only having more participants may not lead to greater effectiveness of the Protocol along with the United Nations Convention to Combat Desertification and the Basel Convention. In this respect, there is a concern that the Paris Agreement may remain an ineffective IEA [ 57 ].

Although a legally binding framework for emission reductions benefits the effective implementation of the Protocol, this finding shows a significant negative impact on economic performance among participants. This new course of the Paris Agreement for a sustainable low carbon future includes a requirement wherein both developed and developing countries report their emissions and implementation efforts in five-yearly cycles. To assess individual performance and further actions, global stocktaking will be conducted every five years. Scholars imply that one of the key challenges for the Paris Agreement is to secure multidimensional contributions including NDCs [ 11 , 56 , 58 ]. It is expected that low-income countries that have a low capacity to mitigate emissions may experience difficulties in adjusting to this new climate regime. There is a promising prospect for mitigating the economic burden in developing countries since the marginal cost of emission reduction is relatively lower than that in developed countries. The CDM may be a good example. Some developing countries achieve cost effective emission reductions through the CDM. Therefore, a well-defined global climate change framework, which balances the impacts on economic and environmental performance, could be more effective in those countries.

To secure the effectiveness of the Paris Agreement, the implications of this study mentioned above should be fully considered. To make a voluntary mechanism—NDCs in the Paris Agreement—effective, a systematic monitoring and evaluation mechanism must be established. A practical consideration for developing countries (e.g., a technical assistant) is also a crucial factor for improving the effectiveness of the agreement. The results show the significant negative impact of the Protocol on economic performance. The decline in GDP is thus a critical obstacle, especially for developing countries.

Conclusions

This study investigated the impacts of the Kyoto Protocol on the Annex I parties’ CO 2 emissions and GDP using country-level panel data for the periods 1997–2008 and 2005–2008. This study applied advanced statistical methods to systematically evaluate the effectiveness of the Kyoto Protocol. We combined the PSM and DID methods to consider the potential sample selection bias problem while examining the environmental and economic impacts of the Protocol. Through this approach, we could consider the differences in economic and environmental performance among countries that affect the impact of various IEAs in practice. Based on the challenges identified in this study, further research could adopt the impact evaluation method using broader data pertaining to various IEAs. The impact evaluation approach would provide a fundamental, but important understanding of the impact of IEAs.

The results suggest that the Kyoto Protocol has had significant positive impact on CO 2 emission reductions and a negative impact on the GDP levels of Annex 1 Parties. The model’s predictions to capture the differences between the actual and counterfactual situations provide monetary value of economic loss and environmental benefit of participating in Annex I parties. Even though this study has grasped the overall effectiveness of the Kyoto Protocol with advanced methodologies, further consideration must be given to interpret this result.

First, although the matched DID approach was designed to minimize time-varying covariates and unobserved time-invariant individual heterogeneity, the result provides only the complete change among the Annex 1 countries. Therefore, we should not underestimate the situation in the Annex 1 countries, which consists of various countries. For example, a significant decline in emissions and economic performance from many of the former satellite states of the Soviet Union during the 1990’s had a significant impact on the overall effectiveness of the Protocol. Moreover, the empirical evidence in this study still shows the “trade-off” between reducing carbon emission and economic growth, however, the technological and structural changes in economy have led to increased energy efficiency and mitigated economic burden. This decoupling phenomenon between the CO 2 emission and GDP is already shown in some countries like the U.S. and the U.K. In this regard, further research must consider this aspect and the role of the IEA to stimulate this phenomenon.

It is important that we introspect the meaning of sustainable “development” going forward. This study establishes the conceptual connection between the effectiveness of IEAs and sustainable development and showed the comprehensive understanding about the effectiveness of IEAs in the environmental and the economic performance by measuring GDP. However, we must be careful regarding the assumption that increase in the GDP is a desirable goal for sustainable development. There are limitations to and controversy regarding the use of GDP as a measurement of economic performance, even though GDP is still a very strong and readily available indicator of economic performance. Further analysis should consider the effectiveness of IEAs by diverging from the conventional limitations of measuring the economic performances to provide deeper understanding of sustainable development.

Before concluding the paper, limitations should be mentioned. First, there could be further improvement related to the marginal damage cost. Although the prediction based on the marginal damage cost of carbon emission revealed that the Protocol’s marginal benefit mitigates a limited portion of the GDP loss, there is no consensus among scholars regarding the marginal damage cost of carbon emissions [ 48 , 59 , 60 ]. Moreover, the damage cost does not adequately reflect the damage of emissions in the real society. Thus, additional efforts to quantify this damage cost are crucial for grasping the impact of the Protocol.

Second, the data set and study objectives can be improved to predict the marginal effect of the Protocol more accurately. Since this study focuses on the impact of the Kyoto Protocol before the start of the first commitment period, the periods analyzed were not long enough. The real consequences of international policies manifest only in the long term. Therefore, further research in this area could focus on the impact of other IEAs from a long-term perspective. In follow-up studies with longer observation periods, for example, analysis on the first (2008–2012) and second (2013–2020) commitment period are necessary to prove that IEAs for sustainable development have a positive impact on environmental and economic performance. Analyzing the database with longer time periods may provide ample clues about the decoupling phenomenon between CO 2 emissions and GDP growth.

It should be noted that external shocks on energy demands need to be considered over the long term. For example, the COVID-19 pandemic has resulted in a temporary reduction in global CO 2 emissions. Scholars insist that the pandemic has had a significant positive impact on the decline of global CO 2 emissions, as domestic industrial activity and energy consumption have seen significant change during the crisis [ 61 , 62 ]. Thus, a long term analysis on the effectiveness of an environmental regime should consider the impact of external shocks on factors affecting CO 2 emissions and the economies of the participants.

Next, the level of stringency of the emission reduction target of the parties should be considered. Different emission reduction targets, burdens, and incentives among countries can have a significant impact on regime effectiveness, since the lenient target, in other word low incentive, lead to limited domestic efforts. Even though this study provided important empirical evidence on the overall effectiveness of the Protocol of Annex 1 countries, we did not consider the domestic differences in emission reduction target, burden, and incentive among parties. More analysis focusing on this aspect would be required to investigate the impact of the level of stringency of the emission reduction targets on the IEA effectiveness and to derive effective policy implications toward sustainable development.

Moreover, further research should consider the impact of the Protocol by taking into account the leakage of environmental damage among the non-Annex I parties. Since this study evaluates the overall effectiveness of the Kyoto Protocol among the Annex I countries, it is difficult to consider the consequences of the Protocol on the non-Annex I countries. Increasing emissions and economic growth in other parts of the world is also an important factor to consider in order to deepen our understanding of the effectiveness of the Protocol.

List of acronyms

Funding statement.

This work was funded by the Ewha Womans University Research Grant of 2018 to YK. The funder had no role in study design, data collection and analysis, decision to publish, or preparation of the manuscript.

Data Availability

Age of Humans

A Smithsonian magazine special report

Twelve Years Ago, the Kyoto Protocol Set the Stage for Global Climate Change Policy

The predecessor of today’s Paris Agreement got us one step closer to an international plan of action on climate change

Laura Poppick

It's been 12 years since the Kyoto Protocol—the first international effort to cut back greenhouse gas emissions and slow the pace of human-induced climate change —took effect. On the face of it, the goals of this far-reaching treaty were ambitious: “It bound member states to act in the interests of human safety even in the face of scientific uncertainty,” writes the United Nation’s Framework Convention on Climate Change.

Today many consider the historic agreement, signed in 1997, to be a bit of a bust. Nearly two decades after it was written, world economies continue to rely heavily on fossil fuels, and greenhouse gases in the atmosphere continue to rise to unprecedented levels. But it isn’t that simple to cast judgment on this treaty, which took concrete steps at a time when there was far less scientific evidence for human-made climate change.

In fact, Kyoto helped lay the groundwork for current global efforts to address climate change, says Ralph Winkler , an economist at the University of Bern in Switzerland who studies climate change policy. It’s true that the treaty hasn’t dramatically reduced global carbon dioxide emissions, nor caused any noticeable change in the composition of Earth’s warming atmosphere. But that wasn’t the goal to begin with, Winkler says.

“To expect that the Kyoto Protocol would more or less save the climate would have been a very naive expectation in the first place,” says Winkler.

For one, the terms of the treaty only applied to developed countries , meaning the largest contributors to global emissions over the past 150 years of modern industrialization . So major developing countries including China and India were not involved at the get-go. Neither were significant developed countries that chose not to commit, including the United States—the second largest emitter of carbon dioxide worldwide after China.

The 37 nations that did commit were legally bound to reduce their emissions by a certain amount between 2008 through 2012. If nations didn’t meet their targets in the first so-called commitment period, they would have to more-than make up for it in the second period that lasts from 2013 through 2020—unless they didn’t sign on for the second round, as was the case for Canada, Japan and Russia.

With no significant legal implications, the incentives to comply were not strong. In a study recently published in the Journal of Environmental Economics and Management , Winkler found that 15 of the key countries involved have not demonstrated any real change in behavior as a result of their commitment.

Still, despite lackluster participation and results, the treaty represents an important first step in developing an international action plan, says  Alexander Thompson , a political scientist at Ohio University who studies climate change policy. If it weren’t for the Protocol, we wouldn’t have the level of climate change awareness and international conversations about lowering emissions that we today take for granted.

“The Kyoto process was useful in setting all sorts of standards,” says Thompson, explaining that it created a common language around addressing climate change. “It got everyone on the same page.”

In 2015, the UN Convention on Climate Change landed on the  Paris Agreement , which builds off the intentions of the Kyoto Protocol but with a new approach. This time, developing countries are included, but there are no binding emission-reduction targets that countries must commit to. Instead, it’s up to each individual government to decide what is feasible for them, and up to the international community to hold their governments accountable.

“That’s most of the value in having the international agreement, is having the publicly stated goal around which interest groups and citizens can rally their governments and keep them politically accountable,” says Thompson.

These kinds of multilateral environmental agreements have been effective in the past. In the late 1980s, the  Montreal Protocol  limited the production of ozone-depleting chemicals to help close the ozone hole, which had been steadily expanding due to the release of chemicals found in a wide-array of consumer products. That treaty is today lauded as an environmental success: Almost 30 years later, the ozone layer has largely recovered, says  Paul Mayewski , director of the Climate Change Institute at the University of Maine Orono.

Still, in order for any real progress to be made in climate change policy, Mayewski says the public must remain well informed of climate-related facts. Efforts by the Trump administration to limit federal agencies from communicating climate change data to the public , as well as efforts by congressional Republicans to limit how the EPA can use climate-related data , could threaten this progress, Mayewski says.

“If we hide the information that demonstrates this and allows us to understand how to deal with it and look for opportunities related to it, then we make a big mistake for our economy, our quality of life and everything else,” says Mayewski.

The urgency to take action now is strong. Some places on Earth continue to  warm at remarkable rates , Mayewski says—such as Mexico City, which is not only facing increasing heat and drought but appears to be  sinking unevenly into the ground . In the past five years, the average temperature in  some regions of the Arctic  has increased by as much as 8 degrees F—a faster rate than has ever been observed in recorded history.

“This is a massively fast change,” Mayewski says.

In November, the UN Convention on Climate Change will hold its  23rd annual Convention on Climate Change  to firm up ways for the 131 countries that signed onto the Paris Agreement to stay on task. Under the new administration, it  remains unclear  what the future involvement of the United States government will be. But the hope of the agreement is that everyone sees themselves as working toward a common goal, says Thompson, who was present in Paris as an observer to the agreement.

It’s kind of like standing at the edge of the pool with your friends in the summer, Thompson says: If you think that you’re the only one who will jump in, you’re not going to do it. “But if you feel like you are going to jump together, then you will jump in,” says Thompson. “So that’s how I think about. We’re all going to jump in and do this together.”

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Laura is a freelance writer based in Portland, Maine and a regular contributor to the Science section.

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What Is the Kyoto Protocol?

Understanding the kyoto protocol, kyoto protocol mechanisms.

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The Kyoto Protocol Today

The bottom line.

• Commodities

What Is The Kyoto Protocol? Definition, History, Timeline, and Status

Investopedia / Michela Buttignol

The Kyoto Protocol was an international agreement that aimed to reduce carbon dioxide emissions and the presence of greenhouse gases (GHG) in the atmosphere. The essential tenet of the Kyoto Protocol was that industrialized nations needed to reduce their CO2 emissions. The protocol was adopted in Kyoto, Japan, in 1997, as greenhouse gas emissions threatened climate stability. It was effectively replaced by the Paris Agreement, which went into effect in 2016.

Key Takeaways

• The Kyoto Protocol was an international agreement that called for industrialized nations to reduce their greenhouse gas (GHG) emissions significantly.
• Other accords, like the Doha Amendment, also aimed to compel countries to mobilize against the climate crisis.
• The Paris Climate Agreement of 2015 replaced the Kyoto Protocol and included commitments from all major GHG-emitting countries to reduce their climate-altering pollution.
• In 2020, the U.S. withdrew from the Paris Agreement on the grounds that the mandate was unfair and would hurt the U.S. economy; it rejoined the accord in 2021.

The Kyoto Protocol mandated that industrialized nations cut their greenhouse gas emissions at a time when the threat of global warming was growing rapidly. The Protocol was linked to the United Nations Framework Convention on Climate Change. It was adopted in Kyoto, Japan, on December 11, 1997, and became international law on February 16, 2005.

Countries that ratified the Kyoto Protocol were assigned maximum carbon emission levels for specific periods and participated in carbon credit trading . If a country emitted more than its assigned limit, then it would be penalized by receiving a lower emissions limit in the following period.

Developed, industrialized countries made a promise under the Kyoto Protocol to reduce their annual hydrocarbon emissions by an average of 5.2% by the year 2012. Targets depended on the individual country. As a result, each nation had a different target to meet by that year. Members of the European Union (EU) pledged to cut emissions by 8%, while the U.S. and Canada promised to reduce their emissions by 7% and 6%, respectively, by 2012.

$100 billion

The amount of the Kyoto Protocol fund that was meant to aid developing countries in selecting industrialized processes and technologies that did not emit GHGs.

The Kyoto Protocol established three different mechanisms to enable countries to meet their targeted emissions limits. The three mechanisms were:

• The International Emissions Trading Mechanism : Countries that had excess emission units permitted to them but did not use them could engage in carbon trading and sell these units to countries that were over-target.
• The Clean Development Mechanism: Countries with emissions reduction or limiting commitments could implement reduction projects in developing countries to earn certified credits.
• The Joint Implementation Mechanism: Countries with emissions reduction or limiting commitments could earn emission-reducing units from a project implemented in conjunction with another party.

Responsibilities of Developed vs. Developing Nations

The Kyoto Protocol recognized that developed countries are principally responsible for the high levels of GHG emissions in the atmosphere as a result of more than 150 years of industrial activity. As such, the protocol placed a heavier burden on developed nations compared to less-developed nations.

The Kyoto Protocol mandated that 37 industrialized nations and the EU cut their GHG emissions. Developing nations were asked to comply voluntarily, and more than 100 developing countries, including China and India, were exempted from the Kyoto agreement altogether.

A Particular Function for Developing Countries

The protocol separated countries into two groups: Annex I contained developed nations, and Non-Annex I referred to developing countries. The protocol placed emission limitations on Annex I countries only. Non-Annex I nations participated by investing in projects designed to lower emissions in their countries.

For these projects, developing countries earned carbon credits , which they could trade or sell to developed countries, allowing the developed nations a higher level of maximum carbon emissions for that period. In effect, this function helped the developed countries to continue emitting GHG vigorously.

U.S. Involvement

The U.S., which ratified the original Kyoto Protocol, dropped out of the protocol in 2001. The U.S. believed that the agreement was unfair because it called only for industrialized nations to limit emissions reductions, and it felt that doing so would hurt the U.S. economy.

Additional Kyoto Protocol Changes

Global emissions were still on the rise by 2005, the year the Kyoto Protocol became international law. In fact, there was an increase of about 40% in emissions globally between 1990 and 2009.

The EU was able to exceed its initial target and said it was on track to meet its goals to continue reducing emissions in the future. However, the United States and China, two of the world's biggest emitters, produced enough greenhouse gases to mitigate any of the progress made by other nations that met their targets.

The Doha Amendment Extended Kyoto Protocol to 2020

In December 2012, after the first commitment period of the Protocol ended, parties to the Kyoto Protocol met in Doha, Qatar, to adopt an amendment to the original Kyoto agreement. This so-called Doha Amendment added new emission reduction targets for the second commitment period, 2012–2020, for participating countries.

The Doha Amendment had a short life. In 2015, at the sustainable development summit held in Paris, all UNFCCC participants signed yet another pact, the Paris Climate Agreement , which effectively replaced the Kyoto Protocol.

The Paris Climate Agreement

The Paris Climate Agreement is a landmark environmental pact that was adopted by nearly every nation in 2015 to address climate change and its negative effects. The agreement includes commitments from all major GHG-emitting countries to cut their climate-altering pollution and to strengthen those commitments over time.

A major directive of the deal calls for reducing global GHG emissions to limit the earth's temperature increase in this century to well below 2 degrees Celsius, with an aim for below 1.5-degrees Celsius relative to preindustrial levels. The Paris Agreement also provides a way for developed nations to assist developing nations in their efforts to adapt climate control, and it creates a framework for monitoring and reporting countries’ climate goals transparently .

Every five years, countries engage in the Global Stocktake, which is an assessment of their progress under the Paris Climate Agreement.

In 2016, when the Paris Climate Agreement went into force, the United States was one of the principal drivers of the agreement, and President Obama hailed it as “a tribute to American leadership.”

In the same period, presidentidal candidate Donald Trump criticized the agreement as a bad deal for the American people and pledged to withdraw the country from the agreement if elected. In 2017, then-President Trump announced that the U.S. would withdraw from the Paris Climate Agreement.

The former president did not begin the formal withdrawal process until November 4, 2019. The U.S. formally withdrew from the Paris Climate Agreement on November 4, 2020, the day after the 2020 presidential election, in which Donald Trump lost his reelection bid to Joseph Biden.

On January 20, 2021, his first day in office, President Biden began the process of rejoining the Paris Climate Agreement, which officially took effect on February 19, 2021.

Kyoto Protocol Timeline

Below are some relevant dates relating to the development, implementation, and revisions to the Kyoto Protocol:

• December 11, 1997: The Kyoto Protocol was adopted at the Conference of the Parties in Kyoto, Japan.
• November 14, 1998: 170 governments adopted a two-year plan titled the Buenos Aires Plan of Action to reduce the risk of global climate change.
• March 16, 1998: The Kyoto Protocol becomes open for signatures.
• March 15, 1999: One year after being open for signatures, the Kyoto Protocol had received 84 signatures.
• February 16, 2005: The Kyoto Protocol goes into force.
• December 8, 2012: The Doha Amendment was adopted for a second commitment period.
• March 25, 2013: Afghanistan becomes the 192nd signatory of the Kyoto Protocol. As of August 2023, there remained 192 signatories.
• December 12, 2015: The Paris Agreement was adopted by 196 parties at COP21 in Paris, largely superseding the Kyoto Protocol.
• November 4, 2016: The Paris Agreement went into effect.
• December 31, 2020: After obtaining acceptance by 147 parties and meeting the minimum threshold of acceptance requirement, the Doha Amendment was officially adopted.

What Was the Primary Purpose of the Kyoto Protocol?

The Kyoto Protocol was an agreement among developed nations to reduce carbon dioxide emissions and greenhouse gases in an effort to minimize the impacts of climate change.

Why Didn’t the U.S. Sign the Kyoto Protocol?

The United States backed out of the Kyoto Protocol agreement in 2001 on the basis that it unfairly burdened developed nations. The treaty called only for developed nations to reduce emissions, which the U.S. believed would unfairly stifle its economy.

How Many Countries Signed the Kyoto Protocol?

After becoming a signatory in 2013, Afghanistan became the 192nd and last signatory of the Kyoto Protocol.

Why Was the Kyoto Protocol Created?

The Kyoto Protocol was created in response to concerns surrounding climate change. The treaty was an agreement between developed nations to reduce carbon dioxide emissions and greenhouse gases. The framework implemented the United Nations' target of reducing global warming consequences including a general rise in sea levels, disappearance of some island states, melting of glaciers, and an increase in extreme climate-related events.

The Kyoto Protocol is largely considered a landmark legislative achievement as one of the more prominent international treaties in regards to climate change. Though the treaty has been superseded by the Paris Agreement, the Kyoto Protocol remains an important part of environmental and conservation history.

United Nations Climate Change. " What Is the Kyoto Protocol? "

United Nations Climate Change. " What Is the Paris Agreement? "

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European Commission. " EU Over-Achieved First Kyoto Emissions Target, On Track to Meet 2020 Objective ."

Council on Foreign Relations, World 101. " Who Releases the Most Greenhouse Gases? "

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The White House: Obama Adminstration (Archive). " Statement by the President on the Paris Climate Agreement ."

U.S. Department of State (Archive). " On the U.S. Withdrawal From the Paris Agreement ."

The New York Times. " Presidential Election Results: Biden Wins ."

The New York Times. " The U.S. Left the Paris Climate Pact. Allies and Rivals Are Pressing Ahead ."

U.S. Department of State. " The United States Officially Rejoins the Paris Agreement ."

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Open Access

Peer-reviewed

Research Article

Environmental and economic effectiveness of the Kyoto Protocol

Roles Conceptualization, Data curation, Formal analysis, Funding acquisition, Investigation, Methodology, Project administration, Resources, Software, Supervision, Validation, Visualization, Writing – original draft, Writing – review & editing

* E-mail: [email protected]

Affiliation Department of Public Administration, Ewha Womans University, Seoul, Republic of Korea

Roles Conceptualization, Formal analysis, Methodology, Project administration, Resources, Supervision, Visualization, Writing – review & editing

Affiliation Research Centre for Sustainability and Environment, Shiga University, Shiga, Japan

Roles Conceptualization, Supervision

Affiliation Graduate School of Asia-Pacific Studies (GSAPS), Waseda University, Tokyo, Japan

• Yoomi Kim, 
• Katsuya Tanaka, 
• Shunji Matsuoka

• Published: July 21, 2020
• https://doi.org/10.1371/journal.pone.0236299
• Reader Comments

This study investigates the environmental and economic impacts of the Kyoto Protocol on Annex I parties through an impact assessment by combining the propensity score matching and the difference-in-difference methods. We establish a country-level panel data set including CO 2 emissions, gross domestic product (GDP), and other socioeconomic data for 1997–2008 and 2005–2008. Based on the impact evaluation, we conduct the simulation predicting the impacts of the Protocol to capture the differences of marginal damage cost of carbon emissions between the actual and counterfactual situations. The results suggest that participating as an Annex I party has a significant positive impact on CO 2 emission reductions, but a negative impact on the GDP of the participants in the long run. The predicted marginal benefit of the Protocol based on the marginal damage cost of carbon emissions shows that the marginal benefit of emission reductions mitigates a limited portion of the GDP loss. Future global climate change frameworks should focus on balancing the impact on economic and environmental performance in order to ensure sustainable development, especially for developing countries that have low capacity to mitigate emissions.

Citation: Kim Y, Tanaka K, Matsuoka S (2020) Environmental and economic effectiveness of the Kyoto Protocol. PLoS ONE 15(7): e0236299. https://doi.org/10.1371/journal.pone.0236299

Editor: Stefan Cristian Gherghina, The Bucharest University of Economic Studies, ROMANIA

Received: April 20, 2020; Accepted: July 1, 2020; Published: July 21, 2020

Copyright: © 2020 Kim et al. This is an open access article distributed under the terms of the Creative Commons Attribution License , which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

Data Availability: All relevant data sources are provided within the manuscript.

Funding: This work was funded by the Ewha Womans University Research Grant of 2018 to YK. The funder had no role in study design, data collection and analysis, decision to publish, or preparation of the manuscript.

Competing interests: The authors have declared that no competing interests exist.

List of acronyms: 2SLS, Two-Stage Least Squares; CDM, Clean Development Mechanism; CER, Certified Emission Reductions; CO 2 , Carbon Dioxide; COP, Conference of Parties; CPI, Consumer Price Index; DID, Difference-in-Difference; EKC, Environmental Kuznets Curves; ETS, Emissions Trading System; EU, European Union; GDP, Gross Domestic Product; GHG, Greenhouse Gas; ICAP, International Carbon Action Partnership; IEA, International Environmental Agreement; IV, Instrumental Variables; LCU, Local Currency Unit; MT, Metric Ton; NDCs, Nationally Determined Contributions; ODA, Official Development Assistance; OECD, Organization for Economic Cooperation and Development; PSM, Propensity Score Matching; UNFCCC, United Nations Framework Convention on Climate Change; USD, United States Dollar; WDI, World Development Indicators

Introduction

The intensification of transboundary environmental issues in the past half century has underscored the need to establish effective international instruments [ 1 , 2 ]. International environmental agreements (IEA) help enhance transnational cooperation, such that global environmental degradation can be addressed [ 1 ]. States can commit to protect the environment by being a part of one or many IEAs [ 3 ].

The rise in the number of IEAs has led to a corresponding increase in the number of studies investigating and evaluating their effectiveness. Scholars have conducted quantitative analyses by applying diverse methodologies and establishing data sets to estimate the impact of IEAs. However, the results obtained in previous studies remain controversial. Proponents insist that an IEA has a significantly positive impact on improving environmental quality [ 4 , 5 ], while opponents consider it an empty promise that involves large expenses for implementation [ 6 – 9 ]. The endemic nature of international policy—for example, many actors, different socioeconomic conditions among parties, analysis, and data sets on this topic—has become limited.

The Kyoto Protocol (hereafter, “Protocol”) is a highly influential IEA affiliated with the United Nations Framework Convention on Climate Change (UNFCCC) regime. This Protocol aims to mitigate greenhouse gas (GHG) emissions. It was adopted in 1997 in Kyoto and came into force in 2005. As of 2016, there are 192 parties to this protocol. The parties consist of 191 states and the European Union (EU) [ 10 ]. In 2016, the Paris Agreement was also adopted under the UNFCCC regime to prepare for the next step in addressing climate change [ 11 ].

According to the main principle of the 1992 UNFCCC, called “common but differentiated responsibilities and respective capabilities,” the Protocol considers differences in emissions, wealth, and capacity for change when allocating obligations toward emission reductions among parties [ 12 ]. Under Annex I of the Protocol, the principal sources of GHG emissions are listed. The list comprises Organization for Economic Cooperation and Development member countries and countries with economies in transition, at the relevant time. Accordingly, a heavier burden of internationally binding targets for emission reductions were imposed on Annex I parties. Moreover, this Protocol introduces three market-based mechanisms—International Emissions Trading, the Clean Development Mechanism (CDM), and Joint Implementation—to help countries successfully achieve their emission reductions targets [ 13 , 14 ]. These flexible market mechanisms support Annex I parties in meeting their obligations toward reductions in a more cost-effective manner [ 15 ].

Previous studies have mostly analyzed the impacts of IEAs in terms of environmental aspects alone. While several studies indicate that carbon dioxide (CO 2 ) emissions have decreased under the Protocol [ 8 , 4 , 5 , 16 – 18 ], the environmental impact of the Protocol is still being disputed. Previous studies on the impact of the Protocol offer mixed results; most have failed to distinguish its impacts in terms of CO 2 emission reductions from those of other socioeconomic effects. A suitable model is therefore needed to investigate the impact of the Protocol alone. For example, studies by Aakvik and Tjøtta [ 19 ], Kim et al. [ 20 ], and Vollenweider [ 21 ] demonstrate that advanced microeconometric approaches can estimate the impact of the Protocol on emissions reductions while discarding the effects of other factors on emissions. It is, thus, relevant to carry out an impact assessment in order to investigate the Protocol’s effectiveness in improving the environmental quality of Annex I countries.

Another important aspect of analyzing the Protocol from the perspective of sustainable development is its impact on economic performance, since various kinds of economic activity produce GHGs. Annex I parties with binding obligations for emission reductions may suffer a degree of economic decline because of technical difficulties and economic constraints [ 22 ]. Research by Nordhaus and Boyer [ 9 ] find that the policy is highly cost-ineffective. Some insist that industrialized countries suffer economic losses because of carbon abatement; however, as the Protocol has tried to reduce the cost of emission reductions by adopting market-based mechanisms, it is expected to achieve its aim of reducing emissions more efficiently by mitigating the associated costs [ 7 , 23 , 24 ].

For example, the CDM, which is introduced in Article 12 of the Protocol, may be a contributing factor. Under the CDM, Annex I parties can achieve a part of their emission reductions obligations of the Protocol by purchasing Certified Emission Reductions (CER) resulting from CDM projects in developing countries [ 10 , 25 ]. In this case, buying CER can easily substitute their commitment toward meeting obligations within their own country, as comparatively lower capacity is effective in mitigating emissions in developing countries.

To summarize, it is difficult to grasp their net impact considering that various external factors, such as the socioeconomic conditions unique to each country, can influence the outcomes of the Protocol in the respective countries. Furthermore, although some previous studies have considered the economic consequences of the Protocol, none have analyzed its environmental and economic impacts under the same analytical framework. It is crucial to evaluate both the environmental and the economic impact to establish the most effective international environmental policies for achieving sustainable development.

Given this context, this study is the first to empirically investigate both the environmental and economic impacts of the Protocol on Annex I parties using the same microeconometric modeling approach. First, it investigates the Protocol’s environmental impact on CO 2 emission reductions, particularly the contribution of Annex I parties toward these. Second, it estimates the net differences in the economic performance of each country before and after agreeing to participate in the Protocol as an Annex 1 party. Combining the propensity score matching (PSM) and difference-in-difference (DID) methods, this study conducts an impact assessment to accomplish its aim. This approach helps control for any unobserved internal and external effects. Thus, the environmental and economic impacts of the non-Annex I and the Annex I countries can be compared accurately. This process facilitates a deeper understanding of the impact of the Protocol.

Materials and methods

Matched did model.

This study carries out an impact assessment by combining the PSM and DID methods. It is possible to obtain unbiased and consistent estimates that control for both the selection bias and the problem of unobserved heterogeneity by using this model [ 26 ]. As this technique helps evaluate the impact of a certain treatment or program, it is gaining attention in various fields such as medical science, economics, and political science [ 27 – 29 ]. Nevertheless, it has seldom been applied to test the effectiveness of IEAs, with few exceptions. Analyses by Aakvik and Tjøtta [ 19 ], Grunewald & Martinez-Zarzoso [ 17 ], Kim et al. [ 20 , 30 , 31 ], and Vollenweider [ 21 ], for instance, have deployed the method.

The variables, X , represent the observed characteristics of Annex I and non-Annex I parties in this study. Each country’s gross domestic product (GDP), population, CO 2 levels, and factors of production—capital, labor, and human capital—are included in the calculation of the propensity score. These variables are deemed to reflect the overall socioeconomic and environmental conditions in each country.

Model specifications

Two models are proposed to investigate the consequences of the Protocol. The environmental as well as the economic equations contain a program impact variable—an Annex I dummy—to capture the impacts of the Protocol as an Annex I party. This variable takes 1 if a country is an Annex I party and 0 otherwise.

This procedure provides consistent estimates when the appropriate instruments are used [ 33 ]. The empirical models are estimated by using Stata.

Selection of evaluation periods

The appropriate selection of the base and target year of the program is a crucial step in setting reliable counterfactual situations [ 26 ]. The base year is usually recognized as the year in which nations declare their commitment to the environment by officially signing a particular IEA. The Protocol has a relatively short history when compared with other IEAs. It was adopted in 1997 and was effective from 2005 onward. This study designates both the adoption year and the year of entry into force in order to observe the gap in the impact of the Protocol between the data adoption and entry into force.

Several scholars have used the target year for emission reductions as stipulated in the Protocol [ 19 , 30 , 34 ]. Previous literatures have estimated the impact of the Protocol by using data from before the end of the commitment period (e.g., analyses by Grunewald and Martínez-Zarzoso [ 4 ], Kim et al. [ 30 ], Kumazawa and Callaghan [ 8 ], and UNFCCC [ 5 ]). This study has set the target year as 2008 to focus on the impact of the Protocol before the commitment period. The target year was set as 2008, which is the start year of the first commitment period to secure a sufficient data for the impact evaluation.

To examine the environmental and economic effectiveness of the Kyoto Protocol, this study uses country-level panel data of 209 countries from 1997–2008. Based on this database, we conduct DID matching. Regarding the dependent variables of CO 2 emissions and GDP, this study accepts data from the World Development Indicators (WDI) by the World Bank as reliable data [ 35 ], although various sources provide country-level data on CO 2 emissions and GDP.

The empirical models contain the program impact variable to determine the effectiveness of the Protocol based on whether the parties belong to Annex I. Information on each country’s participation in the Protocol is extracted from the UNFCCC [ 10 ], the official site of the Secretariat of the Kyoto Protocol. The program effect variables of the models determine whether the parties belong to Annex I by allocating a value of 1 if the country is affiliated to Annex I in the focal year. For GDP function variables, this study uses gross fixed capital formation, the labor force participation rate (percentage of the population aged between 15 and 64 years), and adjusted savings–education expenditure (current United States Dollar (USD)). GDP and capital data are expressed in constant USD from 2000, while education expenditure is in current USD because of data limitations.

The Oil variables are based on annual data on the price of crude oil from the EIA [ 36 ], while the official exchange rate and consumer price index (CPI) of each country have been taken from the WDI [ 35 ]. We calculate the national real oil price with the price of crude oil, official exchange rate (Local Currency Unit (LCU) per USD, period average), and CPI, based on the following equation from previous studies: National real oil price for each country = [(Brent crude oil price (USD per barrel)) (Official exchange rate (LCU per USD, period average))] / (CPI (2010 = 100)) [ 37 – 39 ]. The ETS variable, which indicates the degree of domestic energy policy, is established based on the International Carbon Action Partnership (ICAP) Status Report 2015 [ 37 , 39 , 40 ]. This is also a dummy variable, which takes a value of 1, if we observe the status of adoption of the ETS in a certain year. The EUSE variable is from data on GDP per unit of energy used (constant at the 2011 purchasing power parity (PPP) in terms of $ per kg of oil equivalent) in the WDI [ 35 ]. Table 1 presents descriptive statistics of the relevant variables after the matching process. Using the matching process, the database is separated into two datasets, for 1997–2008 and 2005–2008.

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https://doi.org/10.1371/journal.pone.0236299.t001

Impact on CO 2 emissions

In Table 2 , the columns indicating environmental impact present the results of the impacts of Annex I parties on CO 2 emissions. The R 2 values are 0.870 for the 1997 base-year model and 0.749 for the 2005 base-year model.

https://doi.org/10.1371/journal.pone.0236299.t002

First, the program impact variables—the Annex I dummies—show a negative sign in all models; however, only the coefficient of the 2005 base-year model exhibits statistical significance at the 1% level. These results indicate that, between 2005 and 2008, Annex I parties accomplished greater CO 2 emission reductions than non-Annex I parties. These highly significant results suggest that it takes time for the Protocol to reduce the emissions of Annex I parties. It also indicates that imposing emission reductions targets has a beneficial impact on reducing CO 2 emissions in the long run.

The above positive result of the 2005 base-year model is in accordance with previous discussions on the real impact of the Protocol [ 5 ], as well as previous studies that have showed that participating in IEAs has a positive impact on emission reductions [ 34 , 41 ]. These works have shown that participating in international governance could efficiently mitigate and reduce pollution. This study can overcome the limitations of previous studies by controlling for both pre-program and post-program and treated-group and control group differences. Therefore, the estimated impacts of the Protocol have become more reliable and clearer.

Second, the GDP variables, namely, the instrumental variables, used to solve the problem of endogenous variables are positive and statistically significant for all models. The coefficients for the 1997 and 2005 base-year models are statistically significant, confirming that CO 2 emissions increase with economic development. The empirical results imply that a 1% increase in GDP triggers an increase in CO 2 emissions by around 1%. This result shows that economic growth is positively related with CO 2 emissions. CO 2 emissions are reported to increase along with economic development primarily because of the increase in the use of fossil fuel for industrial development [ 32 – 44 ]. As an extension of the previous studies, significant evidence is found herein to support a monotonic relationship between GDP and CO 2 emissions.

This is in line with the result of the Recession dummy variable, which shows a significant and negative coefficient in the 1997 base-year model. Regarding the result of the Recession dummy, we expect an inverse relation in line with the result of the GDP variable because the Recession dummy reflects economic slowdown. In other words, there is a possibility that the economic depression may affect CO 2 emission reductions.

Finally, the EUSE variable, the control variable shows significant coefficients in the 2005 base-year models. However, these results of the control variables are not only limited but also restricted, and thus further studies are needed to confirm the impact of those factors on CO 2 emission reductions. The other control variables—national real oil price and status of participating in the ETS—show no statistically significant differences in CO 2 emission reductions between the base and target years.

Impact on GDP

The three columns from the left in Table 2 report the economic impacts of the Protocol. The R 2 values (0.985 for the 1997 base-year model and 0.917 for the 2005 base-year model) demonstrate that all three models can explain more than 90% of the variation in GDP.

First, the Annex I dummy variable is highly significant with a negative sign only in the 2005 model. This finding shows that the negative impact of being an Annex I party on economic performance takes effect after having participated for a certain period. The economic performance of Annex I parties deteriorated by approximately 7% in 2005–2008. This means that Annex I parties, which are bound by reduction obligations, recorded lower economic growth than other comparable non-Annex I countries.

These findings concur with the empirical findings of Nordhaus and Boyer [ 9 ], namely, that an economic burden is placed on Annex I parties. These authors argue that, although most Annex I parties are developed countries, economic growth may be curtailed because of the socioeconomic costs, investments, and implementation of corresponding policies for emission reductions. Therefore, the economic outputs of Annex I parties are reduced because of the need to reduce energy, thus leading to an increase in production costs.

Besides the costs of emission reductions, this negative economic impact can be explained by theoretical evidence. Institutional factors, such as enforcement and implementation procedures or sanctions, can influence the impacts of the Protocol. Some scholars insist that the legalization and flexibility in the institutional mechanisms of IEAs can either improve or worsen their effectiveness [ 31 , 45 – 47 ]. Legally binding environmental treaties or agreements are likely to have a positive impact on improving environmental performance. Further, flexibility mechanisms can facilitate rapid adjustments to new circumstances in the decision-making and implementation process.

Table 2 indicates that, while the coefficients of Capital in the 1997 base-year models and Human capital variables in all models are positive and statistically robust, those of Labor are not statistically significant in this analysis. With regard to the control variables for global and domestic energy and commodity market volatility, the Oil variable and EUSE dummy variables present no significant impact on the GDP of each country, similar to the environmental impact models. However, a negative impact of participating in the ETS and recession is observed in the 1997 base-year analysis. Hence, operating the ETS causes an economic burden. Moreover, economic performance in non-recession years is significantly higher than that of other countries from 1997 to 2008. The Recession dummy variable in the 2005 base-year model has positive signs with 1% significance level; however, it may take time to reflect the impact of recession in national economic performance.

Predicted CO 2 reductions and loss of GDP for Annex I parties

Table 3 provides the simulation results of predicting the impacts of the Protocol. These prediction values based on the 2005 base-year models, which have statistically significant Annex I dummy variables, are calculated for Annex I parties.

https://doi.org/10.1371/journal.pone.0236299.t003

The values under the participating and non-participating columns help capture the differences between the actual and counterfactual situations. The CO 2 emissions and GDP values under the participating column are estimated under the assumption that all countries participated as Annex I countries, based on real data for the 2005 base year. Annex I dummy variables take the value of 1. However, the non-participating column represents the assumption that the countries did not participate as Annex I countries. Thus, Annex I dummy variables take the value of 0.

Table 3 indicates that participating as an Annex I party produces a beneficial impact on CO 2 emission reductions. The gap between participating and non-participating countries is 2,995 MT. Thus, if parties were not under the obligation to mitigate CO 2 emissions as Annex I countries were, they would have emitted as much as 14% more CO 2 , as per the 2005 base-year model. In this respect, participating as Annex I parties with reductions obligations significantly affects CO 2 emission reductions. In contrast, being an Annex I country has an adverse impact on economic growth. Approximately 7% of GDP growth—USD 2,273 billion—arises from the non-participating situation. This large gap indicates the considerable economic impacts of participating as Annex I parties.

Next, the economic loss and environmental benefit are directly compared using monetary measures. The total loss of GDP resulting from the participation in Annex 1 is as discussed above and is estimated to be USD 2,273 billion per year. For a direct comparison, the total CO 2 reduction, estimated to be 2,995 MT per year, can be transformed into a monetary value. Tol conducted a meta-analysis of the marginal damage cost of carbon emissions based on the calculated values from 28 published studies. He found that the median and mean of the cost of damage are USD 14 and 93 per ton, respectively [ 48 ]. Using the median value, the total marginal benefit from mitigating CO 2 emissions is approximately USD 42 billion, or approximately 2% of the total GDP loss. If the mean is used instead, the benefit increases to USD 279 billion or approximately 12% of the marginal damage to total GDP. This study applied the marginal damage cost of carbon emissions, which is effective for comparing costs and benefits of CO 2 mitigation within a monetary value. However, this marginal cost does not reflect the entire damage due to CO 2 emissions in the real world.

This study clarifies the impact of mitigating emissions and the economic burden on Annex I parties to the Protocol. The results indicate that although the impact of the Protocol on Annex I parties offsets economic growth; there are positive effects of emission reductions. The Protocol is unable to improve the performance of both the environmental and economic aspects. Moreover, in terms of the marginal benefit of the Protocol based on the marginal damage cost of carbon emission, the marginal benefit of emission reductions mitigates a limited portion of the GDP loss.

Since the adoption of the Kyoto Protocol in 1997, the international community has been paying close attention to its impact on both the environment and the economy [ 4 – 8 , 10 ]. The annual Conference of Parties (COP), which began in 1995 for reviewing the implementation of the UNFCCC, provides a global roadmap for climate change action. Specifically, the 2015 United Nations Climate Change Conference (COP21) laid a strong foundation for a universal agreement on climate change by providing a new direction. The negotiations at COP21 concluded with the decision to embark on a new political course of action, requiring that all countries make an effort to limit the global temperature. This had a significant effect on the Paris Agreement in 2015 [ 10 ]. The international community is considering the effectiveness of the new agreement and addressing ways to enhance and implement each party’s Nationally Determined Contributions (NDCs) by 2020. For example, the international community agreed to pledge 100 billion USD to developing countries, to support mitigation and adaptation costs [ 49 ].

Even though, after COP21, the international community has discussed the rules, financial issues, and technical issues related to the implementation plans for combating climate change after the Paris Agreement enters into force in 2020, major obstacles still persist [ 50 ]. One of the major obstacles to the mitigation of global warming is the failure to reach a consensus in the climate deal. The US withdrew from the Paris Agreement, while China and India are revisiting their emission commitments [ 51 – 55 ]. For instance, discussions about the carbon market and emissions reduction have been postponed to COP26, to be held in 2021, since the non-cooperative countries, such as US, Russia, India, China, Brazil, and Saudi Arabia took the opposite stance [ 56 ]. These non-cooperative countries concern the political dilemma, which includes the cost effectiveness and trade-offs engendered by the Protocol. However, the absence of emission reductions and financial contributions from these countries threaten global climate governance in the future [ 54 ].

Since there have always been questions about the effectiveness of the Protocol in recent years, and the situation worldwide surrounding the global warming issue is still complex, the objectification of its effect may help understand the possibility of sustainable development. In this regard our results have policy implications for the Paris Agreement, a post-Kyoto regime for global climate change, which aims to limit global temperature rise to well below the 2°C target [ 10 , 11 ]. The Paris Agreement adopted in December 2015 at COP 21 opens a new prospect in global climate efforts. This agreement is highly acclaimed, since it brings all parties into a common framework to mitigate CO 2 emissions. First, in the Paris Agreement, each country has to set a goal to reduce emissions through the principle of nationally determined contributions (NDCs); however, no party has legally binding targets for emission reductions. The results indicate that participating as an Annex I party has a beneficial impact on reducing CO 2 emissions. In other words, imposing a duty is an effective way of achieving UNFCCC’s global goal. Although the principle of NDCs that encourages all parties to improve their capacity to address climate change is a significant characteristic of the Paris Agreement, the principle of NDCs itself does not contain any obligations and sanctions. Only having more participants may not lead to greater effectiveness of the Protocol along with the United Nations Convention to Combat Desertification and the Basel Convention. In this respect, there is a concern that the Paris Agreement may remain an ineffective IEA [ 57 ].

Although a legally binding framework for emission reductions benefits the effective implementation of the Protocol, this finding shows a significant negative impact on economic performance among participants. This new course of the Paris Agreement for a sustainable low carbon future includes a requirement wherein both developed and developing countries report their emissions and implementation efforts in five-yearly cycles. To assess individual performance and further actions, global stocktaking will be conducted every five years. Scholars imply that one of the key challenges for the Paris Agreement is to secure multidimensional contributions including NDCs [ 11 , 56 , 58 ]. It is expected that low-income countries that have a low capacity to mitigate emissions may experience difficulties in adjusting to this new climate regime. There is a promising prospect for mitigating the economic burden in developing countries since the marginal cost of emission reduction is relatively lower than that in developed countries. The CDM may be a good example. Some developing countries achieve cost effective emission reductions through the CDM. Therefore, a well-defined global climate change framework, which balances the impacts on economic and environmental performance, could be more effective in those countries.

To secure the effectiveness of the Paris Agreement, the implications of this study mentioned above should be fully considered. To make a voluntary mechanism—NDCs in the Paris Agreement—effective, a systematic monitoring and evaluation mechanism must be established. A practical consideration for developing countries (e.g., a technical assistant) is also a crucial factor for improving the effectiveness of the agreement. The results show the significant negative impact of the Protocol on economic performance. The decline in GDP is thus a critical obstacle, especially for developing countries.

Conclusions

This study investigated the impacts of the Kyoto Protocol on the Annex I parties’ CO 2 emissions and GDP using country-level panel data for the periods 1997–2008 and 2005–2008. This study applied advanced statistical methods to systematically evaluate the effectiveness of the Kyoto Protocol. We combined the PSM and DID methods to consider the potential sample selection bias problem while examining the environmental and economic impacts of the Protocol. Through this approach, we could consider the differences in economic and environmental performance among countries that affect the impact of various IEAs in practice. Based on the challenges identified in this study, further research could adopt the impact evaluation method using broader data pertaining to various IEAs. The impact evaluation approach would provide a fundamental, but important understanding of the impact of IEAs.

The results suggest that the Kyoto Protocol has had significant positive impact on CO 2 emission reductions and a negative impact on the GDP levels of Annex 1 Parties. The model’s predictions to capture the differences between the actual and counterfactual situations provide monetary value of economic loss and environmental benefit of participating in Annex I parties. Even though this study has grasped the overall effectiveness of the Kyoto Protocol with advanced methodologies, further consideration must be given to interpret this result.

First, although the matched DID approach was designed to minimize time-varying covariates and unobserved time-invariant individual heterogeneity, the result provides only the complete change among the Annex 1 countries. Therefore, we should not underestimate the situation in the Annex 1 countries, which consists of various countries. For example, a significant decline in emissions and economic performance from many of the former satellite states of the Soviet Union during the 1990’s had a significant impact on the overall effectiveness of the Protocol. Moreover, the empirical evidence in this study still shows the “trade-off” between reducing carbon emission and economic growth, however, the technological and structural changes in economy have led to increased energy efficiency and mitigated economic burden. This decoupling phenomenon between the CO 2 emission and GDP is already shown in some countries like the U.S. and the U.K. In this regard, further research must consider this aspect and the role of the IEA to stimulate this phenomenon.

It is important that we introspect the meaning of sustainable “development” going forward. This study establishes the conceptual connection between the effectiveness of IEAs and sustainable development and showed the comprehensive understanding about the effectiveness of IEAs in the environmental and the economic performance by measuring GDP. However, we must be careful regarding the assumption that increase in the GDP is a desirable goal for sustainable development. There are limitations to and controversy regarding the use of GDP as a measurement of economic performance, even though GDP is still a very strong and readily available indicator of economic performance. Further analysis should consider the effectiveness of IEAs by diverging from the conventional limitations of measuring the economic performances to provide deeper understanding of sustainable development.

Before concluding the paper, limitations should be mentioned. First, there could be further improvement related to the marginal damage cost. Although the prediction based on the marginal damage cost of carbon emission revealed that the Protocol’s marginal benefit mitigates a limited portion of the GDP loss, there is no consensus among scholars regarding the marginal damage cost of carbon emissions [ 48 , 59 , 60 ]. Moreover, the damage cost does not adequately reflect the damage of emissions in the real society. Thus, additional efforts to quantify this damage cost are crucial for grasping the impact of the Protocol.

Second, the data set and study objectives can be improved to predict the marginal effect of the Protocol more accurately. Since this study focuses on the impact of the Kyoto Protocol before the start of the first commitment period, the periods analyzed were not long enough. The real consequences of international policies manifest only in the long term. Therefore, further research in this area could focus on the impact of other IEAs from a long-term perspective. In follow-up studies with longer observation periods, for example, analysis on the first (2008–2012) and second (2013–2020) commitment period are necessary to prove that IEAs for sustainable development have a positive impact on environmental and economic performance. Analyzing the database with longer time periods may provide ample clues about the decoupling phenomenon between CO 2 emissions and GDP growth.

It should be noted that external shocks on energy demands need to be considered over the long term. For example, the COVID-19 pandemic has resulted in a temporary reduction in global CO 2 emissions. Scholars insist that the pandemic has had a significant positive impact on the decline of global CO 2 emissions, as domestic industrial activity and energy consumption have seen significant change during the crisis [ 61 , 62 ]. Thus, a long term analysis on the effectiveness of an environmental regime should consider the impact of external shocks on factors affecting CO 2 emissions and the economies of the participants.

Next, the level of stringency of the emission reduction target of the parties should be considered. Different emission reduction targets, burdens, and incentives among countries can have a significant impact on regime effectiveness, since the lenient target, in other word low incentive, lead to limited domestic efforts. Even though this study provided important empirical evidence on the overall effectiveness of the Protocol of Annex 1 countries, we did not consider the domestic differences in emission reduction target, burden, and incentive among parties. More analysis focusing on this aspect would be required to investigate the impact of the level of stringency of the emission reduction targets on the IEA effectiveness and to derive effective policy implications toward sustainable development.

Moreover, further research should consider the impact of the Protocol by taking into account the leakage of environmental damage among the non-Annex I parties. Since this study evaluates the overall effectiveness of the Kyoto Protocol among the Annex I countries, it is difficult to consider the consequences of the Protocol on the non-Annex I countries. Increasing emissions and economic growth in other parts of the world is also an important factor to consider in order to deepen our understanding of the effectiveness of the Protocol.

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Cass R. Sunstein, Of Montreal and Kyoto: A Tale of Two Protocols , 31 Harv. Envtl. L. Rev . 1 (2007).

Abstract: Over the last thirty years, climate change and depletion of the ozone layer have been widely believed to be the world's largest environmental problems. The two problems have many similarities. Both involve global risks created by diverse nations, and both seem to be best handled through international agreements. In addition, both raise serious issues of intergenerational and international equity. Future generations stand to lose a great deal, whereas the costs of restrictions would be borne in the first instance by the current generation; and while wealthy nations are largely responsible for the current situation, poorer nations are anticipated to be quite vulnerable in the future. But an extraordinarily successful agreement, the Montreal Protocol, has served largely to eliminate the production and use of ozone-depleting chemicals, while the Kyoto Protocol has spurred only modest steps toward stabilizing greenhouse gas emissions. What accounts for the dramatic difference between the two protocols? Part of the explanation lies in the radically different self-interested judgments of the United States; part of the explanation lies in the very different payoff structures of the two agreements. Influenced by the outcome of a purely domestic cost-benefit analysis involving reductions in ozone-depleting chemicals, the United States enthusiastically supported the Montreal Protocol. Influenced by the very different outcome of cost-benefit analyses for reductions in greenhouse gas emissions, the United States aggressively opposed the Kyoto Protocol. An examination of the two protocols suggests that neither agreement fit the simple structure of a prisoner's dilemma, in which a nation gain from an enforceable agreement, gains even more if it is the only nation not to comply while all others do, and lose most if it, and everyone else, pursue their own national self-interest. For the United States, at least, compliance with the Montreal Protocol would have been justified even if no other country had complied; for the United States, and for several other countries, compliance with the Kyoto Protocol would not have been justified even if all other parties had complied. An understanding of the judgments that surround the two protocols indicates that even though moral considerations require the United States to spend a great deal to protect citizens in other nations, and even though such considerations can influence behavior, the nation is unlikely to act in response solely to those considerations. A general implication is that any international agreement to control greenhouse gases is unlikely to be effective unless the United States believes that it has more to gain than to lose. An illuminating wrinkle, also suggestive of the role of domestic self-interest, is that some European nations, above all the United Kingdom, initially contended that ozone depletion was a greatly exaggerated problem while later calling for strong controls on greenhouse gases.

The Paris Agreement: Annotated

Adopted by almost 200 parties at the 2015 UN Climate Change Conference, the Paris Agreement captures international ambitions for cooperative climate action.

The Paris Agreement on Climate was adopted in December 2015 at the twenty-first meeting of the Committee of the Parties (COP21), as part of a continuing international effort to mitigate climate change headed by the United Nations. The agreement was a successor to the Kyoto Protocol of 1997, which set specific targets, financial contributions, and monitoring and enforcement mechanisms to meet them. The Kyoto Protocol was seen by some large developed countries as harmful to their economies, and it raised complaints that other parties weren’t required to make sufficient reductions in emissions. The United States never ratified the treaty, and Canada announced its withdrawal in 2011.

In contrast, the Paris Agreement has been criticized for its lack of both country-specific goals for emission reduction and enforcement mechanisms. Instead it seeks to limit global temperature increase to below 2℃, and achieve zero greenhouse gas emissions at some point between the years 2030 and 2050.

In consideration of Earth Day , below is an annotation of the Introduction of the Agreement, with relevant scholarship covering the populations, economies, and governments affected by climate change. As always, the supporting research is free to read and download. If you see a small red letter J after a hyperlink—that looks like the one below, click it for free access to that content on JSTOR.

The red J indicates free access to JSTOR. 

_____________________________________________

PARIS AGREEMENT

The Parties to this Agreement ,

Being Parties to the United Nations Framework Convention on Climate Change , hereinafter referred to as “the Convention,”

Pursuant to the Durban Platform for Enhanced Action established by decision 1/CP.17 of the Conference of the Parties to the Convention at its seventeenth session,

In pursuit of the objective of the Convention, and being guided by its principles, including the principle of equity and common but differentiated responsibilities and respective capabilities , in the light of different national circumstances ,

Recognizing the need for an effective and progressive response to the urgent threat of climate change on the basis of the best available scientific knowledge,

Also recognizing the specific needs and special circumstances of developing country Parties, especially those that are particularly vulnerable to the adverse effects of climate change, as provided for in the Convention,

Taking full account of the specific needs and special situations of the least developed countries with regard to funding and transfer of technology,

Recognizing that Parties may be affected not only by climate change, but also by the impacts of the measures taken in response to it ,

Emphasizing the intrinsic relationship that climate change actions, responses and impacts have with equitable access to sustainable development and eradication of poverty ,

Recognizing the fundamental priority of safeguarding food security and ending hunger , and the particular vulnerabilities of food production systems to the adverse impacts of climate change ,

Taking into account the imperatives of a just transition of the workforce and the creation of decent work and quality jobs in accordance with nationally defined development priorities,

Acknowledging that climate change is a common concern of humankind, Parties should, when taking action to address climate change, respect, promote and consider their respective obligations on human rights, the right to health , the rights of indigenous peoples , local communities, migrants , children , persons with disabilities and people in vulnerable situations and the right to development, as well as gender equality , empowerment of women and intergenerational equity ,

Recognizing the importance of the conservation and enhancement, as appropriate, of sinks and reservoirs of the greenhouse gases referred to in the Convention,

Noting the importance of ensuring the integrity of all ecosystems, including oceans , and the protection of biodiversity , recognized by some cultures as Mother Earth, and noting the importance for some of the concept of “ climate justice ” when taking action to address climate change,

Affirming the importance of education, training, public awareness, public participation, public access to information and cooperation at all levels on the matters addressed in this Agreement,

Recognizing the importance of the engagements of all levels of government and various actors, in accordance with respective national legislations of Parties, in addressing climate change,

Also recognizing that sustainable lifestyles and sustainable patterns of consumption and production , with developed country Parties taking the lead , play an important role in addressing climate change,

Have agreed as follows :

[The full text of the Paris Agreement can be found at  https://unfccc.int/files/essential_background/convention/ application/pdf/english_paris_agreement.pdf .]

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