International Environmental Agreements: Empirical Evidence of a Hidden Success

How effective was the Kyoto protocol? International Environmental Agreements (IEA) have been on the rise over the past four decades; however, thus far their effectiveness is controversial, especially after the alleged failure of the Kyoto protocol. This paper aims to empirically test whether the protocol was successful in reducing greenhouse gas (GHG) emissions of participating parties or not. The main contribution of this paper is that it applies the generalized synthetic control (GSC) method for the first time to test the effectiveness of the Kyoto protocol by comparing the emissions of the industrialized countries with a “No-Kyoto” counter-factual scenario that represents the expected emissions in the absence of the protocol. Results show that the protocol was successful in reducing the emissions of the ratifying countries approximately by 7% below the emissions expected under a “No-Kyoto” scenario.