We show that U.S. withdrawal from the Kyoto Protocol can be rationalized under political economy considerations. The reason is that U.S. compliance costs exceed low willingness to pay for dealing with global warming in the U.S. The withdrawal had a crucial impact on the implementation design of the protocol prior to its likely ratification. The remaining non-EU Parties to the Kyoto Protocol gained veto bargaining power and, thus, were successful in asserting far-reaching concessions from the EU on sink credits and, in particular, on the tradability of emission rights. Taking these concessions into account, the Kyoto Protocol was essentially reduced to a symbolic treaty that codifies more or less business-as-usual emissions and makes compliance a rather cheap deal.


Climate policy; Political economy; Willingness to pay