ABSTRACT
In the context of international environmental agreements, joint implementation (JI) involves a bilateral deal, or even a multilateral one, in which countries with high costs of pollution abatement or environmental conservation invest in abatement or conservation in a country with lower costs, and receive credit for the resulting reduction in emissions or increase in conservation. While JI is potentially applicable to any environmental objective, it is generally applied in contexts where one of the partners in the deal has a commitment — which could be legal or self-imposed — to reduce pollution emissions. A constraint on the trade is that emission reductions in the low-cost country, the ‘host’ country, must at least offset the avoided reductions in the ‘donor’ country. In the context of international agreements, the obvious potential attraction of joint implementation is that it reduces the global costs of meeting internationally agreed emission targets. It therefore contributes to cost-minimization. This is fairly self-evident: if the donor avoids cutting emissions of X tonnes at cost C, and invests in cutting emissions in the host nation by X tonnes at cost, say, 0.4C, then there are cost savings of (1–0.4)C = 0.6C and no worsening of global environmental quality. However, the latter result, that global quality does not decline, can be guaranteed only if the obligation being traded is ‘uniformly mixed’, i.e. the damage being done does not vary with the location of the bargaining parties. Greenhouse gases are examples of such uniformly mixed pollutants: it does not matter where the reduction takes place since one tonne of a greenhouse gas does the same amount of global damage wherever the reduction takes place.
