Lessons from Conditionality Provisions for South-North Cooperation on Climate Change

Abstract

This article examines what may be taken into account, when designing a mechanism of international public finance to support south-north cooperation on domestic climate policies in developing countries. We draw lessons from existing mechanisms of conditional transfers. Experience with conditionality provisions that the World Bank, the IMF, and bilateral donors apply to development assistance is varied. Conditionality provisions applied during the EU enlargement process are generally evaluated more positively, as the shared objective is increased credibility and participation. Clearly defining global emissions reductions as a shared objective could offer similar opportunities for cooperation. We discuss lessons that might be of relevance to the design of cooperative climate policy.

Keywords: International cooperation, incentive schemes, mechanism design

JEL Classification: F02, H11, H77, O1