Compliance and Emissions Trading under the Kyoto Protocol: Rules for Uncertain Inventories

A solution is proposed for proving compliance with emission targets and for emissions trading in the event of uncertainties in reported emission inventories. The solution is based on the undershooting concept, from which the mathematical conditions for both proving compliance with a risk α and calculating effective emissions for trading are derived. Based on the reported emission units, the number of permits granted is reduced in proportion to the uncertainty in the inventory. A country whose inventory has higher uncertainty is thereby allotted fewer permits than a country with the same inventory but smaller uncertainty.     

Compliance with ivory trade regulations in the United Kingdom among traders

Global demand for elephant ivory is contributing to illegal poaching and significant decline of African elephant (Loxondonta africana) populations. To help mitigate decline, countries with legal domestic ivory markets were recommended by the Convention on International Trade in Endangered Species of Wild Fauna and Flora to close domestic markets for commercial trade. However, implementing stricter regulations on wildlife trade does not necessarily mean compliance with rules will follow. Using an online questionnaire, we examined the relationship between self-reported compliance with ivory trade regulations among 115 ivory traders in the United Kingdom and 4 dimensions (control, deterrence, legitimacy, and social norms) hypothesized to influence compliance with conservation regulations. Although most traders supported regulations, a large number did not always check that they comply with them when trading objects containing ivory. The main factors influencing compliance with ivory trade regulations were traders’ ability to comply and their perceptions of the regulations and punishments to deter illegal trade. These findings demonstrate the utility of conservation criminology to improve wildlife trade regulations and identify opportunities to reduce illegal ivory entering the market in the United Kingdom. Compliance could be improved by clearer regulations that facilitate easier detection of illegal ivory products and stronger prosecution of violations.     

Illegal fishing and territorial user rights in Chile

Illegal fishing poses a major threat to conservation of marine resources worldwide. However, there is still limited empirical research that quantifies illegal catch levels. We used the randomized response technique to estimate the proportion of divers and the quantities of loco (Concholepas concholepas) they extracted illegally. Loco have been managed for the past 17 years through a territorial user rights for fisheries system (TURFs) in Chile. Illegal fishing of loco was widespread within the TURFs system. Official reported landings (i.e., legal landings) accounted for 14–30% of the total loco extraction. Our estimates suggest that ignoring the magnitude of illegal fishing and considering only official landing statistics may lead to false conclusions about the status and trends of a TURFs managed fishery. We found evidence of fisher associations authorizing their members to poach inside TURFs, highlighting the need to design TURFs systems so that government agencies and fishers’ incentives and objectives align through continuous adaptation. Government support for enforcement is a key element for the TURFs system to secure the rights that are in place.     

Further Results on Permit Markets with Market Power and Cheating

This paper examines a market for pollution permits in which one firm has market power and one or more firms is noncompliant. I show that the firm with market power may choose to hold more permits than it needs, effectively retiring permits from the market. I also show that some noncompliance may be socially desirable because it can mitigate the distortion caused by market power. Similarly, some degree of market power may be socially desirable because it can, in turn, mitigate the distortion caused by noncompliance.