The Effect of the Paris Agreement on Carbon Emissions: A Difference-in-Difference Approach

Abstract

This paper studies the effect of the Paris Agreement on carbon emissions, the primary cause of climate change. It is the first research on the Paris Agreement to utilize a difference-in-difference approach. I utilize a panel event study methodology and then verify my results with a differences-in-differences methodology that utilizes not-yet-treated units as controls. This is useful because there are few true control countries. I find that (1) the Paris Agreement has a small negative effect on carbon emissions in aggregate, which only applies to countries first ratifying in 2017, (2) it negatively affects the emissions of developing countries, (3) it has no effect on developed countries' emissions. These results contribute to a discussion of the effectiveness of the Paris Agreement and international climate agreements in general.