Global costs of US withdrawal: Quantifying the impact on Paris Agreement cooperation

This paper examines the political and economic challenges of addressing climate change under the Paris Agreement, in light of the US decision to withdraw, effective January 20, 2025. As a major greenhouse gas emitter, the U.S.'s withdrawal risks undermining global climate cooperation and may encourage other nations to abandon their commitments. Using a simulation model based on econometric estimation, this study assesses the additional costs incurred by the international community due to non-cooperation, focusing on the implications of the U.S.'s exit. The analysis reveals that global marginal costs for decarbonization are increasing, placing greater burdens on the international community as more countries opt out of their nationally determined contributions (NDCs). The study emphasizes the distinction between conditional and unconditional NDCs, highlighting that non-cooperation by poorer nations exacerbates costs, given their reliance on international support. Conversely, the withdrawal of advanced economies like the U.S. has global implications due to their capacity to influence emissions reductions. Countries are categorized into high- and low-risk groups for free riding, underscoring the necessity of multilateral cooperation. The findings highlight the need for cohesive global action to uphold climate pledges and build trust, particularly in the face of free riding and the pressing threat of climate change.