Environmental and Resource Economics

, Volume 54, Issue 1, pp 63–77 | Cite as

Enforcing Compliance with Environmental Agreements in the Absence of Strong Institutions: An Experimental Analysis

  • Todd L. Cherry
  • David M. McEvoy


This paper uses laboratory experiments to evaluate the performance of a deposit-refund mechanism used to enforce compliance with voluntary public-good commitments made in the absence of strong regulatory institutions. With this mechanism agents decide whether to join an agreement and pay a deposit prior to making their contribution decisions. If an agreement receives sufficient membership to form, members then make their contribution decisions and compliant members are refunded their deposits. If an agreement does not form, then deposits are immediately refunded and a standard voluntary contribution game is played. We find that the deposit-refund mechanism achieves nearly full efficiency when agreements require full participation, but is far less effective, and in some cases disruptive, when agreements require only partial participation. As the mechanism does not require the existence of strong sanctioning institutions, it is particularly suited for enforcing compliance with international environmental agreements.


Enforcing compliance Environmental agreements Experimental economics Deposit refund International environmental agreements 

JEL Classification

D02 Q50 H41 H87 C90 


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Copyright information

© Springer Science+Business Media B.V. 2012

Authors and Affiliations

  1. 1.Economics DepartmentAppalachian State UniversityBooneUSA
  2. 2.CICERO Center for International Climate and Environmental Research, OsloOsloNorway
  3. 3.Economics DepartmentAppalachian State UniversityBooneUSA

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