Environmental consciousness and moral hazard in international agreements to protect the environment

A group of countries that can potentially commit to cooperation to protect the environment are identified as environmentally conscious countries. Conditions are examined under which they can provide self-financing side payments too a second group of less environmentally conscious countries, so that the two groups form a global or partial stable coalition that agrees to reduce emissions. A mechanism that detects cheating is also developed in order to induce the desired emissions even when the emissions level of an individual country cannot be observed by the rest of the participating countries.