We investigate the joint occurrence of international intertemporal trade and international environmental-permit trade, both of which are subject to country sovereignty. Assuming that side payments cannot be made to keep a debtor country from terminating international environmental cooperation,...

A situation is analyzed in which two countries negotiate the financing of costs that accrue if one of them switches onto a sustainable development path. The other country's incentive to pay arises as it benefits from the developing country's environmental resources, but at an ever declining rate...