Trying to make flights 'greener' by changing routes can backfire, because other countries just swoop in and use those paths for dirtier planes.
March 27, 2026
Original Paper
Leakage via Rerouting: Strategic Offsetting and Climate Clubs under Non-CO2 Regulation in Aviation
SSRN · 6358138
The Takeaway
This model of 'strategic offsetting' shows that when one state manages routes to reduce non-CO2 climate impacts, less climate-sensitive states reallocate their own flights into those areas. This leakage can completely negate the environmental benefits of the original regulation.
From the abstract
We study a model of heterogeneous states' strategic responses to the regulation of non-CO2 effects in (international) aviation. States have two instruments to mitigate those effects: (i) route management (rerouting) and (ii) sustainable aviation fuels (SAF). We characterize equilibrium behavior under three institutional settings: noncooperative competition and two kinds of climate clubs (full and partial cooperation). Total welfare is maximized under full cooperation, when externalities are inte