Advanced Search
MyIDEAS: Login to save this paper or follow this series

The Fatter the Tail, the Fatter the Climate Agreement - Simulating the Influence of Fat Tails in Climate Change Damages on the Success of International Climate Negotiations

Contents:

Author Info

  • Thijs Dekker
  • Rob Dellink
  • Janina Ketterer

Abstract

International climate negotiations take place in a setting where uncertainties regarding the impacts of climate change are very large. In this paper, we examine the influence of increasing the probability and impact of large climate change damages, also known as the ‘fat tail’, on the formation of an international mitigation agreement. We systematically vary the shape and location of the distribution of climate change damages using the stochastic version of the applied game-theoretical STACO model. Our aim is to identify how changes to the distributional form affect the stability of coalitions and their performance. We find that fatter upper tails increase the likelihood that more ambitious coalitions are stable as well as the performance of these stable coalitions. Fatter tails thus imply more successful, or ‘fatter’, international climate agreements.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2013/wp-cesifo-2013-01/cesifo1_wp4059.pdf
Download Restriction: no

Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4059.

as in new window
Length:
Date of creation: 2013
Date of revision:
Handle: RePEc:ces:ceswps:_4059

Contact details of provider:
Postal: Poschingerstrasse 5, 81679 Munich
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Email:
Web page: http://www.cesifo.de
More information through EDIRC

Related research

Keywords:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-94, Supplemen.
  2. Claude d'Aspremont & Alexis Jacquemin & Jean Jaskold Gabszewicz & John A. Weymark, 1983. "On the Stability of Collusive Price Leadership," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 16(1), pages 17-25, February.
  3. Carlo Carraro & Johan Eyckmans & Michael Finus, 2006. "Optimal Transfers and Participation Decisions in International Environmental Agreements," Working Papers 2006_44, Department of Economics, University of Venice "Ca' Foscari".
  4. Nagashima, Miyuki & Dellink, Rob & van Ierland, Ekko & Weikard, Hans-Peter, 2009. "Stability of international climate coalitions -- A comparison of transfer schemes," Ecological Economics, Elsevier, Elsevier, vol. 68(5), pages 1476-1487, March.
  5. Olieman, Niels J. & Hendrix, Eligius M.T., 2006. "Stability likelihood of coalitions in a two-stage cartel game: An estimation method," European Journal of Operational Research, Elsevier, Elsevier, vol. 174(1), pages 333-348, October.
  6. Weitzman, Martin L., 2009. "On Modeling and Interpreting the Economics of Catastrophic Climate Change," Scholarly Articles 3693423, Harvard University Department of Economics.
  7. Chander, P. & Tulkens, H., . "A core-theoretic solution for the design of cooperative agreements on transfrontier pollution," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -1158, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  8. Hans-Peter Weikard & Michael Finus & Juan-Carlos Altamirano-Cabrera, 2006. "The impact of surplus sharing on the stability of international climate agreements," Oxford Economic Papers, Oxford University Press, vol. 58(2), pages 209-232, April.
  9. Michael Finus & Ekko Ierland & Rob Dellink, 2006. "Stability of Climate Coalitions in a Cartel Formation Game," Economics of Governance, Springer, Springer, vol. 7(3), pages 271-291, August.
  10. Lancaster, Tony, 2000. "The incidental parameter problem since 1948," Journal of Econometrics, Elsevier, Elsevier, vol. 95(2), pages 391-413, April.
  11. Carraro, Carlo & Siniscalco, Domenico, 1993. "Strategies for the international protection of the environment," Journal of Public Economics, Elsevier, Elsevier, vol. 52(3), pages 309-328, October.
  12. Charles Kolstad & Alistair Ulph, 2011. "Uncertainty, Learning and Heterogeneity in International Environmental Agreements," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 50(3), pages 389-403, November.
  13. Kolstad, Charles D., 2007. "Systematic uncertainty in self-enforcing international environmental agreements," Journal of Environmental Economics and Management, Elsevier, vol. 53(1), pages 68-79, January.
  14. Rob Dellink & Michael Finus & Niels Olieman, 2008. "The stability likelihood of an international climate agreement," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 39(4), pages 357-377, April.
  15. Dellink, Rob & Finus, Michael, 2012. "Uncertainty and climate treaties: Does ignorance pay?," Resource and Energy Economics, Elsevier, Elsevier, vol. 34(4), pages 565-584.
  16. Ikefuji, M. & Laeven, R.J.A. & Magnus, J.R. & Muris, C.H.M., 2010. "Expected Utility and Catastrophic Risk in a Stochastic Economy-Climate Model," Discussion Paper, Tilburg University, Center for Economic Research 2010-122, Tilburg University, Center for Economic Research.
  17. Hans-Peter Weikard, 2005. "Cartel Stability under an Optimal Sharing Rule," Working Papers, Fondazione Eni Enrico Mattei 2005.77, Fondazione Eni Enrico Mattei.
  18. Alistair Ulph, 2004. "Stable International Environmental Agreements with a Stock Pollutant, Uncertainty and Learning," Journal of Risk and Uncertainty, Springer, Springer, vol. 29(1), pages 53-73, 07.
  19. Nordhaus, William D & Yang, Zili, 1996. "A Regional Dynamic General-Equilibrium Model of Alternative Climate-Change Strategies," American Economic Review, American Economic Association, American Economic Association, vol. 86(4), pages 741-65, September.
  20. Rob Dellink, 2011. "Drivers Of Stability Of Climate Coalitions In The Staco Model," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., World Scientific Publishing Co. Pte. Ltd., vol. 2(02), pages 105-128.
  21. Tol, Richard S. J. & Anthoff, David, 2010. "Climate Policy under Fat-Tailed Risk: An Application of FUND," Papers, Economic and Social Research Institute (ESRI) WP348, Economic and Social Research Institute (ESRI).
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_4059. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.