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The benefits of cooperation under uncertainty: the case of climate change

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  • BRECHET, Thierry

    ()
    (Université catholique de Louvain, CORE and Chair Lhoist Berghmans in Environmental Eonomics and Management, B- 1348 Louvain-la-Neuve, Belgium)

  • THENIE, Julien

    (Université catholique de Louvain, CORE and Chair Lhoist Berghmans in Environmental Eonomics and Management, B- 1348 Louvain-la-Neuve, Belgium; ORDECSYS Company, Chêne-Bougeries, Switzerland.)

  • ZEIMES, Thibaut

    (Université catholique de Louvain, CORE and Chair Lhoist Berghmans in Environmental Eonomics and Management, B- 1348 Louvain-la-Neuve, Belgium)

  • ZUBER, Stéphane

    (Université catholique de Louvain, CORE and Chair Lhoist Berghmans in Environmental Eonomics and Management, B- 1348 Louvain-la-Neuve, Belgium)

Abstract

This article presents an analysis of the behavior of countries defining their climate policies in an uncertain context. The analysis is made using the S-CWS model, a stochastic version of an integrated assessment growth model. The model includes a stochastic definition of the climate sensitivity parameter. We show that the impact of uncertainty on policy design critically depends on the shape of the damage function. We also examine the benefits of cooperation in the context of uncertainty: we highlight the existence of an additional benefit of cooperation, namely risk reduction.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2010062.

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Date of creation: 01 Oct 2010
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Handle: RePEc:cor:louvco:2010062

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Keywords: cooperation; uncertainty; climate change; integrated assessment model;

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  1. Manne, Alan & Mendelsohn, Robert & Richels, Richard, 1995. "MERGE : A model for evaluating regional and global effects of GHG reduction policies," Energy Policy, Elsevier, vol. 23(1), pages 17-34, January.
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  4. BRECHET, Thierry & EYCKMANS, Johan & GERARD, François & MARBAIX, Philippe, 2008. "The impact of the unilateral EU commitment on the stability of international climate agreements," CORE Discussion Papers 2008061, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  10. Atkinson, Giles D. & Dietz, Simon & Helgeson, Jennifer & Hepburn, Cameron & Sælen, Håkon, 2009. "Siblings, not triplets: social preferences for risk, inequality and time in discounting climate change," Economics Discussion Papers 2009-14, Kiel Institute for the World Economy.
  11. Jean-Charles Hourcade & Philippe Ambrosi & Stéphane Hallegatte & Franck Lecocq & Patrice Dumas & Minh Ha-Duong, 2003. "Optimal control models and elicitation of attitudes towards climate damages," Post-Print halshs-00000966, HAL.
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  13. Valentina Bosetti & Carlo Carraro & Marzio Galeotti & Emanuele Massetti & Massimo Tavoni, 2006. "WITCH. A World Induced Technical Change Hybrid Model," Working Papers 2006_46, Department of Economics, University of Venice "Ca' Foscari".
  14. Shaw, W. Douglass & Woodward, Richard T., 2008. "Why environmental and resource economists should care about non-expected utility models," Resource and Energy Economics, Elsevier, vol. 30(1), pages 66-89, January.
  15. Bosetti, Valentina & Tavoni, Massimo, 2009. "Uncertain R&D, backstop technology and GHGs stabilization," Energy Economics, Elsevier, vol. 31(Supplemen), pages S18-S26.
  16. BRECHET, Thierry & CAMACHO, Carmen & VELIOV, Vladimir, 2010. "Model predictive control, the economy, and the issue of global warming," CORE Discussion Papers 2010016, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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Cited by:
  1. Thierry Bréchet & Henry Tulkens, 2013. "Climate Policies: A Burden or a Gain?," CESifo Working Paper Series 4147, CESifo Group Munich.

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