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The Incentives to Participate in and the Stability of International Climate Coalitions: A Game-Theoretic Approach Using the WITCH Model

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Author Info
Valentina Bossetti
Carlo Carraro
Enrica De Cian
Romain Duval
Emanuele Massetti
Massimo Tavoni

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Abstract

This paper uses WITCH, an integrated assessment model with a game-theoretic structure, to explore the prospects for, and the stability of broad coalitions to achieve ambitious climate change mitigation action. Only coalitions including all large emitting regions are found to be technically able to meet a concentration stabilisation target below 550 ppm CO2eq by 2100. Once the free-riding incentives of non-participants are taken into account, only a “grand coalition” including virtually all regions can be successful. This grand coalition is profitable as a whole, implying that all countries can gain from participation provided appropriate transfers are made across them. However, neither the grand coalition nor smaller but still environmentally significant coalitions appear to be stable. This is because the collective welfare surplus from cooperation is not found to be large enough for transfers to offset the free-riding incentives of all countries simultaneously. Some factors omitted from the analysis, which might improve coalition stability, include the co-benefits from mitigation action, the costless removal of fossil fuel subsidies, as well as alternative assumptions regarding countries’ bargaining behaviour.

Incitations à participer à des coalitions internationales de lutte contre le changement climatique et stabilité de ces coalitions : Une analyse en théorie des jeux à l’aide du modèle WITCH
Cet article utilise WITCH, un modèle d’évaluation intégré doté d’une structure en théorie des jeux, pour explorer les perspectives et la stabilité de larges coalitions de lutte contre le changement climatique. Il ressort que seules des coalitions incluant toutes les principales régions émettrices ont la capacité technique d’atteindre une cible de stabilisation des concentrations inférieure à 550 ppm CO2eq à l’horizon 2100. Une fois pris en compte les comportements de passager clandestin des régions non-participantes, seule une « grande coalition » regroupant pratiquement toutes les régions du monde est susceptible d’atteindre une telle cible. Cette grande coalition est profitable, impliquant qu’il est toujours possible de mettre en place un ensemble de transferts entre pays tel que tous gagnent à participer. Cependant, ni la grande coalition, ni des coalitions de moindre de taille mais néanmoins significatives d’un point de vue environnemental, n’apparaissent stables. Ceci tient au fait que le surplus collectif engendré par la coopération n’est pas suffisant pour permettre des transferts offrant à tous les pays simultanément les gains qu’ils tireraient d’un comportement de passager clandestin. Certains facteurs non pris en compte ici pourraient améliorer la stabilité des coalitions, tels les bénéfices connexes de la lutte contre le changement climatique, la possibilité de supprimer sans coût les subventions aux énergies fossiles, ou encore des hypothèses alternatives concernant le comportement de négociation des pays.

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Paper provided by OECD, Economics Department in its series OECD Economics Department Working Papers with number 702.

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Date of creation: 30 Jun 2009
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Handle: RePEc:oec:ecoaaa:702-en

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Related research
Keywords: climate coalition; climate policy; free riding; game theory; coalition climatique; passager clandestin; politique climatique; théorie des jeux;

Find related papers by JEL classification:
C68 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Computable General Equilibrium Models
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters

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This page was last updated on 2009-11-20.

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