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Uncertainty and Climate Treaties: Does Ignorance Pay?

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  • Dellink, Rob
  • Finus, Michael

Abstract

Uncertainty and learning play an important role in addressing the problem of climate change. In stylized game-theoretic models of international environmental treaty formation, which capture the strategic interactions between nations, it has been shown that learning usually has a negative impact on the success of cooperation. This paper asks the question whether this negative conclusion carries over to an applied multiregional climate model. This model captures the large heterogeneity between different world regions and considers not only uncertainty about the benefits but also about the costs from climate mitigation. By exploiting differences in costs and benefits between regions and allowing transfers to mitigate free-rider incentives, we derive much more positive conclusions about the role of learning.

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Bibliographic Info

Paper provided by University of Stirling, Division of Economics in its series Stirling Economics Discussion Papers with number 2009-15.

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Date of creation: Jul 2009
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Handle: RePEc:stl:stledp:2009-15

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Postal: Division of Economics, University of Stirling, Stirling, Scotland FK9 4LA
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Fax: +44 (0)1786 467469
Web page: http://www.econ.stir.ac.uk/
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Keywords: cost-benefit analysis; game theory; learning; uncertainty; international climate agreements;

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References

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Citations

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Cited by:
  1. Thijs Dekker & Rob Dellink & Janina Ketterer, 2013. "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," CESifo Working Paper Series 4059, CESifo Group Munich.
  2. Agbo, Maxime, 2014. "Strategic exploitation with learning and heterogeneous beliefs," Journal of Environmental Economics and Management, Elsevier, vol. 67(2), pages 126-140.
  3. Finus, M & Pintassilgo, Pedro & Ulph, Alistair, 2014. "International Environmental Agreements with Uncertainty, Learning and Risk Aversion," Department of Economics Working Papers 39840, University of Bath, Department of Economics.

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