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The Role of Uncertainty and Learning for the Success of International Climate Agreements

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  • Finus, Michael
  • Pintassilgo, Pedro

Abstract

Technological developments intensify linkages between nations, making unilateral policies less effective. Though transnational externalities (e.g. trade, contagious diseases and terrorism) warrants coordination and cooperation between governments, this proves some times difficult. This is particularly true for international environmental agreements. One reason for meager success is the public good character of environmental protection encouraging free-riding. Another reason one might suspect are the large uncertainties surrounding most environmental problems, and in particular climate change, providing sufficient excuse to remain inactive. Paradoxically, some recent papers have concluded just the opposite: the veil of uncertainty can be conducive to the success of international environmental cooperation. This sheds serious doubts on the benefits from research on better understanding environmental impacts. In this paper, we explain why and under which conditions such a pessimistic conclusion can be true. However, taking a broader view, we argue that these unfavorable conditions are rather an exception than the rule. Most important, we suggest a mechanism that mitigates the negative effect of learning and which may even turn it into a positive effect. Our results apply beyond the specifics of climate change to similar problems of cooperation in the presence of externalities.

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Paper provided by University of Stirling, Division of Economics in its series Stirling Economics Discussion Papers with number 2009-16.

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Date of creation: Aug 2009
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Handle: RePEc:stl:stledp:2009-16

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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: learning; uncertainty; self-enforcing agreements; climate change; coop eration;

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Citations

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Cited by:
  1. 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.
  2. Alexandre SAUQUET & Antoine CAZALS, 2013. "When does cooperation win and why? Political cycles and participation in international environmental agreements," Working Papers 201320, CERDI.
  3. Giménez Gómez, José M. (José Manuel) & Teixidó Figueras, Jordi Josep & Vilella Bach, Misericòrdia, 2014. "The global carbon budget:a conflicting claims problem," Working Papers 2072/237597, Universitat Rovira i Virgili, Department of Economics.

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