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Incentives and stability of international climate coalitions: An integrated assessment

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  • Bosetti, Valentina
  • Carraro, Carlo
  • De Cian, Enrica
  • Massetti, Emanuele
  • Tavoni, Massimo

Abstract

This paper analyses the incentives to participate in an international climate agreement and the stability of the resulting climate coalition using the integrated assessment model WITCH. Coalition stability is assessed under alternative assumptions concerning the pure rate of time preference, the aggregation of social welfare, and the severity of climate damages. The profitability, stability, and strong potential internal stability of a number of coalitions, those potentially effective in reducing GHG emissions, is explored in the paper. The main conclusion is that only the grand coalition, i.e. a coalition where all world regions cooperate to reduce emissions, can maintain GHG concentration below 550ppm CO2-eq. However, this coalition is not internally stable, even when allowing for monetary transfers across world regions. Nonetheless, the paper also shows that strongly potentially internally stable coalitions exist, though of smaller size, which can mitigate global warming and limit GHG concentrations to 600ppm CO2-eq.

Suggested Citation

  • Bosetti, Valentina & Carraro, Carlo & De Cian, Enrica & Massetti, Emanuele & Tavoni, Massimo, 2013. "Incentives and stability of international climate coalitions: An integrated assessment," Energy Policy, Elsevier, vol. 55(C), pages 44-56.
  • Handle: RePEc:eee:enepol:v:55:y:2013:i:c:p:44-56
    DOI: 10.1016/j.enpol.2012.12.035
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    Cited by:

    1. Thierry Brechet and Henry Tulkens, 2015. "Climate Policies: A Burden, or a Gain?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    2. KORNEK, Urik & LESSMANN, Kai & TULKENS, Henry, 2014. "Transferable and non transferable utility implementations of coalitional stability in integrated assessment models," CORE Discussion Papers 2014035, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Milan Ščasný & Emanuele Massetti & Jan Melichar & Samuel Carrara, 2015. "Quantifying the Ancillary Benefits of the Representative Concentration Pathways on Air Quality in Europe," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(2), pages 383-415, October.
    4. repec:wsi:ccexxx:v:02:y:2011:i:04:n:s2010007811000346 is not listed on IDEAS
    5. repec:gam:jsusta:v:10:y:2018:i:2:p:334-:d:129103 is not listed on IDEAS
    6. Olivier Bos & Béatrice Roussillon & Paul Schweinzer, 2016. "Agreeing on Efficient Emissions Reduction," Scandinavian Journal of Economics, Wiley Blackwell, vol. 118(4), pages 785-815, October.
    7. Carlo Carraro, 2014. "International environmental cooperation," Chapters,in: Handbook of Sustainable Development, chapter 26, pages 418-431 Edward Elgar Publishing.
    8. repec:aen:journl:ej38-4-kersting is not listed on IDEAS
    9. Venkatachalam ANBUMOZHI, 2015. "Low Carbon Green Growth in Asia: What is the Scope for Regional Cooperation?," Working Papers DP-2015-29, Economic Research Institute for ASEAN and East Asia (ERIA).
    10. Christian Gollier and Jean Tirole, 2015. "Negotiating effective institutions against climate change," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).

    More about this item

    Keywords

    Climate coalition; Game theory; Free-riding;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - 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 and their Management; Global Warming

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