IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v55y2013icp44-56.html
   My bibliography  Save this article

Incentives and stability of international climate coalitions: An integrated assessment

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S030142151201083X
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.enpol.2012.12.035?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Asheim, Geir B. & Froyn, Camilla Bretteville & Hovi, Jon & Menz, Fredric C., 2006. "Regional versus global cooperation for climate control," Journal of Environmental Economics and Management, Elsevier, vol. 51(1), pages 93-109, January.
    2. 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".
    3. Parkash Chander & Henry Tulkens, 2006. "The Core of an Economy with Multilateral Environmental Externalities," Springer Books, in: Parkash Chander & Jacques Drèze & C. Knox Lovell & Jack Mintz (ed.), Public goods, environmental externalities and fiscal competition, chapter 0, pages 153-175, Springer.
    4. Thierry, BRECHET & François, GERARD & Henry, TULKENS, 2007. "Climate coalitions : a theoretical and computational appraisal," Discussion Papers (ECON - Département des Sciences Economiques) 2007006, Université catholique de Louvain, Département des Sciences Economiques.
    5. Valentina Bosetti & Carlo Carraro & Enrica De Cian & Romain Duval & Emanuele Massetti & Massimo Tavoni, 2009. "The Incentives to Participate in and the Stability of International Climate Coalitions: A Game-Theoretic Approach Using the WITCH Model," OECD Economics Department Working Papers 702, OECD Publishing.
    6. Tol, Richard S. J., 2005. "The marginal damage costs of carbon dioxide emissions: an assessment of the uncertainties," Energy Policy, Elsevier, vol. 33(16), pages 2064-2074, November.
    7. Stern,Nicholas, 2007. "The Economics of Climate Change," Cambridge Books, Cambridge University Press, number 9780521700801, October.
    8. Carlo Carraro & Johan Eyckmans & Michael Finus, 2006. "Optimal transfers and participation decisions in international environmental agreements," The Review of International Organizations, Springer, vol. 1(4), pages 379-396, December.
    9. Valentina Bosetti & David Tomberlin, 2004. "Fondazione Eni Enrico Mattei," Working Papers 2004.102, Fondazione Eni Enrico Mattei.
    10. Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-894, Supplemen.
    11. Martin L. Weitzman, 2001. "Gamma Discounting," American Economic Review, American Economic Association, vol. 91(1), pages 260-271, March.
    12. Robert M. Solow, 1974. "The Economics of Resources or the Resources of Economics," Palgrave Macmillan Books, in: Chennat Gopalakrishnan (ed.), Classic Papers in Natural Resource Economics, chapter 12, pages 257-276, Palgrave Macmillan.
    13. Francesco Bosello & Barbara Buchner & Carlo Carraro, 2003. "Equity, Development, and Climate Change Control," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 601-611, 04/05.
    14. Stéphanie Jamet & Jan Corfee-Morlot, 2009. "Assessing the Impacts of Climate Change: A Literature Review," OECD Economics Department Working Papers 691, OECD Publishing.
    15. Matthew McGinty, 2007. "International environmental agreements among asymmetric nations," Oxford Economic Papers, Oxford University Press, vol. 59(1), pages 45-62, January.
    16. Valentina Bosetti & Carlo Carraro & Enrica De Cian & Romain Duval & Emanuele Massetti & Massimo Tavoni, 2009. "The Incentives to Participate in, and the Stability of, International Climate Coalitions: A Game-theoretic Analysis Using the Witch Model," Working Papers 2009.64, Fondazione Eni Enrico Mattei.
    17. Valentina Bosetti & Enrica De Cian, 2013. "A Good Opening: The Key to Make the Most of Unilateral Climate Action," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 56(2), pages 255-276, October.
    18. Claude d'Aspremont & Alexis Jacquemin & Jean Jaskold Gabszewicz & John A. Weymark, 1983. "On the Stability of Collusive Price Leadership," Canadian Journal of Economics, Canadian Economics Association, vol. 16(1), pages 17-25, February.
    19. Nagashima, Miyuki & Dellink, Rob & van Ierland, Ekko & Weikard, Hans-Peter, 2009. "Stability of international climate coalitions -- A comparison of transfer schemes," Ecological Economics, Elsevier, vol. 68(5), pages 1476-1487, March.
    20. Nordhaus, William D & Yang, Zili, 1996. "A Regional Dynamic General-Equilibrium Model of Alternative Climate-Change Strategies," American Economic Review, American Economic Association, vol. 86(4), pages 741-765, September.
    21. Donsimoni, Marie-Paule & Economides, Nicholas S & Polemarchakis, Herakles M, 1986. "Stable Cartels," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(2), pages 317-327, June.
    22. Johannes Bollen & Bruno Guay & Stéphanie Jamet & Jan Corfee-Morlot, 2009. "Co-Benefits of Climate Change Mitigation Policies: Literature Review and New Results," OECD Economics Department Working Papers 693, OECD Publishing.
    23. Carraro, Carlo & Siniscalco, Domenico, 1993. "Strategies for the international protection of the environment," Journal of Public Economics, Elsevier, vol. 52(3), pages 309-328, October.
    24. Joseph E. Stiglitz & G. Frank Mathewson (ed.), 1986. "New Developments in the Analysis of Market Structure," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262690934, December.
    25. Valentina Bosetti, Carlo Carraro, Marzio Galeotti, Emanuele Massetti, Massimo Tavoni, 2006. "A World induced Technical Change Hybrid Model," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 13-38.
    26. Thierry Bréchet & François Gerard & Henry Tulkens, 2011. "Efficiency vs. Stability in Climate Coalitions: A Conceptual and Computational Appraisal," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 49-76.
    27. Valentina Bosetti & Emanuele Massetti & Massimo Tavoni, 2007. "The WITCH Model. Structure, Baseline, Solutions," Working Papers 2007.10, Fondazione Eni Enrico Mattei.
    28. Jean-Marc Burniaux & Jean Château & Romain Duval & Stéphanie Jamet, 2008. "The Economics of Climate Change Mitigation: Policies and Options for the Future," OECD Economics Department Working Papers 658, OECD Publishing.
    29. Hanemann, W. Michael, 2008. "What is the Economic Cost of Climate Change?," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt9g11z5cc, Department of Agricultural & Resource Economics, UC Berkeley.
    30. William D. Nordhaus, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 686-702, September.
    31. Martin L. Weitzman, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 703-724, September.
    32. -, 2009. "The economics of climate change," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 38679, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Karp, Larry & Sakamoto, Hiroaki, 2021. "Sober optimism and the formation of international environmental agreements," Journal of Economic Theory, Elsevier, vol. 197(C).
    2. William D. Nordhaus, 2021. "Climate Club Futures: On the Effectiveness of Future Climate Clubs," Cowles Foundation Discussion Papers 2286, Cowles Foundation for Research in Economics, Yale University.
    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. 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).
    5. Emanuele Massetti & Massimo Tavoni, 2011. "The Cost Of Climate Change Mitigation Policy In Eastern Europe And Former Soviet Union," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 2(04), pages 341-370.
    6. Jan Kersting & Vicki Duscha & Matthias Weitzel, 2017. "Cooperation on Climate Change under Economic Linkages: How the Inclusion of Macroeconomic Effects Affects Stability of a Global Climate Coalition," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    7. Sareh Vosooghi & Maria Arvaniti & Rick van der Ploeg, 2022. "Self-Enforcing Climate Coalitions for Farsighted Countries: Integrated Analysis of Heterogeneous Countries," CESifo Working Paper Series 9768, CESifo.
    8. Valentina Bosetti & Enrica De Cian, 2013. "A Good Opening: The Key to Make the Most of Unilateral Climate Action," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 56(2), pages 255-276, October.
    9. Jasper N. Meya & Ulrike Kornek & Kai Lessmann, 2018. "How empirical uncertainties influence the stability of climate coalitions," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 18(2), pages 175-198, April.
    10. KORNEK, Urik & LESSMANN, Kai & TULKENS, Henry, 2014. "Transferable and non transferable utility implementations of coalitional stability in integrated assessment models," LIDAM Discussion Papers CORE 2014035, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    11. Juan Moreno-Cruz & Anthony Harding, 2022. "A Unifying Theory of Foreign Intervention in Domestic Climate Policy," CESifo Working Paper Series 10172, CESifo.
    12. Eren Cifci & Matthew E. Oliver, 2018. "Reassessing the Links between GHG Emissions, Economic Growth, and the UNFCCC: A Difference-in-Differences Approach," Sustainability, MDPI, vol. 10(2), pages 1-22, January.
    13. 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.
    14. Carlo Carraro, 2014. "International environmental cooperation," Chapters, in: Giles Atkinson & Simon Dietz & Eric Neumayer & Matthew Agarwala (ed.), Handbook of Sustainable Development, chapter 26, pages 418-431, Edward Elgar Publishing.
    15. Thomas Hickmann & Christoph Bertram & Frank Biermann & Elina Brutschin & Elmar Kriegler & Jasmine E. Livingston & Silvia Pianta & Keywan Riahi & Bas van Ruijven & Detlef van Vuuren, 2022. "Exploring Global Climate Policy Futures and Their Representation in Integrated Assessment Models," Politics and Governance, Cogitatio Press, vol. 10(3), pages 171-185.
    16. Moreno-Cruz, Juan & Harding, Anthony, 2023. "A Unifying Theory of Foreign Intervention in Domestic Climate Policy," RFF Working Paper Series 23-24, Resources for the Future.
    17. Jing Wu & Jean-Claude Thill, 2018. "Climate change coalition formation and equilibrium strategies in mitigation games in the post-Kyoto Era," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 18(4), pages 573-598, August.
    18. Holladay J. Scott & Livermore Michael A., 2013. "Regional variation, holdouts, and climate treaty negotiations," Journal of Benefit-Cost Analysis, De Gruyter, vol. 4(2), pages 131-157, August.
    19. 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).
    20. Matthew McGinty, 2020. "Leadership and Free-Riding: Decomposing and Explaining the Paradox of Cooperation in International Environmental Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 77(2), pages 449-474, October.
    21. 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).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Valentina Bosetti & Carlo Carraro & Enrica De Cian & Romain Duval & Emanuele Massetti & Massimo Tavoni, 2009. "The Incentives to Participate in, and the Stability of, International Climate Coalitions: A Game-theoretic Analysis Using the Witch Model," Working Papers 2009.64, Fondazione Eni Enrico Mattei.
    2. Carlo Carraro & Valentina Bosetti & Enrica De Cian & Romain Duval & Emanuele Massetti & Massimo Tavoni, 2009. "The incentives to participate in and the stability of international climate coalitions: a game theoretic approach using the WITCH Model," Working Papers 2009_28, Department of Economics, University of Venice "Ca' Foscari".
    3. Dellink, Rob & Finus, Michael, 2012. "Uncertainty and climate treaties: Does ignorance pay?," Resource and Energy Economics, Elsevier, vol. 34(4), pages 565-584.
    4. Finus, Michael & Pintassilgo, Pedro, 2013. "The role of uncertainty and learning for the success of international climate agreements," Journal of Public Economics, Elsevier, vol. 103(C), pages 29-43.
    5. Bosello, Francesco & Carraro, Carlo & De Cian, Enrica, 2013. "Adaptation can help mitigation: an integrated approach to post-2012 climate policy," Environment and Development Economics, Cambridge University Press, vol. 18(3), pages 270-290, June.
    6. Francesco Bosello & Carlo Carraro & Enrica De Cian, 2010. "Climate Policy And The Optimal Balance Between Mitigation, Adaptation And Unavoided Damage," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 1(02), pages 71-92.
    7. Lessmann, Kai & Kornek, Ulrike & Dellink, Rob & Emmerling, Johannes & Eyckmans, Johan & Nagashima, Miyuki & Weikard, Hans-Peter & Yang, Zili, 2014. "The Stability and Effectiveness of Climate Coalitions: A Comparative Analysis of Multiple Integrated Assessment Models," Climate Change and Sustainable Development 163598, Fondazione Eni Enrico Mattei (FEEM).
    8. KORNEK, Urik & LESSMANN, Kai & TULKENS, Henry, 2014. "Transferable and non transferable utility implementations of coalitional stability in integrated assessment models," LIDAM Discussion Papers CORE 2014035, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    9. Jasper N. Meya & Ulrike Kornek & Kai Lessmann, 2018. "How empirical uncertainties influence the stability of climate coalitions," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 18(2), pages 175-198, April.
    10. Kai Lessmann & Ulrike Kornek & Valentina Bosetti & Rob Dellink & Johannes Emmerling & Johan Eyckmans & Miyuki Nagashima & Hans-Peter Weikard & Zili Yang, 2015. "The Stability and Effectiveness of Climate Coalitions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(4), pages 811-836, December.
    11. Mason, Charles F. & Polasky, Stephen & Tarui, Nori, 2017. "Cooperation on climate-change mitigation," European Economic Review, Elsevier, vol. 99(C), pages 43-55.
    12. Hans-Peter Weikard & Rob Dellink, 2014. "Sticks and carrots for the design of international climate agreements with renegotiations," Annals of Operations Research, Springer, vol. 220(1), pages 49-68, September.
    13. Tol, Richard S.J., 2013. "Targets for global climate policy: An overview," Journal of Economic Dynamics and Control, Elsevier, vol. 37(5), pages 911-928.
    14. Carlo Carraro & Emanuele Massetti, 2010. "International Climate Change Negotiations: Lessons from Theory," Chapters, in: Emilio Cerdá Tena & Xavier Labandeira (ed.), Climate Change Policies, chapter 8, Edward Elgar Publishing.
    15. Carlo Carraro & Francesco Bosello & Enrica De Cian, 2009. "An Analysis of Adaptation as a Response to Climate Change," Working Papers 2009_26, Department of Economics, University of Venice "Ca' Foscari".
    16. Hans-Peter Weikard & Leo Wangler & Andreas Freytag, 2015. "Minimum Participation Rules with Heterogeneous Countries," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(4), pages 711-727, December.
    17. Michael Finus & Bianca Rundshagen & Johan Eyckmans, 2014. "Simulating a sequential coalition formation process for the climate change problem: first come, but second served?," Annals of Operations Research, Springer, vol. 220(1), pages 5-23, September.
    18. Thomas Kuhn & Radomir Pestow & Anja Zenker, 2017. "Building Climate Coalitions on Preferential Free Trade Agreements," Chemnitz Economic Papers 011, Department of Economics, Chemnitz University of Technology, revised Jul 2017.
    19. Thomas Kuhn & Radomir Pestow & Anja Zenker, 2019. "Building Climate Coalitions on Preferential Free Trade Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(2), pages 539-569, October.
    20. Holladay, J. Scott & Livermore, Michael A., 2013. "Regional variation, holdouts, and climate treaty negotiations," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 4(2), pages 131-157, August.

    More about this item

    Keywords

    Climate coalition; Game theory; Free-riding;
    All these keywords.

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:55:y:2013:i:c:p:44-56. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.