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How empirical uncertainties influence the stability of climate coalitions

Author

Listed:
  • Jasper N. Meya

    (University of Oldenburg
    Humboldt-Universität zu Berlin)

  • Ulrike Kornek

    (Mercator Research Institute on Global Commons and Climate Change
    Potsdam Institute for Climate Impact Research)

  • Kai Lessmann

    (Potsdam Institute for Climate Impact Research)

Abstract

International climate agreements are negotiated in the face of uncertainties concerning the costs and benefits of abatement and in the presence of incentives for free-riding. Numerical climate coalition models provide estimates of the challenges affecting cooperation, but often resort to assuming certainty with respect to the values of model parameters. We study the impact of uncertainty on the stability of coalitions in the Model of International Climate Agreements using the technique of Monte Carlo analysis. We extend the existing literature by (1) calibrating parametric uncertainty about damages and abatement costs to estimates from meta-studies and by (2) explicitly considering uncertainty in the curvature of the damage function. We find that stability is more sensitive to uncertainty in damages than in abatement costs and most sensitive to uncertainty about the regional distribution of damages. Our calculations suggest that heterogeneity can increase stability of coalitions; however, this depends on the availability of transfers.

Suggested Citation

  • 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.
    • Handle: RePEc:spr:ieaple:v:18:y:2018:i:2:d:10.1007_s10784-017-9378-5
    DOI: 10.1007/s10784-017-9378-5
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    Cited by:

    1. Achim Hagen & Klaus Eisenack, 2019. "Climate Clubs Versus Single Coalitions: The Ambition Of International Environmental Agreements," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 10(03), pages 1-19, August.
    2. Mao, Liang, 2020. "Designing international environmental agreements under participation uncertainty," Resource and Energy Economics, Elsevier, vol. 61(C).
    3. Moritz A. Drupp & Ulrike Kornek & Jasper N. Meya & Lutz Sager, 2021. "Inequality and the Environment: The Economics of a Two-Headed Hydra," CESifo Working Paper Series 9447, CESifo.
    4. Jasper N. Meya & Klaus Eisenack, 2018. "Effectiveness of gaming for communicating and teaching climate change," Climatic Change, Springer, vol. 149(3), pages 319-333, August.
    5. Sylvia Karlsson-Vinkhuyzen & Katharina Rietig & Michelle Scobie, 2022. "Agency dynamics of International Environmental Agreements: actors, contexts, and drivers," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 22(2), pages 353-372, June.

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    More about this item

    Keywords

    International environmental agreements; Climate coalition formation; Uncertainty; Monte Carlo analysis; Numerical modelling;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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