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The Incentives to Participate in and the Stability of International Climate Coalitions: A Game-Theoretic Approach Using the WITCH Model

Author

Listed:
  • Valentina Bosetti

    (Fondazione Eni Enrico Mattei (FEEM))

  • Carlo Carraro

    (Fondazione Eni Enrico Mattei (FEEM))

  • Enrica De Cian

    (Fondazione Eni Enrico Mattei (FEEM))

  • Romain Duval

    (OECD)

  • Emanuele Massetti

    (Fondazione Eni Enrico Mattei (FEEM))

  • Massimo Tavoni

    (Fondazione Eni Enrico Mattei (FEEM))

Abstract

This paper uses WITCH, an integrated assessment model with a game-theoretic structure, to explore the prospects for, and the stability of broad coalitions to achieve ambitious climate change mitigation action. Only coalitions including all large emitting regions are found to be technically able to meet a concentration stabilisation target below 550 ppm CO2eq by 2100. Once the free-riding incentives of non-participants are taken into account, only a “grand coalition” including virtually all regions can be successful. This grand coalition is profitable as a whole, implying that all countries can gain from participation provided appropriate transfers are made across them. However, neither the grand coalition nor smaller but still environmentally significant coalitions appear to be stable. This is because the collective welfare surplus from cooperation is not found to be large enough for transfers to offset the free-riding incentives of all countries simultaneously. Some factors omitted from the analysis, which might improve coalition stability, include the co-benefits from mitigation action, the costless removal of fossil fuel subsidies, as well as alternative assumptions regarding countries’ bargaining behaviour. Incitations à participer à des coalitions internationales de lutte contre le changement climatique et stabilité de ces coalitions : Une analyse en théorie des jeux à l'aide du modèle WITCH Cet article utilise WITCH, un modèle d’évaluation intégré doté d’une structure en théorie des jeux, pour explorer les perspectives et la stabilité de larges coalitions de lutte contre le changement climatique. Il ressort que seules des coalitions incluant toutes les principales régions émettrices ont la capacité technique d’atteindre une cible de stabilisation des concentrations inférieure à 550 ppm CO2eq à l’horizon 2100. Une fois pris en compte les comportements de passager clandestin des régions non-participantes, seule une « grande coalition » regroupant pratiquement toutes les régions du monde est susceptible d’atteindre une telle cible. Cette grande coalition est profitable, impliquant qu’il est toujours possible de mettre en place un ensemble de transferts entre pays tel que tous gagnent à participer. Cependant, ni la grande coalition, ni des coalitions de moindre de taille mais néanmoins significatives d’un point de vue environnemental, n’apparaissent stables. Ceci tient au fait que le surplus collectif engendré par la coopération n’est pas suffisant pour permettre des transferts offrant à tous les pays simultanément les gains qu’ils tireraient d’un comportement de passager clandestin. Certains facteurs non pris en compte ici pourraient améliorer la stabilité des coalitions, tels les bénéfices connexes de la lutte contre le changement climatique, la possibilité de supprimer sans coût les subventions aux énergies fossiles, ou encore des hypothèses alternatives concernant le comportement de négociation des pays.

Suggested Citation

  • 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.
  • Handle: RePEc:oec:ecoaaa:702-en
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    File URL: http://dx.doi.org/10.1787/223552487415
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    Cited by:

    1. Gersbach, Hans & Hummel, Noemi, 2016. "A development-compatible refunding scheme for a climate treaty," Resource and Energy Economics, Elsevier, vol. 44(C), pages 139-168.
    2. 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.
    3. Hans Gersbach & Noemi Hummel & Ralph Winkler, 2011. "Sustainable Climate Treaties," Diskussionsschriften dp1105, Universitaet Bern, Departement Volkswirtschaft.
    4. Alice Favero & Enrica De Cian, 2010. "Fairness, Credibility and Effectiveness in the Copenhagen Accord: An Economic Assessment," Working Papers 2010.21, Fondazione Eni Enrico Mattei.
    5. Stine Aakre, 2016. "The political feasibility of potent enforcement in a post-Kyoto climate agreement," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 16(1), pages 145-159, February.
    6. Lu, Yingying & Stegman, Alison & Cai, Yiyong, 2013. "Emissions intensity targeting: From China's 12th Five Year Plan to its Copenhagen commitment," Energy Policy, Elsevier, vol. 61(C), pages 1164-1177.
    7. Stine Aakre, 2016. "The political feasibility of potent enforcement in a post-Kyoto climate agreement," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 16(1), pages 145-159, February.
    8. Massetti, Emanuele & Tavoni, Massimo, 2012. "A developing Asia emission trading scheme (Asia ETS)," Energy Economics, Elsevier, vol. 34(S3), pages 436-443.

    More about this item

    Keywords

    climate coalition; climate policy; coalition climatique; free riding; game theory; passager clandestin; politique climatique; théorie des jeux;

    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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