June 15, 2012

Incentives and stability of international climate coalitions: an integrated assessment

On June 12 2012 I presented the paper "Incentives and stability of international climate coalitions: an integrated assessment" joint with Valentina Bosetti, Carlo Carraro, Enrica De Cian and Massimo Tavoni at the Cowles Foundation Summer Conference on "Macronomics and Climate Change” at Yale University.

 Full presentation in pdf here.

In the paper we show why cooperation among world countries to reduce GHG emissions is possible if targets are not to stringent.

We find that cooperation is possible and profitable but:

  • The 2°C target is not supported by cost-benefit analysis even under extreme assumptions on damages and discounting
  • Even with more modest targets coalitions are not stable
  • International transfers are needed to «bribe in» reluctant countries
Policy implication: be less ambitious when negotiating the post-2020 climate architecture

  • Alternative bargaining rules might deliver different results
  • Much cheaper mitigation costs might induce more cooperation
  • Ethical considerations might be used to assess impacts instead of monetary evaluations of future damages
The paper was recently published as CEPR working paper here and a short-article appeared on voxeu.org here.