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The Incentives to Participate in, and the Stability of, International Climate Coalitions: A Game-theoretic Analysis Using the Witch Model

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

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  • Bosetti, Valentina & Carraro, Carlo & De Cian, Enrica & Duval, Romain & Massetti, Emanuele & Tavoni, Massimo, 2009. "The Incentives to Participate in, and the Stability of, International Climate Coalitions: A Game-theoretic Analysis Using the Witch Model," Sustainable Development Papers 54281, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemdp:54281
    DOI: 10.22004/ag.econ.54281
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    11. Hans Gersbach & Noemi Hummel & Ralph Winkler, 2011. "Sustainable Climate Treaties," CER-ETH Economics working paper series 11/146, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
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    14. Carlo Carraro, 2009. "The Road to Copenhagen: What Agreement Can Actually Be Effective and Stable? by Carlo Carraro," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 10(3), pages 30-36, October.
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    16. 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".
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    More about this item

    Keywords

    Environmental Economics and Policy;

    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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