Hope or Despair? Formal Models of Climate Cooperation

Abstract

We review formal (and some more informal) models of climate cooperation derived from economics and political science. These models convey two main messages. On one hand, they suggest that the prospects for effective climate cooperation are bleak: The standard view is that stable coalitions are small and that renegotiation-proof equilibria require that only a few countries participate. On the other hand, there might be light at the end of the tunnel after all. First, more recent work suggests that larger coalitions can be made stable. Second, other recent work suggests that it may be possible to design a renegotiation-proof climate agreement with broad or even full participation. Third, deposit-refund systems might help solve some of the obstacles for effective climate cooperation. Fourth, although the “law of the least ambitious program” pinpoints severe constraints on effective cooperation, this law has its limits. Fifth, countries may use cooperative probes to build trust. Sixth, cooperation might emerge in a completely decentralized fashion. Finally, experiments indicate that some of the conditions for effective cooperation that are taken for granted in most formal models might in fact be overly strict.