Sustainable International Cooperation with Ancillary Benefits of Climate Policy

Abstract

This study aims to increase the long-term feasibility of international environmental agreements (IEAs) between asymmetric countries via a repeated game model by considering the effect of the ancillary benefits of climate policy. Generally, climate change mitigation generates not only primary public benefits, but also ancillary benefits. This study supposes that all countries have two-sided asymmetry: the public and ancillary benefits and cost parameters, which are high and low, respectively. The IEA model with a repeated game considers that a strategy dictates participating countries’ actions. Consequently, ancillary benefits affect the conditions under which participants cooperate in line with the strategy. Moreover, we find the minimum number of participating countries that needs to be satisfied before the agreement starts by considering the method for the selection of the countries that punish a deviator from the agreement between two types of countries so that our strategy is always effective. Additionally, the findings show that there is a possibility that ancillary benefits relax the condition of minimum participation. The results suggest that participating countries should recognize the effect of ancillary benefits when they negotiate on climate change mitigation.