Stability Of International Environmental Agreements Research Articles

The strategic role of adaptation in international environmental agreements

This paper investigates the impact of the timing of adaptation on the stability of international environmental agreements (IEAs) for different levels of cooperation. This issue is addressed by solving a three-stage coalition formation game in a Nash-Cournot setting. In the first stage, countries decide non-cooperatively on their participation in an IEA. Then, depending on the timing, countries decide on adaptation and emissions in the second and third stage. The game is solved for three levels of cooperation. Countries can either cooperate on emissions (emission agreement), on adaptation (adaptation agreement), or both actions (complete agreement). When emissions are chosen first, this extension to an emission–adaptation game is a generalization of the pure emission game. However, when adaptation is chosen first, the grand coalition is stable, provided that countries sign a complete agreement. With partial cooperation, stable coalitions are small. The results establish a connection between the strategic role of adaptation, the levels of adaptation of non-signatories and signatories for the different types of agreements and the participation in an IEA. Moreover, the results indicate that the grand coalition is stable even when it significantly enhances net benefits.

Self-image and the stability of international environmental agreements

In this paper we examine the stability of international environmental agreements about a (common) emissions target. By signing the agreement, the parties develop a sense of responsibility to the commitment made, gaining a self-image that contributes to their utility.We study a dynamic two-stage game where all countries act individualistically. We investigate how two fundamental components of the model, that is, the ambition of the pledge and the relative importance given to compliance to the commitment, affect the stability and efficiency of the agreement in terms of global welfare and total emissions.We find that participation is the key driver of all the results and that it is negatively related to the ambition of the pledge and positively related to countries’ level of concern about environmental issues.

International environmental agreements under different evolutionary imitation mechanisms

AbstractThis paper explores how the formation and stability of international environmental agreements vary with two often adopted mechanisms: imitating‐the‐best‐average and imitating‐the‐best‐total rules. We first show that the possible long‐run equilibria of two dynamics are the same. They are countries' full participation, no‐participation, and the two equilibria combined. However, the occurring conditions of these equilibria under two dynamics may differ. Then, we prove that countries' full participation is more likely to be long‐run equilibrium in international environmental agreements when imitating‐the‐best‐average rule is adopted. Moreover, all findings of this study hold whatever the function forms of countries' abnoatement benefits and costs are, and are unaffected by the positive affine transformation of countries' total payoffs.

International Environmental Agreements and Black Technology

This paper analyzes the stability of international environmental agreements in a dynamic game when the generation of both renewables and fossil fuel based energy requires specialized capital stocks or technologies, respectively. Two contract types are considered. At an incomplete (a complete) contract, the coalition coordinates only (both) CO_2 emissions (and renewable energy investments) of its members. In contrast to the results of Battaglini and Harstad (J Polit Econ 124:160–204, 2016) who endorse incomplete contracts to increase the coalition size, only small coalitions are stable regardless of whether the contract is complete or incomplete. This result also holds if black technology is temporary not completely used or transfers are considered.

Social norms for the stability of international enviromental agreements

<p style='text-indent:20px;'>This paper is devoted to study the stability of international environmental agreements (IEAs) in a pollution abatement context. Countries can decide to cooperate or to defect. Defector countries decide on their abatement levels by minimizing their own total cost whereas, signatory countries decide on their abatement levels by minimizing the aggregate of all cooperators.</p><p style='text-indent:20px;'>In the model, all countries have the same environmental damage instead, respect to the non-environmental cost, we assume that each signatory country has to punish a non-signatory for its behaviour, at some cost to itself (see [<xref ref-type="bibr" rid="b17">17</xref>]). We propose two different cases in which we have that punishment is directly proportional to the level of pollution (see [<xref ref-type="bibr" rid="b6">6</xref>] or not (see [<xref ref-type="bibr" rid="b5">5</xref>]). Punishments can be in the form of trade sanctions or import tariffs, as a measure to encourage cooperation.</p><p style='text-indent:20px;'>We model a differential game in order to determine both the optimal path of the abatement levels and stock pollutant as results of feedback Nash equilibria. Stability conditions, such as internal and external stability, are applied showing that different answers about the size of a stable IEA can be obtained.</p>

National political pressure groups and the stability of international environmental agreements

This paper examines the effects of political pressure groups (lobbies) on transboundary emissions of individual countries and on the stability of international environmental agreements to reduce emissions. We consider two types of lobbies, industry and environmentalists, and we allow for asymmetric countries to consider differences in lobby strengths to study strategic international spillovers of national lobby activities. In our model, lobby groups in countries that are non-signatories to the agreement will impact abatement of the lobby’s home country only. In contrast, lobby activities in signatory countries have spillover effects on the abatement decisions of other member countries. As lobby strength impacts abatement, it will, in turn, impact the incentives to participate in the agreement. We find that lobby activities from both lobby groups, industry and environmentalists, can have the potential to facilitate international cooperation to abate global pollution. This, however, depends on the distribution of lobby activities across countries and on whether green lobby groups have a national or international focus.

Stability of international environmental agreements under isoelastic utility

There is now a growing consensus that ratifying International Environmental Agreements (IEAs) is the most effective way to tackle transboundary pollution problems. While the social benefit function (SBF) critically affects emission choices as well as decisions to ratify IEAs, the related economic literature has mainly concentrated on scenarios where the marginal SBF is linear. Using climatic data, I find that the linear marginal SBF case does not match data and isoelastic SBFs fit data better. In the more realistic, but not yet explored, context of isoelastic SBFs, I reconsider incentives to ratify IEAs. My analysis gives rise to novel conclusions. For instance, changes in the scale of damages do not affect the level of cooperation. When the scale of damages is small, variations of the SBF parameter reveal that large coalitions including the coalition of all countries are stable, but only when the potential gain from cooperation is sufficiently high.

The Impact of Adaptation on the Stability of International Environmental Agreements

We examine the stability of international environmental agreements that include clauses pertaining to both adaptation and mitigation measures. We assume that adaptation requires a prior irreversible investment and presents the characteristics of a private good by reducing a country’s vulnerability to the impact of pollution, while mitigation policies produce a public good by reducing the total amount of pollution. Using a stylized model, we show that adaptive measures can be used strategically and that their inclusion in environmental agreements enhances agreement stability and can even lead to full cooperation. We examine the robustness of agreements including both adaptation and mitigation measures against renegotiation. Finally, we evaluate how including adaptive measures for climate change in international environmental agreements affects welfare and overall pollution.

An Evolutionary Game Approach in International Environmental Agreements with R&D Investments

The paper proposes a dynamic game about the process of formation and stability of international environmental agreements (IEAs) in which abatement levels are associated with the stock pollutant evolution. The model assumes that both countries that ratify an agreement and the stock of accumulated pollution evolve over time. We propose an evolutionary mechanism, based on replicator dynamics, that describes how the population share of signatories countries updates over time. It postulates that players are boundedly rational and make their choices by adopting the more rewarding behavior that emerges from available observation of others’ behaviors. We show that the formation of an IEA cannot be sustained in general, but only if additional considerations are taken into account. In particular, we introduce a positive externality represented by RD otherwise, the non-cooperators support completely their R&D investments for clean technologies. This aspect encourages the formation of coalitions determining conditions such that the Grand Coalition is stable.

A Relaxed Stability Condition of Weakly Renegotiation-Proof International Environmental Agreement Between Asymmetric Countries

This study shows that asymmetry among countries can develop a stability of international environmental agreements, using a repeated game model. Our model reveals relaxed conditions for a weakly renegotiation-proof (WRP) equilibrium by selecting the punishment levels according to the types of deviating country. Furthermore, we identified the minimum number of participating countries necessary for relaxation of a WRP condition.

On the farsightedly and myopically stable international environmental agreements

AbstractWe investigate the stability of International Environmental Agreements. The analysis of Chwe is extended by investigating the question how to find farsightedly stable coalitions. The myopic stability concept of d'Aspremont, Jacquemin, Gabszeweiz, and Weymark and the farsighted stability concept of Chwe are compared. Farsighted stability, direct and indirect domination are discussed. Considering of the direct domination, we check for the single‐step stability by comparing the profits of every coalition member after one‐step deviation has occurred, while considering the indirect domination (farsightedness) we check for the multistep stability by comparing the profits of every coalition member after a series of deviations have come to an end. On the contrary, myopic stability assumes that players look only one step ahead. The improvement of farsightedly and myopically stable coalitions to the environment quality and welfare are compared. Only the farsightedly stable coalition improves the welfare and abatement by 20% and 79% in comparison to all three myopically stable coalitions together. Algorithms are developed, which can find all farsightedly stable coalitions structures.Considerations for ManagementTaking into account findings, management considerations may include: Myopically stable coalitions are typically subsets of farsightedly stable coalitions. Farsightedly stable coalitions are the largest stable coalitions without side payments, and bring the biggest improvement in environmental quality and welfare. We predict the formation of coalitions that are bigger than myopically stable but smaller than farsightedly stable coalitions. This conclusion is valid under the assumption that transfers are not allowed.

International cooperation on biodiversity conservation when spatial structures matter

ABSTRACTInternational cooperation on biodiversity conservation when spatial structures matter. Spatial Economic Analysis. This paper considers the stability of international environmental agreements (IEAs) for biodiversity conservation with an explicit spatial structure. It studies the impact of distance between countries on coalition stability. It analyses a circular spatial structure with different spatial patterns. Robust results are obtained for a wide range of cost-and-benefit parameters: stable coalitions have a maximum size of two members. The best global payoff is obtained when coalitions are composed of neighbouring countries with the smallest possible distance. A ‘remoteness effect’ is observed, i.e., some coalitions of two members are unstable when one of the signatory countries is far away from the other coalition member and from the singletons.

Cleaner Technologies and the Stability of International Environmental Agreements

Abstract: This paper shows that, if countries are farsighted when deciding whether to defect from a coalition, then the implementation of cleaner technologies may jeopardize the chances of reaching an international environmental agreement. The grand coalition may be destabilized by the implementation of cleaner technologies, ultimately resulting in higher global emissions and lower global welfare. We further show that the higher the stock of pollution at the instant when the cleaner technology is implemented, the more likely that the above mechanism unfolds. We examine a reduction in the emission per output ratio as well as measures that enhance the natural rate of decay of stock pollutants.

The effects of R&D investments in international environmental agreements with asymmetric countries

The paper examines the stability of international environmental agreements (IEAs) in a dynamic context where abatement levels are associated with the stock pollutant evolution. We underline two meaningful aspects of this matter. Firstly, we consider asymmetry among countries, dividing them in two types: developed countries that have a considerable environmental awareness and developing ones that pay a less attention to environmental preservation. Secondly, we introduce a positive externality in the cooperation where countries coordinate their R&D activities sharing the investments in order to avoid duplication of green activities. Otherwise, the non-cooperators support completely their R&D investments for clean technologies. These two aspects encourage the formation of stable coalitions till to determine conditions for which also the grand coalition is stable.

INTERNATIONAL ENVIRONMENTAL AGREEMENTS WITH DEVELOPED AND DEVELOPING COUNTRIES IN A DYNAMIC APPROACH

AbstractThis paper is devoted to study the stability of international environmental agreements (IEAs) in a pollution abatement model. We focus our attention on two asymmetric agents: developed countries characterized by a strong measure of environmental awareness and developing ones characterized by less attention to environmental preservation. We model a differential game in order to determine both the optimal path of the abatement levels and stock pollutant as results of open‐loop and feedback Nash equilibria. By means of the concepts of internal and external stability, we explain how the environmental awareness of two types of countries and the number of cooperators and defectors influence the size of stable coalitions. The results establish that the asymmetry assumption does not have consequences for the stability of the grand coalition, which can be obtained only with transfers.

Self-Enforcing International Environmental Agreements and Trade: Taxes Versus Caps

This paper studies within a multi-country model with international trade the stability of international environmental agreements (IEAs) when countries regulate carbon emissions either by taxes or caps. Regardless of whether coalitions play Nash or are Stackelberg leaders the principal message is that the choice of caps or taxes matters. International trade and tax regulation are necessary conditions for the existence of the encompassing self-enforcing IEA, and that the latter is attained the more likely, the less severe the climate damage. Hence, cap regulation is inferior to tax regulation insofar as in case of the former there exist no large and effective self-enforcing IEAs, in particular not the encompassing self-enforcing IEA. Further results are that for the formation of encompassing self-enforcing IEAs it does not matter whether climate coalitions play Nash or are Stackelberg leaders or whether fossil fuel is modeled as a consumer good or an intermediate good.

Towards a Better Understanding of Climate Change Negotiations

The bulk of environmental economics literature applies non-cooperative game theory to examine the stability of International Environmental Agreements. Recently, a new trend has emerged in the literature whereby scholars use modified economic approaches to better account for ‘reality’ as such. This article builds upon the work of Hugh Ward, Frank Grundig and Ethan Zorick who conducted a mixed-method analysis to create a model of international climate change negotiations which could explain why policy change has been minimal in this issue area. The purpose of this article is to further develop the mixed-method approach in order to gain a better understanding of international climate change negotiations. Using the progression of the 2011 Durban negotiation session as our raw data, we demonstrate the usefulness of conducting qualitative and quantitative analyses simultaneously to best represent reality. Content and discourse analyses are applied to the Durban negotiations to identify the properties of the underlying game. The results are applied to the future of the negotiations in order to identify trends which need to be addressed to reach more progressive outcomes in the future. The main results of the qualitative analyses of the Durban negotiations included that players had modest expectations at the outset of the negotiations, which influenced the issues they addressed. The quantitative analysis demonstrated that players achieved a high degree of success at Durban; all players achieved their desired outcomes on at least half of the issues they addressed. Finally, the mixed-method approach identified important trends from the negotiations, most importantly the cracks exposed within the BASIC bloc and the role of the ‘middle ground’ alliance.

Cleaner Technologies and the Stability of International Environmental Agreements

This paper shows that, if countries are farsighted when deciding whether to defect from a coalition, then the implementation of cleaner technologies may jeopardize the chances of reaching an international environmental agreement. The grand coalition may be destabilized by the implementation of cleaner technologies, ultimately resulting in higher global emissions and lower global welfare. We further show that the higher the stock of pollution at the instant when the cleaner technology is implemented, the more likely that the above mechanism unfolds. We examine a reduction in the emission per output ratio as well as measures that enhance the natural rate of decay of stock pollutants.

Largest Consistent Set in International Environmental Agreements

We study the formation and the stability of International Environmental Agreements (IEAs) in a pollution abatement model with a quadratic cost function. Countries play a two-stage game: in the first stage each country decides to join or not the coalition while, in the second stage, the quantity of pollution abatement is chosen. To analyze the stability of coalition structures in a multiple coalition game, we use the notion of the Largest Consistent Set (LCS) which allows players to be farsighted. Chwe (1994) developed the concept of farsighted stability: an outcome is stable and it is in the LCS if and only if deviations from it or potential further deviations are not unanimously preferred to the original outcome by the coalition considering the deviations. Applying this notion of stability in the IEA context we assume that, when a country or a sub-coalition contemplate exiting or joining an agreement, it takes into account the reactions of other countries ignited by its own actions. The goal of this paper is to identify the resulting stable structures and the LCS, examining the cooperation among countries with respect to an indicator of countries' environmental awareness. We show that large coalitions are possible outcomes of the game if the farsightedness is considered. In particular, we obtain general sufficient conditions that assure the farsighted stability of the Grand Coalition. In a computational way, we prove that if the environmental awareness is larger than a threshold value, the number of coalition structures belonging to LCS goes down with respect to the initial coalition structures and coalitions with singleton countries never exist. Moreover, we present a useful Maple algorithm to compare the cost functions and to determine direct dominance.

International Environmental Agreements with Asymmetric Countries

The paper investigates the stability of International Environmental Agreements (IEAs) in a pollution abatement model with a quadratic cost function. We suppose a two stage game, in which in the first stage each country decides whether or not to join the agreement while, in the second stage, the quantity of pollution abatement is chosen. Agents may act cooperatively, building coalitions and acting according to the interest of the coalition, or they make their choices taking care of their individual interest only. We consider two kinds of countries: the first type are industrially advanced, namely developed countries, while the second type are the less developed, namely developing countries. About environmental preservation, the developed countries are characterized by a higher measure of the environmental awareness than developing ones. We provide a new graphic way to visualise results about stable coalitions of different sizes taking into account several environmental awareness values. Moreover, we present a handy Maple algorithm to determine both the optimal costs for each country and the coalitions' stability with an arbitrary number of developed and developing countries. Finally, we introduce an ex-post transfer scheme in order to expand a generic coalition to the grand coalition which reaches the greatest abatement level and the lowest aggregate costs.