Financial Transfers and Climate Cooperation

46 Pages Posted: 8 Nov 2019

See all articles by Suzi Kerr

Suzi Kerr

Environmental Defense Fund

Steffen Lippert

University of Auckland Business School

Edmund Lou

Motu Economic and Public Policy Research Trust

Date Written: March 29, 2019

Abstract

We investigate the impact of side-payments to countries that have a low net benefit from participating in efficient climate cooperation in a repeated games framework with investment in different technologies. We consider different timings of these payments and different degrees of commitment. If countries cannot commit ex ante to transfer funds to low-benefit participants to an agreement, then there is a trade-off. Investment based agreements, where transfers occur before emissions are realized, but after investments have been committed, maximize the scope of cooperation. Results-based agreements minimize transfers whenever these agreements implement cooperation. If countries can commit to transfer funds, then agreements in which countries with high benefits of climate cooperation pre-commit to results-based payments to countries with low benefits both maximize the scope of cooperation and minimize transfers.

Keywords: game theory, cooperation, repeated games, climate change, international agreement

JEL Classification: C37, Q54, Q56, Q58, F55, F53

Suggested Citation

Kerr, Suzi and Lippert, Steffen and Lou, Edmund, Financial Transfers and Climate Cooperation (March 29, 2019). Available at SSRN: https://ssrn.com/abstract=3477054 or http://dx.doi.org/10.2139/ssrn.3477054

Suzi Kerr (Contact Author)

Environmental Defense Fund ( email )

1875 Connecticut ave
257 Park Avenue South
Washington, DC 20009
United States

Steffen Lippert

University of Auckland Business School ( email )

12 Grafton Rd
Private Bag 92019
Auckland, 1010
New Zealand

Edmund Lou

Motu Economic and Public Policy Research Trust ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
13
Abstract Views
235
PlumX Metrics