Coalition Formation Under Uncertainty: The Stability Likelihood of an International Climate Agreement

33 Pages Posted: 8 Sep 2005

See all articles by Rob Dellink

Rob Dellink

Wageningen UR - Environmental Economics and Natural Resources Group; Organization for Economic Co-Operation and Development (OECD)

Michael Finus

University of Stirling

Niels Olieman

Operations Research and Logistics Group - Wageningen University

Date Written: July 2005

Abstract

Results derived from empirical analyses on the stability of climate coalitions are usually very sensitive to the large uncertainties associated with the benefits and costs of climate policies. This paper provides the methodology of Stability Likelihood that links uncertainty about benefits and costs of climate change to the stability analysis of coalitions in a stochastic, empirical setting. We show that the concept of Stability Likelihood improves upon the robustness and interpretation of stability analysis. Our numerical application is based on a modified version of the climate model STACO. It turns out that the only non-trivial coalition structure with a relatively high Stability Likelihood (around 25 percent) is a coalition between the European Union and Japan, though quantitative results depend especially on the variance in regional benefits from abatement.

Keywords: Climate change, Coalition formation, International environmental agreements, Uncertainty

JEL Classification: C79, H87, Q54

Suggested Citation

Dellink, Rob and Finus, Michael and Olieman, Niels, Coalition Formation Under Uncertainty: The Stability Likelihood of an International Climate Agreement (July 2005). FEEM Working Paper No. 98.2005. Available at SSRN: https://ssrn.com/abstract=773927 or http://dx.doi.org/10.2139/ssrn.773927

Rob Dellink (Contact Author)

Wageningen UR - Environmental Economics and Natural Resources Group ( email )

P.O. Box 8130
Wageningen, 6700 EW
Netherlands
+31 (0)317 4 82009 (Phone)
+31 (0)317 4 84933 (Fax)

HOME PAGE: http://www.sls.wau.nl/enr/staff/dellink/

Organization for Economic Co-Operation and Development (OECD) ( email )

Paris
France

HOME PAGE: http://www.oecd.org/env/cc/econ

Michael Finus

University of Stirling ( email )

Stirling, Scotland FK9 4LA
United Kingdom

Niels Olieman

Operations Research and Logistics Group - Wageningen University ( email )

Hollandseweg 1
6700 HB Wageningen, 6706KN
Netherlands

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