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The Biodiversity Bargaining Problem

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Abstract

We employ cooperative bargaining theory and Nash’s ‘rational threats’ idea to cast light on the biodiversity bargaining problem. The problem of global environmental negotiations is argued to be of the nature of a bargaining problem, in which bargainers must agree on the distribution of cooperative surplus in order to move to the bargaining frontier. We discuss the importance of both efficiency (bargaining frontier) and fairness (recognition of characteristics of bargainers) in the choice of the appropriate contract. We show that the incremental cost contract, used to resolve the biodiversity bargaining problem, is of the form of an extreme point contract that fails to recognise the contributions of the South to the production of cooperative surplus. A rational response to such a contract is the use of threats of biodiversity destruction. Contracts must evince both efficiency and fairness in order to represent lasting solutions.

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Authors and Affiliations

  1. Faculty of Economics, University of Cambridge, Sidgwick Avenue, Cambridge, CB3 9DD, UK

    Rupert Gatti

  2. Chair of Environmental Economics, Alfred Weber Institute, University of Heidelberg, 69115, Heidelberg, Germany

    Timo Goeschl

  3. Department of Economics, School of Oriental and African Studies, London, WC1H 0XG, UK

    Ben Groom

  4. Hoffman Chair of Economics, Graduate Institute of International and Development Studies, Institut de hautes études internationales et du développement, P.O. Box 136, 1211, Geneva 21, Switzerland

    Timothy Swanson

Authors
  1. Rupert Gatti
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  2. Timo Goeschl
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  3. Ben Groom
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  4. Timothy Swanson
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Correspondence to Ben Groom.

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Gatti, R., Goeschl, T., Groom, B. et al. The Biodiversity Bargaining Problem. Environ Resource Econ 48, 609–628 (2011). https://doi.org/10.1007/s10640-010-9416-z

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  • DOI: https://doi.org/10.1007/s10640-010-9416-z

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