Climate change coalition formation and equilibrium strategies in mitigation games in the post-Kyoto Era
- 111 Downloads
This paper analyzes the formation of country coalitions in the context of international negotiations on climate change mitigation and simulates the emergence of an equilibrium solution in this game-theoretic framework, while accounting for the interplay with external influences. Coalition formation is gauged through clustering analysis on multiple factors including natural, economic, and social factors, RCPs, and other aspects. Projected emission is found to be the main determinant in forming coalitions, and the USA, EU, China + India, and the rest of the world constitute the four-coalition configuration that is stable across different scenarios. Under this base configuration, the Regional Integrated Climate-Economy model for Coalition Game model is implemented to assess the sensitivity of equilibrium solutions to parameter uncertainties, sanctions on non-mitigation, and adjustments in coalition composition. The main conclusion of the game simulations is that no coalition would adopt a mitigation strategy at the Nash equilibrium if no penalty is in place. The Nash equilibrium remains stable even when the climatic and economic parameters are disturbed. As an alternative to the conventional game, an external sanction is imposed on coalitions that choose not to mitigate climate change; in this scenario, climate change mitigation propagates across coalitions according to various sanction levels. The paper also shows that a social welfare compensation between two coalitions may alter the equilibrium game strategy depending on whether the compensation outweighs the welfare loss from mitigation.
KeywordsClimate coalition Coalition formation Mitigation game Nash equilibrium
This work is supported by the National Key R&D Plan Program of China No. 2016YFA0602702, National Social Science Foundation of China No. 14CGJ025, and National Science Foundation of China No. 41501127. We thank the reviewers for their comments, which have helped us enhance the quality of this work.
- Bank, T. W. (2010). Public attitudes toward climate change: Findings from a multicountry poll (pp. 1–83). Washington, DC: The World Bank.Google Scholar
- Botteon, M., & Carraro, C. (1997). Environmental coalitions with heterogeneous countries: Burden-sharing and carbon leakage. Working paper, Fondazione Eni Enrico Mattei, Milano.Google Scholar
- CIESIN (1995). Thematic guide to integrated assessment modeling of climate change. Palisades, NY: Center for International Earth Science Information Network. http://sedac.ciesin.org/mva/iamcc.tg/TGHP.html. Accessed April 16, 2018.
- Clarke, L., Kyle, P., Wise, M., Calvin, K., Edmonds, J., Kim, S., et al. (2008). CO 2 emissions mitigation and technological advance: An updated analysis of advanced technology scenarios. Richmond, WA: PNNL Report Pacific Northwest National Laboratory.Google Scholar
- Emmerling, J., Kornek, U., Bosetti, V., Lessmann, K., & Tavoni, M. (2015). The effect of climate thresholds on coalition formation: An application of numerical models. Working paper, Fondazione Eni Enrico Mattei, Milano.Google Scholar
- Finus, M. (2003). Stability and design of international environmental agreements: The case of transboundary pollution. In H. Folmer & T. Tietenberg (Eds.), International yearbook of environmental and resource economics 2003/2004: A survey of current issues (pp. 82–158). Cheltenham: Edward Elgar.Google Scholar
- Finus, M., & Rundshagen, B. (2001). Endogenous coalition formation in global pollution control. Working paper, Fondazione Eni Enrico Mattei, Milano.Google Scholar
- Gillingham, K., Nordhaus, W. D., Anthoff, D., Blanford, G., Bosetti, V., Christensen, P., et al. (2015). Modeling uncertainty in climate change: A multi-model comparison (No. w21637). Working paper, National Bureau of Economic Research, Cambridge, MA.Google Scholar
- Hagen, A., & Eisenack, K. (2015). International environmental agreements with asymmetric countries: Climate clubs vs. global cooperation. Working paper, Fondazione Eni Enrico Mattei, Milan.Google Scholar
- Lax, D. A., & Sebenius, J. K. (1991). Thinking coalitionally: Party arithmetic, process opportunism, and strategic sequencing. In H. P. Young (Ed.), Negotiation analysis (pp. 153–193). Ann Arbor: University of Michigan Press.Google Scholar
- Magyar, Z. (2011). EU plans to reduce GHG emissions with 80% by 2050. REHVA Journal, 5, 83–85.Google Scholar
- Manne, A. S., & Richels, R. G. (1992). Buying greenhouse insurance: The economic costs of carbon dioxide emission limits. Cambridge, MA: MIT Press.Google Scholar
- Mitchell, T. D., Carter, T. R., Jones, P. D., Hulme, M., & New, M. (2004). A comprehensive set of high-resolution grids of monthly climate for Europe and the globe: The observed record (1901–2000) and 16 scenarios (2001–2100). Working paper, Tyndall Centre, Norwich.Google Scholar
- Nakicenovic, N., Alcamo, J., Grubler, A., et al. (2000). Special report on emissions scenarios (SRES). A special report of Working Group III of the intergovernmental panel on climate change. Cambridge, UK: Cambridge University Press.Google Scholar
- Nax, H. H., & Norman, T. W. (2012). Climate coalitions, march 2012. http://users.ox.ac.uk/~sjoh0644/files/tom19.pdf. Accessed Aug 20, 2016.
- Nordhaus, W. D. (1994). Managing the global commons: the economics of climate change (Vol. 31). Cambridge, MA: MIT Press.Google Scholar
- Nordhaus, W. D., & Yang, Z. (1996). RICE: A regional dynamic general equilibrium model of optimal climate change policy. American Economic Review, 86(4), 741–765.Google Scholar
- Patchen, M. (2006). Public attitudes and behavior about climate change (p. 601). West Lafayette: Purdue Climate Change Research Center Outreach Publication.Google Scholar
- Stern, N. (2008). Key elements of a global deal on climate change. London: London School of Economics and Political Science.Google Scholar
- Stiglitz, J. E. (2007). Making globalization work. New York: WW Norton & Company.Google Scholar
- Stocker, T. F., Qin, D., Plattner, G. K., Tignor, M., Allen, S. K., Boschung, J., et al. (2014). Climate change 2013: The physical science basis. New York: Cambridge University Press.Google Scholar
- Wood, P. J. (2010). Climate change and game theory: A mathematical survey. CCEP working paper 2.10. Canberra: Centre for Climate Economics & Policy.Google Scholar