November 28, 2010

The Benefits of Cooperation under Uncertainty: the Case of Climate Change

by Thierry Brechet, Julien Thenien, Thibaut Zeimes and Stéphane Zuber

- This article presents an analysis of the behavior of countries defining their climate policies in an uncertain context. The analysis is made using the S-CWS model, a stochastic version of an integrated assessment growth model. The model includes a stochastic definition of the climate sensitivity parameter. We show that the impact of uncertainty on policy design critically depends on the shape of the damage function. We also examine the benefits of cooperation in the context of uncertainty: we highlight the existence of an additional benefit of cooperation, namely risk reduction.

Brechet, T., J. Thenien, T. Zeimes and S. Zuber (2010). "The Benefits of Cooperation under Uncertainty: the Case of Climate Change." CORE Discussion Paper No. 2010.62, Oct 2010.