The Benefits Of Cooperation Under Uncertainty: The Case Of Climate Change
Source: Universite Catholique de Louvain
This paper 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. The authors show that the impact of uncertainty on policy design critically depends on the shape of the damage function. They also examine the benefits of cooperation in the context of uncertainty: They highlight the existence of an additional benefit of cooperation, namely risk reduction.