Financial Transfers and Climate Cooperation

Suzi Kerr, Steffen Lippert and Edmund Lou ()
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Edmund Lou: Motu Economic and Public Policy Research

No 19_04, Working Papers from Motu Economic and Public Policy Research

Abstract: We investigate the impact of side-payments to countries that have a low net benefit from participating in efficient climate cooperation in a repeated games framework with investment in different technologies. We consider different timings of these payments and different degrees of commitment. If countries cannot commit ex ante to transfer funds to low-benefit participants to an agreement, then there is a trade-off. Investment based agreements, where transfers occur before emissions are realized, but after investments have been committed, maximize the scope of cooperation. Results-based agreements minimize transfers whenever these agreements implement cooperation. If countries can commit to transfer funds, then agreements in which countries with high benefits of climate cooperation pre-commit to results-based payments to countries with low benefits both maximize the scope of cooperation and minimize transfers.

Keywords: game theory; cooperation; repeated games; climate change; international agreement (search for similar items in EconPapers)
JEL-codes: F53 F55 Q54 Q56 Q58 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2019-03
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env and nep-gth
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Persistent link: https://EconPapers.repec.org/RePEc:mtu:wpaper:19_04

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