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The benefits of cooperation under uncertainty: the case of climate change

Thierry Bréchet, Julien THENIE, Thibaut ZEIMES and Stéphane Zuber
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Julien THENIE: Université catholique de Louvain, CORE and Chair Lhoist Berghmans in Environmental Eonomics and Management, B- 1348 Louvain-la-Neuve, Belgium; ORDECSYS Company, Chêne-Bougeries, Switzerland.
Thibaut ZEIMES: Université catholique de Louvain, CORE and Chair Lhoist Berghmans in Environmental Eonomics and Management, B- 1348 Louvain-la-Neuve, Belgium

No 2010062, CORE Discussion Papers from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: 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.

Keywords: cooperation; uncertainty; climate change; integrated assessment model (search for similar items in EconPapers)
JEL-codes: C71 C73 D9 D62 F42 Q2 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-env, nep-gth and nep-res
Date: 2010-10-01
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