Climate Change and Incentives to Cooperate in Local Commons*

Maija Halonen-Akatwijuka

Bristol Economics Discussion Papers from School of Economics, University of Bristol, UK

Abstract: This paper anyalyzes incentives to cooperate in maintenance of local commons. Climate change, modeled as Markov process with a probability of permanent reduction in productivity, reduces both the value of the relationship and the temptation to freeride. Cooperation incentives are improved because lower temptation is dominant. Therefore, the effect of climate change is mitigated by higher degree of cooperation – but only if productivity is initially so high that first best cooperation is not possible. While climate change results in full reduction of surplus if productivity is initially relatively low and cooperation at the first best level is already sustainable.

Date: 2025-04-02
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Persistent link: https://EconPapers.repec.org/RePEc:bri:uobdis:25/804

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