Bargaining over a climate deal: deadline and delay

Pierre Courtois and Tarik Tazdaït ()
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Tarik Tazdaït: CIRED - centre international de recherche sur l'environnement et le développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique

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Abstract: Assuming that a North-South transfer is the key to effective climate cooperation, we ask when and how much the North should offer to the South in return for a commitment to reduce deforestation and forest degradation. In light of the risk of irreversible damage over time, we examine a negotiation with a deadline. In this case, the North threatens the South over a negotiation dead-end in case an agreement is not reached rapidly. We assess the conditions for an agreement to be immediate or delayed, and discuss those situations likely to result in negotiation failure. Despite the risk of irreversible damage over time, we show that cooperation is likely to be delayed and we identify situations wherein the North and South do not reach an agreement within the deadline. Although Pareto-improving, cooperation may collapse because of inefficiencies related to incomplete information. What's more, we show that in negotiations with a deadline, uncertainty about the benefits deriving from cooperation and the irreversibility of the damage that will be caused if cooperation isdelayed are the two key components affecting choice.

Keywords: Transfer; Bargaining; Deforestation; Climate treaty; Deadline; Irreversibility; Ultimatum (search for similar items in EconPapers)
Date: 2014-09
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Published in Annals of Operations Research, 2014, 220 (1), pp.205-221. ⟨10.1007/s10479-011-1018-9⟩

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Journal Article: Bargaining over a climate deal: deadline and delay (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-01084942

DOI: 10.1007/s10479-011-1018-9

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