Climate treaties and approaching catastrophes

Author
Publication Year
2013

Type

Journal Article
Abstract

If the threshold that triggers climate catastrophe is known with certainty, and the benefits of avoiding catastrophe are high relative to the costs, treaties can easily coordinate countries’ behavior so as to avoid the threshold. Where the net benefits of avoiding catastrophe are lower, treaties typically fail to help countries cooperate to avoid catastrophe, sustaining only modest cuts in emissions. These results are unaffected by uncertainty about the impact of catastrophe. By contrast, uncertainty about the catastrophic threshold normally causes coordination to collapse. Whether the probability density function has ‘‘thin’’ or ‘‘fat’’ tails makes little difference.

Journal
Journal of Environmental Economics and Management
Full text

If the threshold that triggers climate catastrophe is known with certainty, and the benefits of avoiding catastrophe are high relative to the costs, treaties can easily coordinate countries’ behavior so as to avoid the threshold. Where the net benefits of avoiding catastrophe are lower, treaties typically fail to help countries cooperate to avoid catastrophe, sustaining only modest cuts in emissions. These results are unaffected by uncertainty about the impact of catastrophe. By contrast, uncertainty about the catastrophic threshold normally causes coordination to collapse. Whether the probability density function has ‘‘thin’’ or ‘‘fat’’ tails makes little difference.