Title: The value of international cooperation: Optimising behaviour in climate change negotiations

Authors: Clare Smith, Stephen Hall

Addresses: Centre for Economic Forecasting, London Business School, Sussex Place, London NWl 4SA, UK; School of the Environment, University of Sunderland, Langham Tower, Ryhope Road, Sunderland SR2 7EE, UK. ' Centre for Economic Forecasting, London Business School, Sussex Place, London NWl 4SA, UK

Abstract: In this paper, an integrated model of the costs of climate change damage and carbon dioxide abatement is used under an optimal control regime to simulate the international agreements on greenhouse gas abatement, where each region aims to minimise their overall costs. The model used is EGEM (Environmental Global Econometric Model), described in Smith et al. [1], which forecasts energy related carbon dioxide emissions and the impact of carbon taxes. Here the model is extended to include a function for the costs of damage from climate change, and optimal policies are found under various scenarios by minimising both the long-run costs of damage and the cost of abatement in terms of the size of tax needed. Optimising from the perspectives of two non-cooperating regions (Europe and North America) is shown to produce significantly lower taxes than a cooperative case, resulting in large gains to cooperation.

Keywords: climate change costs; climate change negotiations; environmental policy; international cooperation; carbon dioxide; CO2; carbon abatement; carbon emissions; greenhouse gases; GHG emissions; modelling; carbon taxes; environmental damage.

DOI: 10.1504/IJGEI.1998.063303

International Journal of Global Energy Issues, 1998 Vol.10 No.2/3/4, pp.238 - 253

Published online: 09 Jul 2014 *

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