THE VALUE OF INTERNATIONAL-COOPERATION FOR ABATING GLOBAL CLIMATE-CHANGE

Because abatement of global climate change is a public good, independe nt national actions may not produce the efficient quantity. Using a nu merical integrated-assessment model, abatement costs and damages induc ed by climate change are compared at the cooperative and noncooperativ e solutions to a set of two-party dynamic games between the industrial ized and developing countries. Games with perfect and imperfect inform ation about climate and economic factors are considered. Across 144 ga mes with perfect information, incorporating different values of climat e and economic parameters, the noncooperative solution usually yields global benefits comparable to those of the cooperative solution. In ab out one-fifth of these games, however, a second noncooperative solutio n exists which yields none of the benefits of the cooperative solution . In a game with imperfect information, where the state of nature is u ncertain in the first but known in the second of two periods, the expe cted benefits of the noncooperative solution are 98% of the expected b enefits of the cooperative solution. In contrast to single-agent studi es which show little cost to delaying abatement, the benefits of coope ration are usually lost if cooperation is delayed 20 years.