Stability of International Environmental Agreements: Effects of Mitigation and Adaptation Policies

Abstract The purpose of the paper is to study how research and development (R&D) into adaptation technologies and mitigation activity for the reduction of emissions can influence participation in International Environmental Agreements (IEAs). Both mitigation and adaptation are supposed to be a public good because both produce the benefit of all countries. The model is employed in the context of non-cooperative dynamic games. Countries are involved in a two-stage game. In the first stage, each country decides upon its participation in the agreement, that means collectively deciding their mitigation and adaptation policies. In the second stage, countries decide on their mitigation strategies and investment in R&D, either individually or collectively, depending on their decision in the first stage. Members of the agreement fully share their knowledge about adaptation capacity and there is the assumption that some knowledge unintentionally spills over between a signatory and a non-signatory country and between two non-signatory countries. The model is employed in the context of non-cooperative dynamic games. Countries are involved in a two-stage game. In the first stage, each country decides upon its participation in the agreement, that means collectively deciding their mitigation and adaptation policies. In the second stage, countries decide on their mitigation strategies and investment in R&D, either individually or collectively, depending on their decision in the first stage. Members of the agreement fully share their knowledge about adaptation capacity and there is the assumption that some knowledge unintentionally spills over between a signatory and a non-signatory country and between two non-signatory countries. The results obtained show how mitigation activity and knowledge in adaptation technologies between countries can influence the size of stable coalitions. In particular, how it is possible to obtain the stability of the grand coalition, as well as the stability of coalitions composed of a small number of countries.