Publication Details

Category Text Publication
Reference Category Journals
DOI 10.1504/IJSD.2003.004229
Title (Primary) International environmental cooperation with risk aversion
Author Endres, A.; Ohl, C.
Source Titel International Journal of Sustainable Development
Year 2003
Department OEKON
Volume 6
Issue 3
Page From 378
Page To 392
Language englisch
Keywords cooperative push; environmental policy assessment; international environmental agreements; risk preferences.
Abstract This paper models global environmental policy in a stochastic setting: reducing pollution not only reduces expected environmental damage but also its spread. The national incentives to cooperate are analysed under adverse conditions: expected payoffs are taken to have the structure of a (static) prisoners' dilemma. It is shown that, even then, incentives to cooperate unilaterally or even bilaterally may exist. They actually do if countries are sufficiently risk averse. Following the traditional economic approach we take national risk preferences to be given. Still, the finding sketched above turns out to be relevant for the design of global environmental policy. We define critical thresholds that actual risk aversion must exceed to induce cooperation. It is shown that risk management may push these thresholds down. Thereby, appropriate policy design may improve the chances for stable and effective international environmental agreements.


Persistent UFZ Identifier
Endres, A., Ohl, C. (2003):
International environmental cooperation with risk aversion
Int. J. Sustain. Dev. 6 (3), 378 - 392 10.1504/IJSD.2003.004229