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This study explores the relationship between cooperation failure and the 2°C target using a theoretical dynamic game model, simulation, and sensitivity analyses. It emphasizes the essential need for global cooperation to combat climate change and reach the 2°C target. The results highlight the importance of effective compensations and benefit transfer mechanisms in promoting cooperation among countries. The research underscores the significance of institutional design in fostering cooperation and suggests opportunities for generalized Pareto improvement.
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Cooperation is Essential for 2℃ Target: New Perspective from Dynamic Game Model
Contents • 1. Introduction • 2. Theoretical Dynamic Game Model • 2.1. Individual utility • 2.2. Effects of Climate Change Investment (CCI) • 2.3. Non-cooperative and cooperative dynamic game equilibriums • 3. Simulation and Sensitivity Analyses • 4. Conclusions
1. Introduction • Backgrounds: • 2℃increment was “an upper limit beyond which the risks of grave damage to ecosystems, and of non-linear responses, are expected to increase rapidly” (AGGG) • Although it’s intuitively acceptable that there might be a connection between the cooperation failure and the 2℃ target, few researches can effectively prove the relationship. A theoretical model together with simulation and sensitivity analyses are introduced to investigate the relationship: 2℃ Target and Cooperation Strategy from Dynamic Game Perspective
2. Theoretical Dynamic Game Model • 2.1. Individual utility (CRRA) Gross Present Utility for Country i is the discounting ratio Consumption at time t for Country i Utility for Country i at time t Index of relative risk aversion for Country i GDP growth rate at time t for Country i GDP growth rate in the absence of global warming Temperature increment at time t Marginal effect of temperature increment on GDP growth for country i
2. Theoretical Dynamic Game Model • 2.1. Individual utility (CRRA) • Two Uncertainties: • 1). • 2). • Methods: • Based on Integrated Assessment Models with PDF (Probability Density Function)
2. Theoretical Dynamic Game Model • 2.2. Effects of climate change investment (CCI) • Def. invi donates the percentage of CCI to GDP • Positive Effects • Accelerate GDP growth with marginal effect • Negative Effects • Decrease the percent of consumption • Spillover Effects • Temperature increment upper boundary (UBTI)
2. Theoretical Dynamic Game Model • 2.2. Effects of climate change investment (CCI)
2. Theoretical Dynamic Game Model • 2.3. Non-cooperative and cooperative dynamic game equilibriums • Two Country/Group Game Scenario • Backward Induction Method
3. Simulation and Sensitivity Analyses • Initial Parameter for two-country model
3. Simulation and Sensitivity Analyses • Simulation Results • Cooperation is essential for 2℃target. • Cooperation is not self-driven. • It’s still possible and feasible for the implementation of cooperation although it’s not self-driven.
3. Simulation and Sensitivity Analyses • Sensitivity Analyses
4. Conclusions • Firstly, it’s essential for cooperation among countries to deal with global warming and to reach the 2℃target. • Secondly, without effective compensations and benefit transfer mechanisms, cooperation can hardly be realized automatically. • global climate negotiation should put enough attention to the institutional design to avoid the collapse of cooperation • Finally, our research also gives a good signal that there’s still room for generalized Pareto improvement to carry out cooperation
