Cooperation with asymmetric environmental valuation and responsibility in a dynamic setting

Francisco Cabo (1) , Mabel Tidball (2)

1 Universitad de Valladolid
2 CEE-M - Centre d'Economie de l'Environnement - Montpellier

We analyze a dynamic environmental agreement between two regions. We assume that the agreement is jointly protable, because the eort associated with emission reductions is overcompensated by a cleaner environment in the future The two regions are asymmetric in two respects: their value of a cleaner environment is dierent, and they are responsible for the initial environmental problem in dierent ways. Because the benets of a cleaner environment cannot be transferred, we propose a mechanism on how to share the eorts of lowering current emissions, satisfying two main properties. The rst property is a benets pay principle: the greater one region's relative benet from cooperation, the greater must be its relative contribution. The second property is, a polluter pay principle: a region's relative contribution increases with its responsibility. Moreover, the sharing scheme must be time consistent. At any intermediate time, no country can do better by deviating from cooperation. *

Domaines: Economies et finances

Francisco Cabo, Mabel Tidball. Cooperation with asymmetric environmental valuation and responsibility in a dynamic setting. Virtual Workshop on Dynamic games in environmental economics and management, May 2021, En ligne, France. ⟨halshs-03256916⟩