International environmental agreements, uncertainty and learning: the case of stock dependent unit damage costs

Abstract

In Ulph (2002) I analysed how the possibility of future resolution of uncertainty about damage costs affected the incentives and timing for countries to join a self-enforcing international environmental agreement (IEA). I analysed two membership rules – fixed (countries commit whether to join an IEA for all periods) and variable (countries decide each period whether to join). While total damage costs depended on the stock of pollution, average damage costs did not. One consequence was that, in the variable membership model the number of countries who joined in the current period could not be affected by future learning. In this paper I allow unit damage costs to depend on the stock of pollution. I show that while this complicates the analysis, all the results of the previous paper are essentially unaffected. In particular, with variable membership future learning has almost no affect on current membership.