Design of international environmental agreements under uncertainty

We present a simple game model of international environmental agreements and examine the effects of learning (resolution of uncertainty) on the stability of agreements. An agreement is said to be stable if no countries have an incentive to defect from it and free-ride. We have shown that whether negotiations are conducted before or after learning does not have a significant effect on the stability of an agreement, and that it is necessary to include “punishment” in the rules, which means that countries in a coalition should respond to countries defecting from the agreement by individually reducing the amount of their abatements to Nash equilibrium levels. Also shown is the fact that side payments are essential to realization of a stable imputation. It is important to include rules requiring technological and financial aid for abatement of anthropogenic pollutants. Copyright Springer Japan 2004