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Mitigation and adaptation represent two solutions to the issue of global warming. While mitigation aims at reducing $$\hbox {CO}_2$$ emissions and preventing climate change, adaptation encompasses a broad scope of techniques used to reduce the impacts of climate change once they have occurred. Both have direct costs on a country's gross domestic product, but costs also arise from temperature increases due to inaction. This paper introduces a tipping point in a real options model and analyzes optimal investment choices in mitigation and their timing. [ABSTRACT FROM AUTHOR]

This paper re-examines the formation of International Environmental Agreements (IEAs) modelled as a two-stage non-cooperative game when countries' strategies to control pollution are complementary. This new assumption relying on empirical and theoretical evidences means that reinforcement effects do exist between countries' strategies when polluting or abating. From a deliberately conventional model the results established analytically strongly contrast with those in the literature on IEAs. We find that the unique stable agreement can consist in half countries involved in the negotiation; we demonstrate that the environmental impact of such cooperation is almost total: it tends toward the one of the full cooperative solution. Even if the incentives to free-ride are less strong, we do not observe the formation of the 'grand' coalition: not all the countries sign the agreement. We also explain why the level of cooperation is decreasing with the perception countries have of the seriousness of the problem. [ABSTRACT FROM AUTHOR]

We analyze stability of self-enforcing climate agreements, considering a sequential coalition formation process of heterogeneous and farsighted players. Players can make proposals which are either accepted or countered by alternative proposals. We discuss the conceptual difficulties of implementing and solving such a game and the strategic options arising in a sequential process. This is illustrated with simple examples and with numerical simulations using the CLIMNEG world simulation model (CWSM). [ABSTRACT FROM AUTHOR]