CESifo Working Paper: Energy and Climate Economics 4024
If the threshold that triggers climate catastrophe is known with certainty, and the benefits of avoiding catastrophe are high relative to the costs, treaties can easily coordinate countries' behavior so as to avoid the threshold. Where the net benefits of avoiding catastrophe are lower, treaties typically fail to help countries cooperate to avoid catastrophe, sustaining only modest cuts in emissions. These results are unaffected by uncertainty about the impact of catastrophe. By contrast, uncertainty about the catastrophic threshold typically causes coordination to collapse. Whether the probability density function has thin or fat tails makes little difference.
catastrophe uncertainty thresholds impacts coordination cooperation international