Pollution does not respect political boundaries. Classic examples of transboundary pollution include acid deposition, climate change, pollution of the North Sea or the Black Sea, and damage to the stratospheric ozone layer. Transboundary pollution can have regional effects on local ecosystems (e.g., acid deposition in a particular
country) or worldwide impacts on global public goods (e.g., biodiversity loss due to climate change). Countries should be working together to address these pollution problems – the responsibility for reducing any risk to local or global goods must ultimately be shared among nations that benefit.
The challenge is that although nations have a common interest to protect themselves, they may or may not have a national interest to abate pollution voluntary at a socially optimal level. This creates an incentive for one country to free ride off the abatement effort of other nations because no one can be prevented from enjoying the abatement efforts, regardless of whether they abate or not.
The purpose of the proposed summer school is to describe some of the key issues emerging from the economic analysis of these transboundary pollution, global public good problems, and environmental conflict. We focus on climate change as an important example of a global environmental problem requiring global solutions. The school will have two parts. The first part will be devoted to the theoretical models on international environmental agreements based on game theory. This review of the basic models will be extended to include dynamic models and the analysis of uncertainty on the scope of cooperation. The second part of the school will focus on some of the climate-economy integrated assessment models elaborated to evaluate the effects of
different climate policies.
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