Adaptation measures and stable international environmental agreements in a pollution dynamic game

The paper studies how the effort in research and development (R&D) for adaptation technologies and the effects of spillover can influence the participation in International Environmental Agreements (IEAs). Adaptation is supposed to be a public good because knowledge in adaptation requires investments in R&D that can benefit many countries. Members of the agreement fully share their knowledge and determine their investments in R&D by maximizing their joint welfare, while non-members optimize their individual payoffs under the assumption that part of knowledge unintentionally spills over between a signatory and a non-signatory country and between two non-signatory countries. The model is placed in the context of differential games and we study the open-loop Nash equilibrium of a pollution problem whose stock accumulates and evolves over time. The results obtained show the effects of R&D in adaptation technologies and of knowledge spillover between countries, on the size of stable coalitions and on the evolution of stock pollution.