Europe's Reaction to the US Withdrawal from the Paris Environment Agreement: A Game Theory Approach

Document Type : Research Paper

Authors

1 Associate Professor of Economics, Shahid Bahonar University of Kerman, Kerman, Iran.

2 Master student of the Department of Economics, Shahid Bahonar University, Kerman, Iran

10.22103/jdc.2021.17577.1135

Abstract

Objective: Environmental security is a significant part of human and national security. Today, attention to environmental issues and sustainable development is one of necessities of economic development and the problem of climate changes or global warming in the environmental domain has turned to one of the most important human concerns, since it will have long-term effects on future generations welfare. Solving the created environmental challenges requires international cooperation for the countries' just and logical exploitation of human resources without damage to other countries. The Paris Agreement or the paris agreement is a treaty within the framework of the United Nations Convention on Climate Change. The text of the agreement was approved by the delegates of 195 countries at the 21st United Nations Conference on Climate Change in Paris and was ratified on December 21, 2015. This agreement has been in force since November 4, 2016. According to the text of the agreement, the agreement was to enter into force when 55 countries, which produce at least 55% of the world's greenhouse gases, ratify, accept or sign the agreement. Among the goals of the Paris Agreement is to try to prevent a 1.5 degree rise in temperature compared to the pre-industrial era in order to reduce the risks and effects of climate change, increase the ability to adapt to the severe effects of climate change and create climate resistance, conditions to reduce greenhouse gas emissions. The United States withdrew on June 1, 2017. American exit has challenged this problem. This study addresses cooperation or non-cooperation of European Union and United States in Paris Agreement using game theory.
 Method: Play is a description of the economic, social and political activities of individuals. Each of these activities or games has a structure and rules according to which players play the game to achieve their goals. The purpose of this theory is to provide a way to express the facts of human life that expresses contradiction and alignment. A game is a situation in which each person's decision affects another person's decision and all the people in that situation are aware of this. Game theory can be used in many cases, the most important of which is to explain the reality, predict the results and recommend, and in this way can show the right way to the players of a game.  The method used in this study is game theory, through which the strategy of each member country can be examined.
 Findings: The result of the Nash equilibrium of the US-Europe game in terms of carbon emissions according to the NDC target and two degrees of decrease in air temperature, US and European exit, Nash equilibrium of the US-Europe game in terms of carbon prices, no US-European exit, Also, the Nash equilibrium of the US-Europe game in terms of macroeconomic effects is the non-exit of the US and Europe, because at this point, none of the players is motivated to violate.
 Conclusion: If carbon emission considerations are considered together with economic considerations (carbon prices and macroeconomic effects) by the two groups of the country; The two groups of countries will abide by the agreement and follow the strategy of not leaving. So the United States comes to an agreement.

Keywords

References

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Journal of Development and Capital
Volume 6, Issue 1 - Serial Number 10
September 2021
Pages 209-230

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History

  • Receive Date: 12 May 2021
  • Revise Date: 30 June 2021
  • Accept Date: 17 July 2021

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