This paper develops a dynamic model of environmental treaty formation with heterogeneous countries that allows for entry, exit and country specific uncertainty on the benefits from other countries ratifying the treaty. Using a dataset comprising the cross-section of ratification dates of global environmental treaties for 1980-2020, we structurally estimate the model’s parameters. The estimates inform about the existence of strategic complementarity or substitutability in the formation of environmental treaties, which occur when the relative benefits from cooperation increase or decrease after the inclusion of an additional country. Through counterfactual experiments, we illustrate how mechanisms fostering strategic complementarity can expedite the establishment of a grand coalition in support of environmental treaties and quantify associated welfare gains.
