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Climate Change as a Collective Action Problem Climate change stands out as the quintessential global-scale collective action problem with implications that require carefully managed policy coordination and multi-level governance. The build-up of greenhouse gases in the atmosphere threatening global warming, sea level rise, changed rainfall patterns (leading to shifting agricultural productivity), and increased intensity of hurricanes and typhoons cannot be successfully addressed by any one nation acting alone nor by governmental action at any one level of geographic scale (Ivanova, 2010, p.30).

The atmosphere into which greenhouse gases are emitted is inescapably shared by all nations, and the emissions from each travel freely across national borders. Although the emissions are global in scope, the polluting activities often require local, state/provincial, or national monitoring and control.

Where a natural resource is shared among many countries as in the case of the atmosphere (or the oceans), fostering sustainable resource use often proves to be excruciatingly difficult. Some countries (or sub-jurisdictions) may not share the views of others as to how serious the problem is, how much should be invested in a policy response, or how to trade off a commitment to the shared problem versus other priorities. Will India pay for greenhouse gas controls – or insist that scarce environmental resources go toward expanded drinking water infrastructure? And some nations may act strategically – hoping to “free ride” on the efforts of others. Problems of the “global commons,” of which climate change is the ultimate example, thus highlight the need to manage ecological interdependence alongside economic interdependence and to develop versatile governance regimes that can manage across the multiple scales at which action will be required.

Without a commitment to managing interdependence, institutional flexibility, and carefully crafted policy instruments, this sort of “public good” will be under-provided, leading to a “tragedy of the commons,” where national policy optimization leads to global over-exploitation of a limited resource (see generally Olson, 1965). 1 In the case of climate change, this risk translates into an increased threat of global warming and the other harms identified above. Without cooperation and discipline on “free riding,” the environmental concerns related to climate change will go unaddressed. Moreover, any country acting unilaterally to reduce emissions – and bearing costs that others do not – faces the prospect of competitive disadvantage. For every nation, the benefit-cost calculus related to their own greenhouse gas emissions control efforts will be negative. Simply put, no nation will reap benefits from their own climate change mitigation efforts alone that would justify the costs. The case for action comes solely from the logic of reciprocity, supported by governance cooperation across both vertical and horizontal scales (Daniel C. Esty and Geradin, 2000).

Reciprocity and a commitment to manage interdependence systematically depends on the burden of responsive action being spread in a manner that engages all parties (or at least all major players) fully and fairly. In the case of climate change, two separate “burdens” must be considered: (1) the distribution of the harms from climate change (and thus the benefits of emissions control) and (2) the costs of emissions control. Unfortunately, the distribution of potential harms from climate change is neither evenly spread nor correlated with emissions. Small island states, for instance, emit very little * Yale University School of Law.

Highlighting public goods as the source of all collective action problems and defining them, in the traditional economic terms, as goods which are non-excludable (i.e. one person cannot reasonably prevent another from consuming the good) and non-rivalrous (one person’s consumption of the good does not affect another’s, nor vice-versa).

Daniel Esty and Anthony Moffa

but are likely to bear high costs in the form of sea level rise and more severe windstorms. Likewise, some powerful political interests within the biggest emitters, including both China and the United States, perceive the benefits of a reduced threat of climate change to be less than the costs in the form of higher energy prices and potentially diminished economic growth.

Thus, while there is generally agreement on the need for “common but differentiated responsibility” (see e.g. Kyoto Protocol, 1997, p.22), no consensus exists on the particulars of what “burden-sharing” should look like in the climate change context. European nations have committed to action ahead of the pack. But other industrialized nations such as the United States (as well as Australia and Canada) have balked at taking action for fear of “free riding” on the part of major developing nations who have become trade competitors. China and India, the particular targets of this concern, continue to insist that they are too poor to be assigned greenhouse gas emissions control obligations. These emerging industrial powerhouses argue that the developed countries are responsible for most of the historic emissions and should therefore bear the responsibility for fixing the problem.

Of course, some recently developed nations, such as South Korea, Mexico, Brazil, and Chile, acknowledge their greenhouse gas emission obligations and would accept targets in a “Beyond Kyoto” climate change treaty (Torre et al., 2009, p.50; see also Green Climate Fund, 2011 noting that the Republic of Korea offered to contribute to the start-up cost of the Green Climate Fund). Still many developing nations remain too poor to be asked to do very much at all, thus, each Conference of Parties to the United Nations Framework Convention on Climate Change, including Copenhagen in 2009, Cancun in 2010, and Durban in 2011, has simply resulted in aspirational agreements to agree at a later date (Establishment of an Ad Hoc Working Group, 2011).

Divergent values and priorities across the nations of the world exacerbate this burden-sharing problem. The higher discount rates used by poor countries with fast-growing economies make coordinated environmental governance even more difficult. Thus, even when costs and benefits are carefully calculated and the value judgments are made explicit; the various peoples around the world may come to different conclusions regarding the optimal level of commitment to emissions reductions.

There has not yet been a unifying burden-sharing principle enunciated or even commitment to a sufficiently robust environmental governance mechanism to facilitate collective decisions – and more importantly, ensure adherence to an emissions control regime.

Climate change also presents a “commons problem” of a unique scale and complexity. Due to the wide range of greenhouse gas sources and issues, climate change implicates a large number of international, national, regional, state/provincial, and local regulatory bodies with overlapping jurisdiction and, at the same time, incomplete coverage and limited accountability. This phenomenon, dubbed a “regulatory commons problem,” results from hesitation of those with jurisdiction to act unilaterally (Buzbee, 2003). This second-order commons problem is further complicated by the challenge of sovereignty, with international institutions generally deferring to nation states to choose how to regulate their own citizens.

This paper argues that more effective global environmental governance will be needed to address climate change. In particular, we believe that a new environmental regime needs to be constructed with institutional capacities designed to respond to global-scale collective action problems in general and the specific challenges of climate change in particular. But we do not believe that even a robust Global Environmental Organization can succeed without support from other international bodies, most notably the World Trade Organization. In laying out this argument, we begin by providing a diagnostic profile of the current environmental regime’s failure. Although there have been numerous scholarly attempts to derive frameworks for international institutional success (Buzbee, 2003, describing a framework labelled the ‘three C’s,’ which claims that any effective action of environmental institutions is likely to increase concern or capacity, or improve the contractual environment; Barrett and Stavins, 2003, p.369), few studies have focused on the elements of failure.

This gap persists despite the acknowledgement by many in the field that poor institutional design is Why Climate Change Collective Action has Failed and What Needs to be Done within and without the Trade Regime one of the core problems plaguing global environmental governance (Ivanova, 2010, p.46). We group the elements of institutional failure into three categories: (a) political economy considerations, (b) negotiation roadblocks, and (c) structural deficiencies with regards to ensuring adherence to shared commitments (i.e., lack of discipline on free riding). We present the specific characteristics in each of these problem areas and then develop the case for a Global Environmental Organization (GEO) to address the identified shortcomings (the proposed GEO expands upon and updates Daniel Esty’s earlier models, see Esty, 1994a; Esty and Ivanova, 2003).

We go on to explain that even a well-functioning GEO will not be able to respond adequately to the climate change challenge. Given the nature of climate change costs and benefits as well as the disagreement over burden-sharing, the environmental regime must be reinforced by a broader framework of global governance – in particular an international trading system which ensures that access to the gains from economic integration made possible by global markets are available only to those who share the burdens of ecological interdependence. Ongoing cooperation to address a problem that requires all to bear costs cannot be achieved without a system of discipline – which is easier to base on withheld benefits than imposed through threats. In this regard, we note that the trading system (with its recognized benefits) has made great strides in moving toward greater recognition of environmental concerns, including climate change (Lamy, 2007; Esty, 2001), but still has some distance to go. We spell out the further steps required within the WTO to ensure that the trade regime plays a constructive role in reinforcing the proposed GEO and responding to climate change.

Diagnosis of Failed Climate Change Policymaking at the Global Institutional Scale Progress at the global scale in addressing climate change has been modest. The trajectory of global scale climate change policy progress has been flat, or even downhill, since the Framework Convention on Climate Change was signed in Rio de Janeiro in 1992. The two intervening decades of negotiations have failed to produce the serious international commitments needed to address the problem. Recent “conferences of the parties” in Copenhagen, Cancun, and Durban made strides with regard to financing mitigation and adaptation, deforestation, and adaptation strategy (see e.g. Green Climate Fund, 2011; The Copenhagen Accord, 2009, establishing ‘Methodological guidance for activities relating to reducing emissions from deforestation and forest degradation and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries.’), but a real decision on a new over-arching climate change treaty has been repeatedly deferred.2 The burgeoning literature on the international climate change negotiations reveals a number of breakdowns. These diagnostic elements fall into three broad categories: political economy considerations, roadblocks to negotiation, and inadequate incentives for cooperation.

Political Economy Considerations

Complexity of the system The first commonly identified source of regime failure is the complexity of the international environmental governance structure (Halvorssen, 2007; Alter and Meunier, 2009; Stavins, 2010;

Asselt, 2007). A complex system makes directed and coordinated efforts especially difficult. The institutional inertia makes collective action even less likely. The overlapping jurisdiction of numerous Most recently in Durban, South Africa the parties agreed only to establish yet another working group that has as its stated goal the development of a new “protocol, legal instrument or agreed outcome with legal force” by 2015, which will take effect by 2020. The Ad Hoc Working Group on the Durban Platform for Enhanced Action group is in addition to the existing Ad Hoc Working Group on Long-term Cooperative Action under the Convention (FCCC, 2011).

Daniel Esty and Anthony Moffa

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