How to encourage collective action on climate change

By now, the danger from climate change and other forms of environmental degradation is so evident that it seems crazy to ignore it. And yet the world has failed thus far to devise an adequate response to the problem. Our first stab at a solution, the 1997 Kyoto Protocol, set only modest goals and failed to include the world’s biggest polluters. The effort in Copenhagen in 2009 to craft a more potent global agreement ended in a breakdown of negotiations.

Our collective failure to take action is not the result of having chosen leaders who are insane or irrational. The reason we seem incapable of coming together to protect the climate is known as the “tragedy of the commons”: a shared resource tends to be rapidly depleted because no single actor – whether a country or a person – considers how their actions affect other users. In other words, because you reap all of the benefits, but suffer only part of the costs, you are tempted to over-exploit the resource. And, so far, there is little reason to believe that we are on track to find a way to ensure a happier ending.

The soon-to-be-endangered Atlantic bluefin tuna is one example. We have a shared interest in preventing the species from being fished to extinction. And yet individual fishermen have little reason not to catch as many tuna as possible, as any animal that escapes their net will likely end up in another’s. A similar logic applies to countries considering fishing quotas; as a result, bluefin stocks are running low.

One approach to ending the tragedy of the commons was devised some 50 years ago by the economist Ronald Coase. His solution was to assign property rights to the shared resource, compensating the losers. With private ownership established, market mechanisms could restore efficiency.

Such a solution might work for fish, provided that migrating populations could be tracked; but it is far harder to apply it to something like the climate. How, after all, would one assign property rights to atmospheric composition?

The alternative approach – embodied by the Kyoto Protocol – is to implement quotas limiting individual actors’ permissible greenhouse-gas emissions. Only then is a market created to allow actors to buy the emissions permits they need and sell those they do not use.

In theory, this approach provides an incentive for the participants to cooperate, as the arrangement’s breakdown would accelerate the depletion that all have agreed to avoid. In practice, however, these types of deals are difficult to conclude and often are violated.

For starters, domestic politics can pose an obstacle to participation in international treaties, especially when policymakers facing re-election are dependent on the support of interest groups with goals that run counter to the public’s welfare.

Decisions made during US President George W. Bush’s two terms in office offer an illuminating contrast. In 2001, during his first 100 days in office, Bush blocked or overturned many laws and regulations protecting the environment, and he put a definitive end to American participation in the Kyoto Protocol. The mining and oil industries – important sources of support for his next presidential election campaign – had gotten their money’s worth.

Once Bush’s re-election was secured, however, he had less incentive to seek the support of these powerful lobbies. During his second term, Bush created the world’s largest ocean preserve – a 360,000-square-kilometer area around the Hawaiian Islands. Because Bush was constitutionally barred from seeking a third term, the way was opened for more environmentally friendly policies.

Another impediment to cooperation is geopolitical. If conflict over valuable resources is unavoidable, as examples throughout history suggest, there is little reason for a country not to exploit a given resource to the maximum possible extent prior to the emergence of scarcities. To the extent that countries believe that resource-based conflict is inevitable in the future, negotiations to limit resource depletion become more likely to break down in the short run.

Of the two obstacles, domestic interest-group politics is the more easily surmountable. Over the past two centuries, political leaders have become more accountable to constituencies within and outside of their countries’ borders, and voters have become less susceptible to lobbying groups and the media. Further education of the electorate may be the key to speeding up this process.
The geopolitical concerns are more difficult to address. The challenge of persuading countries to cooperate is similar to the one governments have always faced in inducing their citizens to contribute to the common good; everyone benefits from good roads, but most people would prefer not to contribute to the cost of their construction.

According to the American economist Mancur Olson, these types of cooperation problems are easier to solve when there are as few decision-makers as possible. Within a country, the problem is overcome by providing governments with the coercive capacity to collect taxes, redistribute public goods, and mediate conflicts between citizens. By extension, one solution to the global problem would be for all of humanity to be ruled by a universal government, accountable to its constituents, and endowed with the authority to enforce its decisions.

Such a scenario is of course extremely unlikely; nation-states will never agree to hand over their sovereignty to a world government. In the absence of alternatives, the best solution, it seems, would be a reduction in the number of actors – a return to a bipolar world in which two superpowers decide for themselves and their subordinates. But, while this solution would contain the problem of the commons, the dangers could outweigh the benefits. Last time, international cooperation was underpinned by fear of blowing up the planet. Now, too, fears of mutually assured destruction could re-emerge.

This article is published in collaboration with Project Syndicate. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Petros Sekeris is Principal Lecturer in Economics at the Department of Economics and Finance, Portsmouth Business School.

Image: Splinters of ice peel off from one of the sides of the Perito Moreno glacier in a process of a unexpected rupture during the southern hemisphere’s winter months, near the city of El Calafate in the Patagonian province of Santa Cruz, southern Argentina, July 7, 2008. REUTERS/Andres Forza.