Tuesday, June 9, 2015

Can Climate Clubs and Community-Based Initiatives overcome International Free-Riding to Reduce Global Greenhouse Gas Emissions?

How Idealism, Expressed in Concrete Steps, Can Fight Climate Change (Robert J. Shiller, New York Times, Mar. 29, 2015)

Also discussed here: A Polycentric Approach for Coping with Climate Change (56 page pdf, Elinor Ostrom, Policy Research Working Paper 5095, Background Paper to the 2010 World Development Report, The World Bank, Oct. 2009)

And here: Climate Clubs: Designing a Mechanism to Overcome Free-Riding in International Climate Policy (51 min webcast video, American Economic Association Presidential Address, William Nordhaus, Jan. 4, 2015)

Today we review two ideas that will overcome the last of four key aspects of climate change: climate science (mature and known), costs to reduce emissions (known), economic instruments to implement policy (carbon tax, cap and trade, known), system to prevent international free-riding (zero progress). Free-riding avoids the costs of implementing change while benefiting international from the actions of the few nations who do take action at cost to themselves. Little global leadership is seen in the failed attempts to reduce global GHG emissions and even when countries pledge to reduce emissions, dropping out of that pledge brought no penalties or sanctions to the partner that exits- as seen by the decision of the Canadian government to drop out of its Kyoto Protocol commitment in 2011.

Two proposals are now on the table and involve starting at the community level or small group of participating countries and then expanding these as progress is made. Climate Clubs is a top-down treaty with penalties for non-participants (such as tariffs for imports into climate club regions) which can lead to high participation with high abatement The Community approach, introduced at the 2009 UN Climate Conference in Copenhagen (notably the world’s first carbon neutral capital), is based on action at the individual or community level where benefits can be more clearly seen and costs are less than through changes at the national or international level. Both avoid the problem of free-riding. cycling for cl ch  

Key Quotes:

 “Trade-offs are particularly relevant on an average, national, or global level…Stronger climate policy now implies higher, immediate economic costs. Coal-fired power plants will become obsolete sooner or won’t be built in the first place…The big trade-off question then is how these costs compare to the benefits of action, both because of lower carbon pollution and because of economic returns from investing in cleaner, leaner technologies today”

“the Copenhagen Theory of Change…we should be asking people to volunteer to save our climate by taking many small, individual actions” “while many of the effects of climate change are global, the causes of climate change are the actions undertaken by individuals, families, firms, and actors at a much smaller scale. The familiar slogan “Think Globally but Act Locally” hits right at a major dilemma facing all inhabitants of our globe.”

“a climate club is a group of countries that agree to create incentives for people to reduce carbon emissions, while also erecting tariff barriers on imports from countries that are not members of the club…A climate club may start with only a few countries and then grow as others join. The club may grow through time rather than collapse as we saw with the Kyoto Protocol. Now they will be coming into the club as they see, over the years, the advantages of membership.”

“In the case of climate change, the joint “good” is reducing a joint “bad” caused by increased emissions of greenhouse gases. The joint goal is reducing the threats of massive climate change, of increased ocean levels, of increased variability in climate patterns, and many other global bads.”

 “The maintenance of reliable, comparative information over time is a very important step in coping with large-scale externalities, both to assess who is complying with policies and to compare the effectiveness of diverse strategies in different units.”

“A strong commitment to finding ways of reducing individual emissions is an important element for coping with climate change. Building such a commitment, and the trust that others are also taking responsibility, can be more effectively undertaken in small- to medium-scale governance units that are linked through information networks and monitoring at all levels.”

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