Global Warming: Policy-Making

Global warming is a typical case of Hardin's tragedy of unmanaged global commons. * As in most common property, policy-making and implementation for mitigating global warming remains a complex task that involves international agreements and protocols. In this situation, substantive actions on climate change will be taken by sets of nations if and only if each nation believes that it benefits on balance.

The issue came into prominence during the late 1980s as a result of the increasing public concern over the greenhouse effect , stimulated by the Brundtland Report, and led to the formation of the Intergovernmental Panel on Climate Change in 1988. Following this, the United Nations General Assembly called for a global summit on environmental and developmental issues. More than 150 countries participated in this 1992 Earth Summit held at Rio de Janeiro, and pledged to confront this problem through international treaties.

The Kyoto Protocol of 1997, endorsed by 160 parties to the United Nations Framework Convention on Climate Change, called for, on average, a 5-percent cut in emissions of six greenhouse gases by thirty-eight industrialized countries relative to 1990 emissions levels. Initial drafts of the international treaty called for this reduction by 2012, with each country having a different goal. Developing nations were not asked to commit to this emissions reduction.

To take effect, the treaty needs ratification by the industrialized nations accounting for 55 percent of the 1990 carbon dioxide emissions. The treaty has not enjoyed universal support, however. Some prominent nations, including the United States and Canada, have expressed reservations about the possible negative economic impact of the treaty. Representatives of countries have continued to meet regularly to negotiate consensus about unresolved issues of the protocol, especially rules, methods, and penalties. As of October 2002, eighty-four parties had signed and ninety-six parties had ratified or acceded to the Kyoto Protocol.

Obstacles to Policy-Making

Several factors influence policy-making in global warming. The existence of a "free-rider problem" makes international negotiations difficult. This results from an individual country taking advantage of the benefits of carbon abatement without bearing the abatement cost.

The second obstacle is the divergence of interest between winners (countries with damage from global warming) and losers (countries dependent on

Japanese environment minister Hiroshi Oki is seen on two screens as he addresses the final plenary session of the United Nations Global Warming Conference in Kyoto, Japan in December 1997. A treaty aimed at heading off a potentially catastrophic warming of Earth was formally adopted after 11 days of debate. As of 2002, the protocol still awaited international consensus.
Japanese environment minister Hiroshi Oki is seen on two screens as he addresses the final plenary session of the United Nations Global Warming Conference in Kyoto, Japan in December 1997. A treaty aimed at heading off a potentially catastrophic warming of Earth was formally adopted after 11 days of debate. As of 2002, the protocol still awaited international consensus.
production and export of fossil fuels ) of global warming actions. Scientific uncertainty about the greenhouse effect and its regional implications is another issue that makes policy decisions more complicated and creates disagreements.

Another argument from proponents of inaction is that technical change over the years will solve the global warming problem. The participation of developing countries in limiting emissions is another issue facing policy-makers. These nations argue that they should not be forced to bear the economic costs associated with reducing greenhouse emissions that they did not create. There is a growing tension between developed and developing countries regarding constraints on emissions, highlighting the importance of including developing countries in international efforts toward global warming policies.

The unique nature of China's production that relies on coal poses another major challenge to policy-making. With its share of 11 percent of emissions and an expected share of 22 percent in 2011, this is becoming an important factor in international efforts.

Policy-making to address global warming aims at three options: preventive strategies to slow global warming; offsetting global warming through climatic engineering; and adaptation to the new climate. Among these options, preventive strategy has received the greatest public support. In a typical policy-making process, policy scientists and economists use a policy framework that is effective in addressing global warming in a coordinated way among individual countries.

Policy Instruments

There are four main classes of policy instruments that are commonly used to address global warming: emission targets, joint implementation, carbon taxes, and trading permits. These instruments differ in appropriate behavioral incentives to achieve the stated goals, economic efficiency in achieving these goals, and group incentives for long-term cooperation.

Emission targets aim at committing countries to achieve specific targets (especially carbon dioxide [CO 2 ] and other greenhouse gases) by a specific date. While this approach is easier to administer, variation in abatement costs among countries could lead to uncertainty in the cost of meeting the target and often involves too much centralized information.

The joint implementation mechanism involves countries paying for pollution abatement projects in other countries and counting the reduced emissions against their own limits. A major drawback of this approach is that it cannot form a long-term basis for achieving targets unless all countries involved have enforced national emission levels. Carbon taxes are levied on producers or consumers on the basis of the carbon content of each fossil fuel. The tax level is efficient if it equated marginal damage cost of CO 2 emissions.

Uncertainty in energy elasticities and technological substitutes makes it difficult to assess emissions reductions a priori. Extension of these taxes to an international scale is politically difficult to implement because of the reluctance of some countries to devolve sovereign powers. The shift of carbon emissions from controlled to uncontrolled countries could occur if there is disparity in national controls, which policymakers call "carbon leakage."

Trading permits, or quotas, constitute another policy instrument in which each country is allotted a quota that it may emit each year based on equity or other political considerations. These permits can be traded between countries to match their actual emissions.

National-Level Efforts

At the national level, several countries are making efforts to reduce emissions. Energy tax on usage (in some European countries), a CO 2 tax (in Norway), industry–government agreements on energy efficiency (in the Netherlands), energy efficiency through improved technology (such as Energy Star in the United States), and reducing vehicular emissions (such as FleetWise in Canada) are some of the programs followed in individual countries.

Several European countries impose heavy taxes on energy usage, designed partly to curb such emissions. Norway taxes industries according to the amount of carbon dioxide they emit. In the Netherlands, government and industry have negotiated agreements aimed at increasing energy efficiency, promoting alternative energy sources, and cutting down greenhouse gas output. Other local initiatives to reduce emissions include energy-efficient buildings, reduced vehicle emissions and fuel use, and public education.

While several countries have recognized global warming as a serious problem, the success of policy-making depends on available technical information and international coordination.

SEE ALSO Acid Rain ; Carbon Dioxide in the Ocean and Atmosphere ; Climate and the Ocean ; El NiÑo and La NiÑa ; Glaciers, Ice Sheets, AND Climate Change ; Global Warming and the Hydrologic Cycle ; Global Warming and the Ocean .

Timothy Randhir


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Cline, William. The Economics of Global Warming. Washington, D.C.: Institute of International Economics, 1992.

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Heal, Geoffrey. "Formation of International Environmental Agreements." In Trade, Innovation, Environment, ed. Carlo Carraro. Dordrecht, Netherlands: Kluwer Academic Publishers, 1994.

Mabey, Nick et al. Argument in the Greenhouse: The International Economics of Controlling Global Warming. New York: Routledge, 1997.

* See page 67 of this volume for an explanatory sidebar, "Tragedy of the Commons."

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