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Climate change is a problem that is inherently different from other environmental problems with which humanity has grappled, because the assumption that prior experience with other air-pollution problems is a good model upon which to base climate policy responses fails at many levels. At least six unique features characterize the issue.
Public goods issues
Traditional environmental air-pollution problems have been amenable to local
solutions. The dirty air in a North American city is of no direct consequence
to a city in New Zealand. With climate change it is the emissions of all sources
in all nations that determine the concentration of greenhouse gases (GHGs) in
the atmosphere. As a consequence, the climate change problem is inherently a
public goods problem. That is, the climate that everyone enjoys is the product
of everyone’s behaviour. No single individual or nation can determine the
composition of the world’s atmosphere. Any individuals’ or nations’
actions to address the climate change issue, even the largest emitting nation
acting alone, can have only a small effect. As a consequence, individuals and
nations acting independently will provide, together, fewer resources than all
individuals and nations would if they acted in concert. This characteristic
provides an important motivation for collective, global action.
Multiplicity of decision makers
Multiplicity of decision makers also implies that there are limits to collective
actions. Decisions by actors at a wide range of levels–global governmental
organizations, nation states, regional governments, private individuals, multinational
firms, local enterprises–all matter. The global nature of the problem also
implies that the full breadth of human social structures is encompassed. This
in turn implies that a diversity of policy responses is needed. Policy responses
that are effective and appropriate in one social context may be completely inappropriate
in another.
Heterogeneity
Emissions and consequences are also heterogeneous around the world. This exacerbates
the basic public goods nature of the problem. Countries are distributed across
a spectrum of high emitters to low emitters and high impacts to low impacts.
Nations with high emissions and low expected impacts have a high potential to
control concentrations, but little incentive. On the other hand, nations with
low emissions and high impacts have great incentive to control emissions, but
little capability. While side payments could, in principle, resolve this dilemma,
transaction costs may be significant and the present income distributions may
lead to unacceptable outcomes. Furthermore, most of the people who will be directly
affected by the problem have not been born yet, which limits their ability to
negotiate. Both emissions and the capability to mitigate carbon emissions to
the atmosphere are unevenly distributed around the world. A dozen countries
control 95% of conventional carbon-based energy resources–conventional
oil, conventional gas, and coal. Unconventional resources–deep gas, methane
hydrates, and shales–while presently expensive relative to conventional
fuels, have an unknown distribution in potentially vast quantities. Fifteen
nations emit more than 75% of the world’s annual carbon emissions.
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