By Dipti Singhal*
Through a college course recently, I came across a 10th standard student speaking passionately about global warming and climate change. It got me wondering that would the current situation be so worse if our national leaders and decision makers had similar concern about this issue. The Intergovernmental Panel on Climate Change (IPCC) has estimated an increase of 3 degrees Celsius in global average temperature by the end of century.
Other global threats are change in rainfall patterns which may leave some areas flooded and some drought affected, and rise in sea levels due to melting of glaciers submerging coastal areas. This trail of thought made me wonder why international climate change negotiations fail miserably in spite of the great risk to all the nations around the world. This led me to do an independent research on the topic and the article will further talk about my understanding of the issue.
Why are international negotiations needed anyway?
These negotiations are greatly about strategic interdependencies whether we consider decisions of superpowers like China and USA or the differences between developed and developing countries. Here even if a country decides to pollute, it can reap benefits of another country’s decision of abating pollution and will not thus cut its own emissions. Due to the global nature of the problem, a cooperative effort is required.
No single country will be interested in taking costly mitigation efforts until it is assured all other countries will mitigate. So one country waits to see what other countries do. This situation is called social dilemma. This results due to non- cooperative behaviour of countries. So to drive countries to social optimum, international negotiations are needed.
Why do they fail?
International climate change negotiations are not self-sustaining. An intuitive way to understand why international negotiations fail is: If we say both countries decide to cooperate, the outcome will still be same as this is not a self-sustaining agreement as both countries have incentive to deviate. There is nobody to enforce this agreement. So there is a need to understand the challenges due to which these negotiations fail and how they can be adjusted so that the agreement becomes self-sustaining.
What are the challenges faced by these negotiations?
This is an outcome of the public good nature of greenhouse gas reductions. Free-riding refers to a country avoiding mitigation measures because another country is taking mitigation measures. An example of this can be developed countries take costly mitigation measures to avoid burning of fossil fuels due to which their prices go down in international market. As a result, developing countries increase their emissions neutralizing all the efforts of the developed countries. This was a major reason of failure of Kyoto Protocol as it placed no obligations over developing countries making USA reluctant to participate.
Discounting refers to countries avoiding early mitigation expecting advancement in technology which could reduce the cost of taking measures in future. Countries ignore the irreversible ecological changes that could take place due to this and assume very high discount rates.
This feature of negotiations increases the importance of signalling. If a country is taking early mitigation measures, that serves as a signal to other countries which are motivated to take mitigation measures considering their efforts won’t go futile. This also results in lowering future mitigation costs and increases participation in further stages of negotiation. But in the same manner a reluctant signal could decrease participation significantly and increase future mitigation costs.
As a result of failed negotiations, countries also give heed to how to adapt to climate changes technologically. These give rise to reluctance in countries to take mitigation measures and instead spend in adaptive technologies.
Lack of certainty
Governments know that climate change is occurring but they don’t have exact information about when and how much damage will they suffer which makes them reluctant to take early mitigation measures. Countries therefore prefer to wait to understand their own vulnerability to the damages due to climate change.
What can be done?
Assume that only two countries participate in the negotiations, USA and China. Both fear to lose industrial competitiveness due to reductions in emissions and represent developed and developing countries. The former demands universal agreement on country-specific limits on emissions based on historical emissions while the latter is interested in basing limits on per- capita basis.
In real world scenario, developing countries perceive their damages low as they are already poverty stricken and perceive the damages of developed countries high as
they will incur huge wealth loss due to impact of climate changes. As the perceived damages of USA are high, it might want to take early mitigation measures and China might expect USA to give a side-payment for China to participate in early mitigation measures too.
Clean Development Mechanism of Kyoto Protocol raising 100 billion dollar at Copenhagen negotiations are examples of real life existence of side payments. So uncertainty and greed of countries for side-payments makes it understandable why countries delay mitigation.
Countries also tend to outweigh their certain mitigation costs to the uncertain damages and would thus prefer late mitigation to early mitigation. In such a case, even small positive signals from countries (a country investing in renewable source of energy) can lead to both countries doing early mitigation or a small negative signal (a country investing in coal field) could make other country suspicious about its late mitigation intentions and could lead to both choosing late mitigation. In real life, increasing the number of countries further amplifies the importance of signalling.
Adaptive technologies play a major role too. Examples of adaptation measures are relocation of population to low-risk regions, genetic modification of seeds to yield more drought resistant crops etc. Another category is geo-engineering. These measures reduce greenhouse gas concentration from atmosphere directly, e.g., promotion of algal growth to capture Carbon dioxide, genetic engineering of trees that capture more Carbon dioxide, etc. All these alternatives to mitigation are threats for mitigation.
As the number of countries increase, the probability of cooperation goes very low. So bilateral agreement between USA and China is a good option to remove other distractions of multilateral agreement. The two super powers could then drag other countries into mitigation using their power.
Countries can also influence other countries using the following strategies:
- Increase damages of countries by attaching moral stigma to the image of the countries holding up negotiations.
- Levying taxes on import by non-mitigating countries to increase their damages due to non-cooperation.
- Trade liberalization among countries making effort for mitigation so as to increase prospective payoff of countries non-mitigating and lure them towards mitigation
We bring down the factors on which cooperation in international negotiations depend: (i) Perceived damages from climate change (ii) Costs of mitigation (iii) Perceived discount rate (iv) Signals of other countries.
These factors give rise to strategic behaviour and alternatives like adaptation and geo-engineering decrease chances of cooperation. Signalling becomes very important and any ill-attempt to lure side payment or inclination towards non-mitigation may drive all countries to give up mitigation. Therefore, early actions towards mitigation play an important role, and because free-riding is such a major problem, bilateral agreements could be much better to increase the chances of cooperation. Countries which perceive their damages to be very high can drag other countries into mitigation by increasing their perceived damages using international trade or reputation as a means.
*PGP 2, MBA, Indian Institute of Management, Ahmedabad; Btech, CSE, Indian Institute of Technology, Kanpur