A UN summit on climate change at the recent UN General Assembly meeting was supposed to give momentum to a post-Kyoto accord to be penned in December in Copenhagen. Indeed, an announcement was made that most leaders agreed that there is an “urgent and significant need” to cut greenhouse gas emissions.
But even though most participants accept a controversial claim that human-based carbon emissions cause climate change, they are unlikely to agree to significant curbs. And if such an accord is reached, it is unlikely to be implemented, not even by those countries that supply the most vocal and ardent supporters. While the US drew international criticism for not adhering to the Kyoto Protocol, most countries that signed on did not fulfil their promises.
The biggest hurdle to reaching agreement on a scheme to curb emissions is that it will impose high costs on some countries while benefits will be enjoyed by all. As such, negotiations to reduce carbon emissions involve a “prisoner’s dilemma” game that lacks an enforcement mechanism and where interaction relating to an agreement is limited.
Illustration: Jayachandran / Mint
It turns out that outcomes of discussions under these conditions tend to fail to serve the interests of most involved parties. Since most parties realize before the fact that a negotiated outcome will not meet their goals, there is mostly smoke and little fire. As it is, there are wide differences between industrial powers and emerging economies over mandatory reduction target and exemption of obligations for developing countries.
For their part, governments of industrialized economies sprang a self-inflicted trap by admitting that Western carbon dioxide emissions are behind the worsening of global natural disasters. This has encouraged officials from developing economies and environmentalists to insist the West pay to fix the problem.
Some developing countries are seeking an environmental “Marshall Plan” to address climate change worth $600 billion each year, paid for by citizens of rich countries. In turn, taxpayers of advanced economies will be put on the hook to pay the bills of those who believe that climate change is the most important issue confronting humanity.
But it beggars belief that international institutions will be more effective in compensating poor countries for climate-change adaptation than they did in distributing aid. As it is, much of the at least $2 trillion in development aid paid by rich countries to developing countries over the past half century was wasted.
Another issue related to global climate talks is that paying for a shift to “clean” energy requires that taxpayers accept lower living standards. This is because nearly all “clean” energy initiatives involve very large subsidies that must be funded by higher taxes. Only by wilfully ignoring the large government-funded payouts can proponents of alternative energies insist they will lead to net gains.
Another barrier to climate-change agreements is that many countries are not yet at an income threshold where their citizens place a sufficient value on a clean environment. As such, they may not be willing to incur costs to make improvements.
Economists point out that a clean environment is only one good among many that people want. The will to reduce carbon emissions may grow as countries become more prosperous so that citizens are able and willing to forgo consumption for environmental improvement.
Estimates are that this kicks in at an annual per capita income of around $4,000. It seems that this threshold must be reached before citizens possess sufficient education or information to begin putting a value on environmental quality. At the same time, there are sufficient resources to put to work on making improvements.
An ironic conclusion that is drawn here is that those seeking lower carbon emissions should promote economic growth so that more countries attain this income threshold and do so soon. This would involve encouraging free trade and expanding economic freedom with reduced taxes, fewer regulations and lower tariffs, and protecting private property rights. This suggests that environmentalists should find comfort in the process of globalization!
In the end, it is likely that more effort will be spent on posturing about or reaching a climate-change agreement than will be applied to reduce emissions after a resolution is reached. As such, it is a safe bet that any significant decrease in emissions will be due to a sick global economy rather than adherence to a treaty signed in Copenhagen.
Christopher Lingle is a research scholar at the Centre for Civil Society in New Delhi and visiting professor of economics at Universidad Francisco Marroquin in Guatemala. Comment at email@example.com