Climate Change and Collective Action

Abstract

Climate change presents the greatest collective action problem the international community has yet confronted. The unequal distribution of expected costs and benefits from climate change (based on mean damage estimates from probability distribution functions) creates different incentives for different countries, which can be expected to bargain in their own perceived interests. Unresolved collective action problems explain the notorious flaws in the Kyoto Protocol, and continue to impede efforts to replace or improve on Kyoto. Policy recommendations and negotiating strategies that ignore those collective action problems are likely to prove ineffective.

This paper explains why collective action problems are far more serious in the case of the Kyoto Protocol than they were in the case of the Montreal Protocol on protecting the stratospheric ozone layer, and offers recommendations for reducing those problems. In particular, due consideration of (1) low-probability, high magnitude climate changes (beyond the mean estimates of damages) and (2) the secondary effects of climate change (implicating, for example, national security interests) should better align the interests of the parties. At the very least, it should raise the lowest common denominator of the parties, resulting in a substantially stronger and more effective international climate change regime.

Keywords: climate change, global warming, collective action, Kyoto Protocol, Vienna Convention, Montreal Protocol, catastophe

JEL Classification: D7, H41, K32, Q25, Q42, C7, D61