Toward a Real Richard N. Cooper THE CHALLENGE AFTER KYOTO IN DECEMBER 1997 the world's nations met in Kyoto to grapple with the problem of global warming. The Kyoto conference garnered a wide variety of assessments, ranging from "a notable success" through “a useful first step" to "a grave disappointment and setback" for those concerned with the future of the planet. Whatever one thinks of Kyoto in terms of environmentalist politics, the troubling fact remains that its underlying approach is bound to fail. Because it is premised on setting national emissions targets, the Kyoto strategy will not be able to solve the alleged problem of global climate change resulting from greenhouse gas emissions. The likely failure of Kyoto should be used as the impetus for a hard look at the prospects for a treaty on global climate change. The Framework Convention on Climate Change signed in 1992 in Rio de Janeiro drew wide international attention to the danger of gradual global warming from humanity's use of fossil fuels and other activities. Rio committed signatory governments to do something about global climate change, but it did not commit them to take any specific actions. Since Rio, governments of most rich countries undertook to reduce their levels of carbon dioxide emissions to estimated 1990 levels-within the relatively near, but unspecified future. In 1995 the rich nations further committed themselves to agree at Kyoto in 1997 on a set of binding emissions targets to last beyond the year 2000. RICHARD N. COOPER is Boas Professor of International Economics at Toward a Real Global Warming Treaty Since Rio, actions actually taken to reduce emissions of greenhouse gases carbon dioxide, methane, nitrous oxide, and chlorofluorocarbons have not matched stated intentions. Emissions of CFCS have slowed due to the Montreal Protocol of 1987 to protect the ozone layer, and carbon dioxide emissions are growing less quickly because of lower-than-expected economic growth since 1992 in Europe, Japan, and the former Soviet Union. Nevertheless, one projection shows that energy-related carbon dioxide emissions will grow by fully 30 percent between 1990 and 2010. At Kyoto, the 24 rich members of the Organization of Economic Cooperation and Development (OECD) as of 1992 and the European countries of the former Soviet Union pledged to cut their greenhouse gas emissions by 2010. The reduction targets, which also give credit for planting trees that remove carbon dioxide from the atmosphere, are eight, seven, and six percent below 1990 emission levels for the European Union, the United States, and Japan, respectively. Such reductions will be difficult to achieve, at least for the United States, whose emissions are otherwise expected to grow by over 30 percent between 1990 and 2010. Unfortunately, Kyoto's approach cannot solve the problem.1 International treaties designed to realize commonly held goals fall into two categories: those that set agreed-upon national objectives but then leave each signatory country to pursue those goals in its own way, and those that define mutually agreed-upon actions. The Kyoto treaty belongs to the first category. The essence of the Kyoto framework is negotiations to allocate national rights to greenhouse gas emissions. Targets low enough to be effective in halting man-made climate change mean that these emission rights will be worth trillions of dollars, even if such rights were traded among countries. Stabilizing the amount of greenhouse gases in the atmosphere will eventually require reducing carbon emissions to levels that cannot be reached 'The alleged problem is that large volumes of greenhouse gases-mainly carbon dioxide from burning fossil fuels but also methane generated by rice cultivation and catde raising will gradually warm the earth's surface, with countless implications for natural ecosystems as well as for human habitation. There is still serious scientific disagreement on both the magnitude and the timing of such warming. This essay does not enter this debate, but for the sake of argument simply stipulates that there is a problem serious enough for governments to address in the next few decades. Richard N. Cooper without the engagement of the developing countries, but the framework of the proposed treaty is unacceptable to them. There is unlikely to be any generally acceptable principle for allocating valuable emission rights between rich and poor countries, making the success of the Kyoto approach a probable impossibility. We would do better to adopt an alternative strategy that, while difficult, at least has some prospect of bringing man-made climate change under effective control. A successful attack on global warming will only happen through mutually agreed-upon actions, such as a nationally collected tax on greenhouse gas emissions, rather than through national emission targets. A GLOBAL CHALLENGE MITIGATING GLOBAL warming through formal collective action will not be easy, for three key reasons. First, climate change from an increased atmospheric concentration of greenhouse gases is a global issue since, whatever their earthly origin, the gases are widely dispersed in the upper atmosphere. Effective restraint must therefore involve all actual and prospective major emitters of greenhouse gases. Today's rich industrialized countries currently account for most of the emissions. The Soviet Union was a major contributor before its collapse in 1991, and an economically resurgent Russia can be expected to follow suit. Moreover, rapidly growing poor countries will soon become major contributors. By 2010 developing countries are expected to contribute 45 percent of total greenhouse gas emissions, and China and India alone will experience greater growth in emissions than all the OECD countries combined. Thus effective action cannot be taken by a small group of countries alone, as was possible with the recent agreement to cease testing of nuclear weapons. Here, while the same requirements need not be imposed on all countries from the beginning, agreement must be structured from the beginning so that all significant countries will eventually participate. Second, the rewards from restraints on greenhouse gas emissions will come in the politically distant future, while the costs will be incurred in the political present. Moreover, those rewards are highly uncertain. Much controversy still surrounds the expected impact of further greenhouse gas emissions on the earth's ecosystems. The residents of some countries, such as Canada and Russia, may even expect to benefit from some surface warming. It will thus be difficult to persuade people that they should make sacrifices in the level or growth of living standards today for the sake of uncertain gains for their grandchildren or great-grandchildren. The wide distribution of expected but distant benefits in response to collective action provides an incentive for every country to encourage all to act but then to shirk itself-the so-called free-rider problem. Third, the pervasive sources of greenhouse gas emissions notably burning fossil fuels, cultivating wetlands, and raising cattle imply that restraint will involve changes in behavior by hundreds of millions if not 07 to W Richard N. Cooper billions of people, not merely the fiat of 180 or so governments. Thus the most important part of an effective regime to limit climate change involves not an agreement among governments but the effective influence of governments on their publics. No major legally binding regulatory treaty involves all of these characteristics to a similar degree. Typically, as with the halt to nuclear weapons testing or the Montreal Protocol to limit production of CFCS, the major actors are either governments themselves or a relatively few firms in a relatively few countries. The Convention on International Trade in Endangered Species perhaps comes closest in its comprehensiveness; it requires states to prohibit international trade in the covered products. Various agreements for managing international fisheries require cooperation of thousands of fishermen, but with a few exceptions they have not been notably successful. The currently preferred approach to a treaty limiting greenhouse gas emissions centers around imposing agreed national targets on emissions possibly permitting some of the allowed emissions to be sold from one nation to another, a feature that would significantly reduce the costs of a given reduction in emissions. A second approach, which has received less emphasis, stresses agreement on a set of actions that countries would undertake with a view toward reducing emissions. The latter option has been unwisely marginalized. Mutually agreed-on actions have better prospects of success than national targets. NATIONAL TARGETS IF TARGETS are to be set, on what basis should they be set? When quantitative targets are imposed within countries, they almost always reflect recent history. Such targets are allocated roughly in proportion to, say, recent emissions of pollutants or recent catch of fish. Targets based on emissions in some past year (e.g., a given country's 1990 emission levels) have a similar character. In effect, they allocate property rights to the existing tenants, conferring ownership on recent users. Targets allocated on this basis will be completely unacceptable, however, to countries that are or expect to be industrializing rapidly. Such nations' demand for fossil fuels grows with |