International Coordination Under the Kyoto Protocol

International coordination under the Kyoto Protocol

The Kyoto Protocol represents nearly a decade of international effort to reduce carbon emissions aiming at combating global warming. Although it has been ratified by 187 states, it has been rejected by the biggest polluter (the USA) and international cooperation suffers from compliance and coordination problems.

Some political and economic reasons can explain the current situation. First, it is difficult to coordinate the decisions of large groups when asking them to accept immediate and certain costs in order to gain future and uncertain benefits. Second, governments made up of elected officials find it difficult to coordinate long-term policies that produce future and uncertain benefits, but impose costs that might decrease their chances of reelection. Third, no company is going to undertake large capital investments unilaterally to reduce the environmental damage it causes if its competitors do not; the expense of doing so will damage the company’s competitive position. And four, at present neither the USA nor China –the two biggest polluters- are going to take action unilaterally to reduce the environmental damage they causes if the other does not. The expense of doing so will damage the competitive position of its companies’ goods and will add to the costs of goods and services produced for domestic consumption. This will reduce economic growth and will reduce the quality of life for the country’s citizens.

Problems of international cooperation involving regional or global public goods, or regional or global commons problems, have characteristics similar to the “prisoners’ dilemma” in game theory, in which two prisoners, given the option to confess or not confess their crime, will always both confess despite the Pareto efficient outcome of both not confessing. Examples of such international problems are the protection of the ozone layer, the conservation of biodiversity and climate change mitigation....