Fixing the Paris Failure

Peter Cramton and Steven Stoft
5 December 2015

Climate change is a problem of the commons. Nearly all agree. But the insidious nature of this problem is being largely ignored in Paris, and this has led to a self-contradictory approach. The current agreement has produced pledges based on narrow economic self-interest. If left in place these will rule out any possible 2°C scenario[1] by 2030. So an add-on “ratchet mechanism” is proposed to increase ambition. But ambition and narrow self-interest are contradictory, and so the forces that have shaped the current pledges will defeat any add-on ambition mechanism.  ….

Here we examine the contradictions between the current approach to pledges, the global nature of the climate problem, and any ambition mechanism. We then show how to merge the Paris approach to negotiation with the previous approach and arrive at the one strategy that behavioral science finds most promising. …. Download PDF

Where Are We and How We Got Here

An informal review

Here’s a quick big picture:

1. Climate is a problem of the commons.
2. To solve that we have to cooperate and do more than our narrow self-interest.
3. That used to be called ambition (In Paris, “ambition” became meaningless).
4. There are two ways to get countries to be ambitious:
   1. Make a deal — You be ambitious and I’ll be ambitious.
   2. Be an altruist, and hope for the best — I’ll be ambitious even if you’re not.
5. Kyoto negotiators were smart and tried for #4.a, but they tried for the wrong kind of deal. Stiglitz explained this in 2005. You cannot get rich an poor countries (or even just the Kyoto countries) to agree on a common emission-limit formula.
   1. So they gave up and did #4.b — altruism.
   2. That was weak and got weaker.
6. Only a few experts chimed in with Stiglitz, so negotiators sort of tried the impossible again at Copenhagen, but it was so obvious that they couldn’t agree on quantity targets that it just blew up.
7. So they reverted to #4.b, altruism — Please everybody, be nice and make a strong pledge.
8. We got the Paris agreement. And almost no altruism. In fact Christiana Figueres says every pledge is just pure self-interest, with nothing for the planet/climate. For example, she says China just pledged to reduce smog and make money on renewables for purely domestic reasons. China had planned to do that anyway.
9. Of course, everyone admits this is not working. And hopes it will start working in 2020, but why should it? It will be the same old plan — hope for altruism.

What was/is needed:

1. We need to make a deal (#4.a above). They were right back in 1995. Besides, that’s just how things get done in the real world.
2. A deal on emission limits would be nice, but that will never work. India’s limits need to go up a whole lot before they come down, etc. It’s just way too complicated. India and china will never accept being limited to below the US. That’s common sense.
3. Fortunately there’s a really easy (by comparison) deal to make — agree on a global price of carbon, say, starting at $10/ton.
   1. Better to start low than not at all.
   2. After countries see it’s pretty painless, they will agree to raise it.
   3. They can still be altruistic, like with Paris.
   4. Every country can keep their carbon revenues, so it’s cheap.
   5. Since it’s so cheap we can pay poor countries for the costs of their abatement, and we will really get something for our money (and so will they).
   6. Every country can do it their way, fuel taxes, cap-and-trade, carbon tax, etc.
4. This is how you solve a problem of the commons — Elinor Ostrom.
5. Knowing others have to do their part develops trust.
6. If you want to read how a lot of experts say to do this, download the free PDF book from the right sidebar.