The World Climate Conference in Dubai ended with a minimal compromise, which will probably do little to help the global climate. This is not due to the inability or unwillingness of the actors, but rather to the system of the conference.
What I mean by that.
The agreements at the world climate conferences are voluntary. As a result, they regularly fall short of the necessary measures. Too little is being done. Because every action costs money, resources and prosperity in the short term. And because some hope that others will act. Because that is the most profitable. Do nothing and still benefit.
Voluntariness is not the solution to the global climate problem, it is the cause.
Many say it is the only option we have. We simply don’t have a world government that could implement a consistent climate policy. That’s correct. And maybe that’s a good thing, because what if, for example, this world government were non-democratic?
But the point is: We don’t need a world government to get all countries to participate effectively in climate protection.
Economics has long recognized why the climate problem exists and what can be done about it.
The states’ participation problem is due to so-called free-rider behavior. It is a typical dilemma of human interaction. It arises when something is created or exists that can be used by everyone, including those who have not contributed anything to its provision and who cannot be prosecuted for sharing it.
Many of these “goods” are so obvious that we never think about them. Why is street lighting not a private good? Why aren’t there street lighting suppliers in demand by those who want street lighting? So why is there no market for street lights? Because street lighting is a public good. If it were treated like a private good, free riding behavior would occur. Not all users of these goods would be willing to pay for their creation and maintenance costs. Why should I buy street lights when others can use them for free? Let others spend their money on it! The end of the story: It would be largely dark in the city at night. There are far too few street lights, even though almost everyone wants street lighting. Everyone acts in the best possible way from their own point of view, but as a result everyone is worse off. A dilemma.
Because there are public goods, the state is needed. It solves the dilemma, it repairs the market failure, as economists say. The state provides street lighting and finances it through levies and taxes. For the good of everyone.
The street lighting is only a Example. The free rider problem exists in many areas of human coexistence. The excessive use of our livelihoods is also part of it. The deforestation of forests, the overfishing of the seas and also the far too high CO2 emissions.
Every new economics textbook knows these examples. And each one also contains solutions. This also applies when free-riding behavior occurs across national borders, i.e. when the CO2 reduction efforts of one country lead to the reduction efforts of the other country being reduced because this other country benefits from the efforts of the CO2-reducing country without itself having to bear the costs for this.
Appeals and target agreements, such as those decided at world climate conferences, are not included in these economic solution proposals.
What economics advises against this: Find rules that make it worthwhile for everyone involved to take part in climate protection!
Because people and states like incentives. If they can make their own situation better, they usually do. On the other hand, if it is primarily third parties who benefit from your own effort, the willingness will be significantly lower.
So what we need is a global system that makes CO2 savings worthwhile, specifically for those who save CO2. So how do we solve the free rider problem if there is no world government?
By willing climate protection countries founding a climate club. The economist William Nordhaus received the Nobel Prize for this, among other things. The climate club countries agree on reduction targets for each club country; Even better, they establish an emissions trading system in which all club states participate. Anyone who sticks to the agreed goals is part of the club. And receives club benefits. Anyone who is not there will face significant disadvantages. The disadvantages are so big that it’s worth becoming part of the climate club.
The benefits for club states would essentially be free trade within these states. Anyone who is not included would have to pay a tax on their (CO2-intensive) imports into the club states. And it’s such a high tax that it’s worth becoming part of the club – and thereby committing to the emissions targets. Gentle pressure instead of global government. Incentives instead of appeals. The European Union is currently going with its CO2 border adjustment system already in this direction.
Saving the climate would be a win-win situation for everyone. The struggle for target agreements at climate conferences, which everyone knows when they sign that they are, firstly, not sufficient and, secondly, never fully met, would then become history.
That wouldn’t be a bad thing if the crisis was seen as an opportunity. Towards more orderliness in world politics. It doesn’t rely on appeals, but rather on rules and incentives. Societies live in prosperity when they are set in such a way that individual actions lead to the benefit of all. We should also apply this principle to saving the climate. Minimal compromises like at COP28 in Dubai help politicians save face. They probably won’t save the world‘s climate.