Climate change is a problem that is inherently different from other environmental problems with which humanity has grappled, because the assumption that prior experience with other air-pollution problems is a good model upon which to base climate policy responses fails at many levels. At least six unique features characterize the issue.
Public goods issues
Traditional environmental air-pollution problems have been amenable to local solutions. The dirty air in a North American city is of no direct consequence to a city in New Zealand. With climate change it is the emissions of all sources in all nations that determine the concentration of greenhouse gases (GHGs) in the atmosphere. As a consequence, the climate change problem is inherently a public goods problem. That is, the climate that everyone enjoys is the product of everyones behaviour. No single individual or nation can determine the composition of the worlds atmosphere. Any individuals or nations actions to address the climate change issue, even the largest emitting nation acting alone, can have only a small effect. As a consequence, individuals and nations acting independently will provide, together, fewer resources than all individuals and nations would if they acted in concert. This characteristic provides an important motivation for collective, global action.
Multiplicity of decision makers
Multiplicity of decision makers also implies that there are limits to collective actions. Decisions by actors at a wide range of levelsglobal governmental organizations, nation states, regional governments, private individuals, multinational firms, local enterprisesall matter. The global nature of the problem also implies that the full breadth of human social structures is encompassed. This in turn implies that a diversity of policy responses is needed. Policy responses that are effective and appropriate in one social context may be completely inappropriate in another.
Emissions and consequences are also heterogeneous around the world. This exacerbates the basic public goods nature of the problem. Countries are distributed across a spectrum of high emitters to low emitters and high impacts to low impacts. Nations with high emissions and low expected impacts have a high potential to control concentrations, but little incentive. On the other hand, nations with low emissions and high impacts have great incentive to control emissions, but little capability. While side payments could, in principle, resolve this dilemma, transaction costs may be significant and the present income distributions may lead to unacceptable outcomes. Furthermore, most of the people who will be directly affected by the problem have not been born yet, which limits their ability to negotiate. Both emissions and the capability to mitigate carbon emissions to the atmosphere are unevenly distributed around the world. A dozen countries control 95% of conventional carbon-based energy resourcesconventional oil, conventional gas, and coal. Unconventional resourcesdeep gas, methane hydrates, and shaleswhile presently expensive relative to conventional fuels, have an unknown distribution in potentially vast quantities. Fifteen nations emit more than 75% of the worlds annual carbon emissions.
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