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The Institutional Origins
of Transatlantic Discord on Climate Change
Jonathan B. Wiener
Duke University, RFF, EHESS & CIRED
IDDRI, Paris
31 January 2006
Why the US-Europe Discord on
Climate Policy?
1. National Net Benefits (perceived)?
2. Design of the Climate Treaties?
3. Ideology/culture – against climate,
against precaution?
4. Domestic Political Institutions?
Disaggregating Decisions: a Multi-level Game
Global Net Benefits
National Net
Benefits
National
B>C
National
B>C
Domestic
Institutions:
• Executive
• Legislative
• Judicial
• Other
Institutions…
Institutions…
Actors: Firms,
NGOs, Individuals,
Parties …
Actors…
Actors…
1. Role of National Net Benefits in the
“Tragedy of the Climate Commons”
• Atmosphere = open-access disposal site for GHGs.
• Control is costly to each emitter; but Benefits of control would
be shared widely. = Incentives for overuse.
• Uncertainties? Yes, but “is it real or a hoax?” = wrong question.
– Neither all “true” nor all “false”: probabilistic risk scenarios.
– Rate of change (not just ultimate level) matters. Gradual/anticipated may
= benign; Faster/Abrupt/unanticipated = more damage. Varies by regional
resilience. Even with uncertainty, expected value of damages > 0.
– Yet even if very “real,” solutions are not simple. Diagnosis vs. remedy.
• It’s worth limiting access to the commons, where B > C for the
collective group (Kaldor-Hicks).
• International law of treaties: participation requires consent, so
requires B > C for each individual party (Pareto-improving).
National Net Benefits?
A Very Rough BCA for the US
Benefits
(not incl. abrupt change)
Costs
• KP, CO2 only, no trading
• CO2, Annex B trading
• Multigas, Annex B trading
• Multigas, Full Trading
with global participation
0.1-0.3 % GDP
0.1-0.3 %
0.1-0.3 % +
0.1-0.3 % ++
1.0-3.0 %
0.5-1.5 %
0.2-0.6 %
0.1-1.0 %
• Sinks
• Include China, DCs
• Optimal path targets
+ biodiversity
++
lower
lower
lower
See Stewart & Wiener, Reconstructing Climate Policy (2003), pp. 45-46.
National Net Benefits (perceived) ?
• Recall that the US joined the Montreal Protocol in 1987 in part based on a
BCA done by EPA and Council of Economic Advisers, showing B > C.
• Does the KP yield net benefits to the EU ?
• Not clear whether KP yields national net benefits to the US.
– EU initial opposition to flexibility mechanisms (trading) = raise costs =
less incentive for US to join.
– Irony: since 2001, the EU is using trading (ETS) – originally urged by
the US – while the US is using government technology funding. The
Market and the State have switched sides of the Atlantic!
• Russia and China may perceive benefits to global warming (agriculture).
– Need to reduce costs, increase benefits, offer side payments to attract their
participation.
– Russia’s demands to join KP: extra allowances to sell, more sink credits, and
favorable treatment re WTO & natural gas.
• Opposition to, or neglect of, engaging China & India = US fear of leakage
(competitiveness losses, plus undermines environmental effectiveness) = US
reluctant to join. EU should have engaged China & India to engage the US.
Just cajoling the US won’t work.
Varying Impacts of Climate Change:
Losers, Winners ? Tol (2001)
percent of regional GDP
4
3
OECD-E
2
CPA
1
OECD-P
0
-1
OECD-A
-2
2000
2020
2040
2060
2080
2100
2120
2140
2160
2180
2200
year
percent of world GDP
3
4
CEE&fSU
2
ME
2
0
LA
1
-2
S&SEA
0
-4
-1
AFR
-6
-2
-3
2000
-8
2020
2040
2060
2080
2100
2120
2140
2160
2180
-10
2200
year
Source: Richard S.J. Tol, “Estimates of the damage costs of climate change, Part II. Dynamic estimates,” working paper, Hamburg University / Vrije University
/ Carnegie Mellon University, May 2001, Figure 13, p.38. In lower panel, impacts for CEE&FSU are on left axis, all others on right axis.
Varying Impacts: Mendelsohn et al. (2000)
From R. Mendelsohn, W. Morrison, M. Schlesinger and N. Adronova. "Country-Specific Market Impacts from
Climate Change”, Climatic Change 45 (2000) 553-569.
Does greater use of BCA in the US explain US
opposition? But: convergence on BCA?
USA
• Congress requires BCA: TSCA (1975), Paperwork Reduc. Act (1980), UMRA
(1995), SDWA amdts. (1996). But also often forbids BCA (e.g. CAA 109).
• Every President since Jimmy Carter has required BCA of new regulations
– Carter EO 12044 (1978): economic impact
– Reagan EO 12291 (1981): Bs must “outweigh” Cs, else OMB “return letter”
– Clinton EO 12866 (1993): “justify”; R-R, qualitative, distributional effects
• 2001- : still using Clinton EO. More “Return” letters. Plus new “Prompt letters”:
also using BCA to say Yes (e.g. trans-fat labels, defibrillators).
• New RIA Guidelines (2003): more CEAs; lower discount rates (3% as well as
7%); probabilistic scenarios if >$1b; BCA of homeland security regs.
Europe
• “Proportionality principle” = BCA
• “Communication on PP” (Feb. 2000): PP requires BCA
• Member States’ implementation of PP: cost, proportionality criteria added.
• Better Regulation initiative: Impact Assessment guidelines (2002, 2005): BCA
• But: institutional gap: no OMB/OIRA to supervise BCA.
2. Design of the Climate Treaties
• Goals
• EU initial position ~1989: taxes; then targets & timetables
• US ~1989: unclear, then ‘no’; 1993-97 ‘yes’; 2001 ‘no’ …
• Scope (coverage of gases, sectors, sinks)
• EU ~1989: energy sector CO2 only, no sinks
• US ~1989: a framework treaty, then a protocol on each gas
• Instrument choice
• EU ~1989: taxes, or national caps with no trading
• US ~1989: trading, but no caps
• Participation of major emitters
• EU ~1989: unaddressed, or industrialized countries act first
• US ~1989: unaddressed
Selection criteria:
•
•
•
•
Effectiveness
Cost
Dynamic innovation
Fairness
max(B-C)
Comprehensive scope: Advantages
• EU position ~1989: CO2 only, energy only, no sinks
• US proposal late 1989: “comprehensive approach”: all GHGs,
sources & sinks
• Environmental advantages
– Prevents perverse cross-gas shifts from regulating one gas
alone (e.g. CO2 to CH4; or CO2 to N2O)
– Encourages conservation of forest sinks (biodiversity)
• Economic advantages
– Different countries have different emissions portfolios: some
more energy CO2, others more Land Use & Forestry, more
CH4, etc.
– Lowers cost of abatement: 60% or more
Scope:
Index of Global Warming Potential (GWP)
Gas
Atmospheric
Lifetime
(years)
CO2
50-200
1
1
1
CH4
12
56
21
6.5
N2O
120
280
310
170
GWP over years
20
100
500
(Source: D. Schimel et al. in IPCC, Climate Change
1995: The Science of Climate Change 65-131 (1996))
Comprehensive coverage
prevents perverse Cross-Gas Shifts
Comprehensive scope
= solution to “Risk-Risk Tradeoffs”
(Cambridge MA: Harvard University Press, 1995)
Comprehensive scope
also reduces Costs
Comprehensive: FCCC, Kyoto
Not (energy CO2 only): EU ETS, RGGI, …
Comprehensive scope:
Disadvantages
• Negotiation costs -- increase or decrease ?
• Administrative practicality ?
– GHG index
• need some index; can’t avoid comparing
• imperfect index value is better than zero
• can improve index over time
– Monitoring emissions
• can monitor diverse GHGs
• can improve monitoring, via incentives
• “precautionary paradox”: uncertainty & inaction
Comprehensiveness in Kyoto: GHGs
FCCC Article 4(2)(b): covers “emissions of carbon dioxide and other
greenhouse gases not controlled by the Montreal Protocol.”
4(2)(c): “Calculations … should take into account the best available scientific
knowledge, including of the effective capacity of sinks and the respective
contributions of such gases to climate change.”
Kyoto Protocol, Article 3(1): covers “aggregate anthropogenic carbon dioxide
equivalent emissions of the greenhouse gases listed in Annex A”
Annex A: 6 sets of greenhouse gases:
carbon dioxide (CO2)
But:
methane (CH4)
Black carbon (soot) ?
nitrous oxide (N2O)
Sulfate aerosols ?
hydroflourocarbons (HFCs)
perflourocarbons (PFCs)
sulfur hexaflouride (SF6)
Comprehensiveness in Kyoto:
Sinks
• Kyoto Protocol
– Allows credit for sinks
– Restricts credit to new sinks; neglects conservation of
existing sinks (biodiversity)
– Restricts credit for sinks in CDM
• The Hague (Dec. 2000): EU sought limits on sinks
• Bonn / Marrakech (2001):
– Put quantitative limits on sink credits (though not as
tight as sought at The Hague)
– Russia got extra sink credits
Instrument Choice
Selection criteria:
• Effectiveness
• Cost
• Dynamic innovation
• Fairness
Conduct:
• technology standards
• policy efforts
Quantity:
• fixed emissions caps
• cap & trade (Kyoto, EU ETS, McCain-Lieberman, …)
Price:
• emissions taxes
• civil tort liability
• subsidies for emissions abatement, technology R&D
Information:
• disclosure of emissions, liabilities
Trading reduces Cost
(OECD Model Results for 2020)
Source: Barrett (1992)
Instruments in Kyoto: Emissions
Trading
Kyoto Protocol, Article 17:
“The conference of the Parties shall define the relevant principles, modalities, rules and
guidelines, in particular for verification, reporting and accountability for emissions
trading. The Parties included in Annex B may participate in emissions trading for the
purposes of fulfilling their commitments under Article 3. Any such trading shall be
supplemental to domestic actions for the purpose of meeting quantified emission
limitation and reduction commitments under that Article.”
1990s: US advocated, EU opposed emissions trading
The Hague (Dec. 2000): EU sought quantitative limit on trading, via “supplementarity”
Bonn / Marrakech (2001): EU agreed that no quantitative limit on trading is implied by
“supplemental.” But added: seller’s reserve requirement.
2005: EU launches its own “Emissions Trading System.” CO2 sources only.
Instruments in Kyoto: JI and CDM
FCCC Article 4(2)(a): “... These [Annex I] Parties may implement such policies and
measures jointly with other Parties”
Kyoto Protocol Article 6: “(1) For the purpose of meeting its commitments under
Article 3, any Party included in Annex I may transfer to, or acquire from, any other
such Party emission reduction units …, provided that:
(a) Any such project has the approval of the Parties involved;
(b) Any such project provides a reduction in emissions by sources, or an enhancement
of removals by sinks, that is additional to any that would otherwise occur; ...
(d) The acquisition of emission reduction units shall be supplemental to domestic
actions for the purposes of meeting commitments under Article 3. …”
Kyoto Protocol Article 12: “(1) A clean development mechanism is hereby defined.
… (3) Under the clean development mechanism:
(a) Parties not included in Annex I will benefit from project activities resulting in
certified emission reductions; and
(b) Parties included in Annex I may use the certified emission reductions accruing
from such project activities to contribute to compliance . . .”
But: Small Effect of Kyoto Protocol
on Global Emissions, Concentrations
Effect of the Kyoto Protocol (shown in blue) on (1) the projected total, worldwide emission of CO2; and on (2), the resulting
concentration of the gas in the atmosphere (in parts per million by volume, ppmv), if Kyoto caps applied through the year 2100.
Emissions are in units of petagrams (1015 grams) of carbon, or equivalently, billions (109) of metric (2,200 lb) tons per year. In each
figure the black reference line (labeled IPCC) is the projected scenario, called IS92a, developed by the Intergovernmental Panel on
Climate Change. Shown for reference in the second figure is the pre-industrial CO2 concentration of roughly 275 ppmv. (From Jae
Edmonds, “Beyond Kyoto: Toward A Technology Greenhouse Strategy,” Consequences, vol. 5 no. 1 (1999), Figure 1, pp. 17-28, at
http://www.gcrio.org/CONSEQUENCES/vol5no1/beyond.html .) Assumes US joins, and zero leakage to non-Annex I countries.
(Washington DC: AEI Press, 2003)
Engaging Participation:
Importance of Developing Countries
Source: Council of Economic Advisers (CEA),
Economic Report of the President (1998) p171
Institutions Matter:
Voting Rules for Adopting Law
Fiat:
Rule by 1
Majority:
Rule by
N/2 + 1
Unanimity:
Rule by N
See Buchanan & Tullock, The Calculus of Consent (1962)
Institutions Matter:
Voting Rules for Adopting Law
Coercion.
Costs to dissenters,
e.g. rents extracted
Fiat:
Rule by 1
Assumed in
many analyses
Collective Net Benefits
(Kaldor-Hicks)
Polluters Pay
Consent.
Costs of free riding,
e.g. slow to act
Majority:
Rule by
N/2 + 1
National
law
Unanimity:
Rule by N
International
law
Individual Net Benefits
(Pareto-improving)
Beneficiaries pay
Problem: Cooperation among Countries
with Heterogeneous Interests
Source only
(bear costs of
policy)
e.g.: Russia,
China?
“Coop. losers”?
Victim only
Both Source & Victim (reap benefit from
policy)
(both costs and benefits)
e.g.: small
e.g.: most countries.
island
Some free riders.
countries
“Free riders”: share benefits; prefer: Free ride > Both act > Neither acts > Act alone.
“Cooperative losers”: lose from others’ acting (e.g., gain from global warming);
prefer: Neither acts > Free ride > Both act > Act alone.
= Raises side payment needed to attract participation.
Disadvantages of
Partial, local action
(e.g. by EU only, or US only, or RGGI, California)
• Emissions growth not limited in unregulated areas
• “Leakage” of emissions to unregulated places
– Undermines effectiveness
– Raises costs
– Political fear of leakage = unwilling to adopt policy
• Higher abatement cost (lost trading opportunities)
• Market power by fewer permit sellers
• Patchwork of different rules
• Constitutional constraints on action by US states
Examples of Side Payments
to attract Participation
in International Environmental Regimes
Disadvantages of Side Payments
• Aid/cash: direct subsidies for abatement without caps (e.g.
government aid, CDM payments)
– Perverse incentive / moral hazard = increases MC but
reduces AC, may increase total emissions (Oates, Kohn)
– CDM projects may induce domestic leakage (no caps)
– CDM sales may undercut attraction of formal trading: why
agree to a cap, if CDM credits sell at the same price?
– Government aid programs may be distorted by politics
– Tax + pay = undermine incentive effect of tax
• Compare: Cap & Trade with “headroom” allowances as side
payment (as in 1990 Clean Air Act, and Kyoto for Russia)
– Cap avoids perverse incentive
– Decentralized, competitive, private sector, innovation
• Or: linkage to other issues, e.g. WTO entry, health co-benefits
“Participation Efficiency”: Instrument
Choice under Consent Voting Rule
Minimize sum of CNP + CP :
CNP = Costs of non-participation
(uncontrolled sources,
“leakage” of emissions to unregulated countries,
higher abatement cost,
market power)
+
CP = Costs of securing participation,
i.e. costs of making side payments
(out of pocket costs,
perverse incentives)
Participation Efficiency of Alternative
Instruments
Trading vs. Taxes: a broader comparison
Uncertainty
• Taxes superior if MC’ > MB’ ; otherwise Trading superior
(Weitzman 1974; Pizer)
• Stock pollutant = flat MB ? But abrupt damages = steep MB ?
Dynamic adjustment
• More difficult with quantity rules than with price rules? E.g., NY
City taxicab medallions, vs. tax changes.
Engaging participation
• Tax would not attract participation by key players
• Who would administer?
• Tax plus side payment = undermines incentive effect of tax?
“Fiscal cushioning” – principal/agent problems
• Domestic tax/subsidy games to cushion key industries
• Tax authority may maximize revenues, not tax externality
• More costly to monitor true compliance with tax than with cap
• Undermines environmental performance of taxes
Pros and Cons of Kyoto
• Pros
– Scope: Comprehensive – all GHGs, sources and sinks
– Instrument: Cap & trade (plus JI, CDM)
– Participation:
• headroom allowances to engage Russia
• Cons
– Scope: limits on use of sinks, & no credit for conserving forests
– Instrument: limits on full trading
– Participation:
• Failure to engage China, India, Brazil, etc.
• As a result, failure to engage US, Australia
– Targets
• 2012: too stringent; 15-30% below BAU = tighter than optimal path
(Hammitt: 3% below BAU); US would bear 50-80% of the total
required reductions from BAU
• Post-2012: ??? (Hammitt: 5% below BAU by 2020, 20% by 2050)
– Compliance: ??
3. Ideology?
Public Attitudes on Climate
• Americans…
– Favor US action to limit GHGs if other G8 countries act: 86%
• Favor US doing as much or more to limit GHGs than average of G8: 98%
• Assume US is already doing as much or more to limit GHGs than average of
G8: 68%
– US should join Kyoto Protocol: 73%
• Assume Bush favors Kyoto Protocol: 43%
• Assume Bush opposes Kyoto Protocol: 43%
– There is a consensus among scientists that global warming exists and
could do significant damage:
• Republicans: Yes 41%, No 46%
• Democrats: Yes 62%, No 33%
– Favor McCain-Lieberman bill: 83%.
• Even if it costs $15/household/month: 68%.
From Program on International Policy Attitudes, poll conducted June 2005, data at:
http://www.pipa.org/OnlineReports/ClimateChange/ClimateChange05_Jul05/ClimateChange05_Jul05_rpt.pdf
Comparing Risk Regulation:
More Precautionary Than Thou ?
“More and More,
EUEuropeans
Find Fault with US: Wide
Range of Events Viewed as
• Genetic Engineering,
Menacing” -- NY Times, 9
GMO
April
2000,foods
p.A1 / crops
View espoused
by:
• EU officials
• Hormones in Beef,
• NGOs
including
rBST
“Precaution
is for
Europeans”
– NY Times, April 2003
• Climate Change
• Toxic Chemicals
“Europe is considered fairly
• Guns … America, on the
risk-averse
other
hand, is often seen as
• Antitrust
having a strong risk-taking
culture” – The Economist, 24
January 2004
• News media
“In the US they believe
that if
no risks have been
US
proven about a product, it
should be allowed. In the
EU we believe something
should not be authorized
if there is a chance of
risk.”
-- Pascal Lamy, EU Trade
Commissioner, 1999
• Scholars
E.g. Vogel et al. (2000,
2003), Kramer (2004):
Reversal (“flip-flop”) in
relative US/EU
precaution over 1970-2000
Comparing Precaution: Hypotheses about the
Evolution of US and European Policies
• Convergence
• Divergence
• “Flip-Flop”
• “Hybridization”
• Globalization yields
Harmonization
• EU risk-averse, US risktaking ? Or,
• US adversarial legalism,
EU informal corporatist ?
• US more PP in 1970s,
EU more PP since 1990s
• Borrowing, learning
• Heterogeneity across &
within regulatory systems
Flip-Flop: Evidence
EU
US
• 1970s: Sweden; German
• Lead phaseout (Ethyl Corp. v.
“Vorsorgeprinzip”
EPA, D.C. Cir. 1976)
• 1980s: Marine treaties
• Species (TVA v. Hill, S.Ct. 1978)
• 1990s: Rio treaties.
• Default assumptions in RA
• Benzene (S.Ct. 1980) (OSHAct)
Maastricht Treaty 130r (now
174) adopts PP. Member States (“show us your risk assessment” before
you regulate). … Alar controversy.
adopt PP. ‘No’ to GMOs, beef. • Carter, Reagan, Clinton = Exec.
• 2000: Commission issues
orders requiring Cost-Benefit
“Communication on the PP”
• 27 Questions re Communication
• 2001: ECJ on BSE. Late Lessons. • Revisions at Rio; Cartagena
• 2002: Action Plan - Better
• WTO case on Beef Hormones
Regulation, Impact Assmts. (BCA) • ‘No’ to Kyoto. Jo’burg WSSD.
• ECFI case on antibiotics in feed • Iraq War. WTO case on GM
• 2005: REACH
foods. San Francisco adopts PP.
Comparing Precaution:
Method 1: Case Studies
• “Narrow and deep” inquiry
• Not just GMOs, Climate …
• Fosters pragmatic dialogue, reduces acrimony over abstract
rhetoric of “principle”
• Sheds light on real policies, consequences, choices
• Greater detail on institutional context and process history
(Blomquist) - surrounding the PP, e.g. Implementation &
Enforcement, Proportionality Principle, Impact Assessment, Tort
law as a backup to ex ante regulation.
• But: sampling bias remains – “my cases vs. your cases”
“The Reality of Precaution” Project
Project Objective: Move beyond abstract rhetoric to
compare actual policies over a wide array of cases.
Four Transatlantic Dialogues:
1. Bruges, January 2002
2. Airlie House, June 2002
3. Berlin, June 2003
4. Duke Univ. Sept. 2004
• Genetically Modified Foods
• Mad Cow Disease (BSE)
• Acrylamides in food
• Chemicals (TSCA and REACH)
• Phthalates
• Marine Environment
• Biodiversity
• Nuclear Energy
• Automobile Fuels (Diesel)
• Ozone Depletion & Climate Change
• New Drug Approval
• Medical Errors, ADRs, Patient Safety
• Health Supplements
• Children’s Health
• Antibiotics in animal feed
• Smoking
• Cell phones
• Youth violence
• Terrorism & WMD
• Information Disclosure Policies
CFCs and GHGs
• Stratospheric Ozone Depletion: US acted first, favored targets
– Molina & Rowland paper 1974
– Bans on CFCs in aerosols: Oregon 1975, all of US in 1978
– US halts SST. Europe goes ahead with Concorde.
– Europe adopts production cap that exceeds current production
– “Ozone Hole” 1985
– Montreal Protocol 1987, followed by London, Copenhagen:
phaseout
• Climate Change: EU acted first, favored targets
– Arrhenius 1896; rising CO2 concentration; hotter years 1988- .
– Europe presses for treaty; US joins FCCC (Rio 1992) provided no
targets & timetables.
– US signs Kyoto Protocol (1997) but Clinton Admin. never submits
to Senate for ratification. Bush Admin. withdraws (2001).
– EU moves ahead with Kyoto targets, emissions trading.
Diesel Emissions
• EU: promotes Diesel
– to reduce CO2
– > 20% of passenger vehicle fleet
• US: restricts Diesel
– to reduce fine Particulate Matter (PM)
• PM reductions = majority of net benefits of all US federal
regulation, 1980-2004
– < 3% of passenger vehicle fleet
• Simultaneous precaution, but vs. conflicting risks
BSE/vCJD Policies
Cases of BSE
Ban on UK Beef
Ban on MBM in feed
Ban on eating SRM
Ban on beef > 30 months old
Testing at slaughter
Ban on UK, EU Blood Donors
UK
~ 200,000
(1986-)
No
EU
~ 2,000
(1990-)
USA
~2
(deer/elk 2001-?
Canada 2003)
Temporary
Yes
(1996-99)
(1989-)
Yes
(1988)
Yes
(1989)
Yes
(1996)
No
Yes
(1994)
Yes
(1997)
No
Yes
(1997)
No
Yes
(2000)
No
No
(leukodepletion)
No
Yes
(1999-)
(Source: Wiener & Rogers, 2002; George Gray, Harvard School of Public Health, 2002)
No
Comparing Precautionary Cases:
More Precautionary Than Thou ?
US
EU
1970s – 80s:
• Marine environment
• Guns
1990s - present:
• Hormones in Beef, rBST
• GM foods / crops
• Climate
• Toxic Chemicals
• Diesel - more (CO2)
1970s – 80s:
• New drug approval
• CFCs
• Nuclear power
• Endangered species
• Lead (Pb) in gas/petrol
1990s - present:
• BSE in Beef, Blood
• Smoking
• Diesel - less (PM)
• Youth violence
• Terrorism & WMD
Comparing Precaution:
Method 2: Aggregate Quantitative Data
• Larger database: all risks mentioned in risk literature (254
references) in US and EU, 1970-2004.
– 2878 risks. Broad, but shallow.
• Unbiased sampling: random & stratified random
But:
• True universe of risks?
• Random vs. Representative sampling
• Less information regarding foreign law, member state law ?
• Variation within each system & over time
– Policies by member states within US, EU
– Rise of EU & its competence over E/H/S issues, since late 1980s
– Change in EU membership over 1970-2004
• Scoring ambiguities: e.g., ambient vs. emissions standards
• Scoring measures standards, not implementation & enforcement
• Scoring counts earliness & stringency, not degree of uncertainty
Constructing a Larger Sample
Universe
of all
risks
11,086
“verbatim”
risks from
254 sources
in literature
on risk
perceptions,
ranking, and
classification,
1960-2003,
in US and
Europe
3,000
“unique”
risks
(recombining
essentially
identical
“verbatim”
risks)
In 19
categories
and 95
subcategories
2,878
“unique”
risks
In 18
categories
and 92
subcategories
(dropping
122 unique
risks, 1
category,
and 3
subcategor
ies)
100 in random
sample;
92 in stratified
random sample
Table I. Risks by Type
Percentage in:
Code
Category
Matrix
1
Crime and violence
1.8
3
2
Alcohol, tobacco, and other drugs 3.0
3
3
Medication and medical treatment 6.8
8
4
Transportation
8.2
13
5
Accidents not elsewhere classified 2.4
2
6
Recreation
5.5
8
7
War, security, and terrorism
1.5
8
Toxic substances
9.8
8
9
Food and agriculture
9.5
9
10
Pollution
7.5
11
Energy production
5.0
12
Political, social, and financial
3.4
1
13
Ecogeological
4.0
2
14
Global
2.2
1
15
Human disease/health
9.7
9
16
Occupational
15.0
17
17
Consumer products
3.4
2
18
Construction
1.4
0
Total percentage
100
100
Total number
2,878
100
Sample
3
8
3
Testing Hypotheses:
Evidence from the Random Sample
• Convergence
• Divergence
• “Flip-Flop”
• “Hybridization”
Scoring method:
• Drew 100 risks at
random
• Scored each risk in
each year, 1970-2003:
+1 if greater EU
stringency
0 if tie
-1 if greater US
stringency
Figure 1. Trends in relative precaution
(all risks)
0.1
Average annual score
Weighted
Unweighted
0
1970
1980
1990
-0.1
Year
From: Hammitt, Wiener, Swedlow, Kall & Zhou (2005).
2000
Oscillation or
other
Divergence:
from tie to
Divergence:
from tie to
Convergence:
from >EU to
Convergence:
from >US to
Always >EU
Always Tie
Always >US
Flip-flop: from
>EU to >US
Flip-flop: from
>US to >EU
Number of risks
Figure 4. Patterns of Relative Precaution
35
30
25
20
15
10
5
0
Summary of Quantitative Sample
• No significant trend over 1970 – 2004
• Slight shift toward greater precaution in EU over 1990–2004
– But very slight: <10%, or equivalent to a switch toward
greater EU precaution in only 3-6% of sample
• Much diversity across risks
– Shift toward greater EU precaution: 21 risks
– Shift toward greater US precaution: 14 risks
– Always equal: 33 risks
– EU always more precautionary: 11 risks
– US always more precautionary: 9 risks
• “Precautionary Particularity” – risk selection.
– Why? Perceptions? Institutions?
4. Domestic Political Institutions?
• The “2-Level Game”: national positions in negotiations are
influenced by sub-national politics. (Robert Putnam, Frederick
Mayer)
• Perceived national net benefits depend on domestic
institutions for:
– implementing policies
– adopting policies
– formulating ‘national’ preferences
• Key institutions
– Executive: The Presidency
– Legislative: The Congress
– Judicial: The Courts
– Federal-State relations
Institutions: The Presidency
• Consistent skepticism of KP by US Presidents
– Pres. George W. Bush rejected the KP in March 2001, citing cost
(assuming no trading, and CO2 only).
– In December 1997, Vice President Al Gore went to Kyoto to seal the deal
on the KP, and Pres. Bill Clinton signed it. But Pres. Clinton announced
the next day that he would not submit it to the Senate (until “meaningful
participation “ by developing countries).
– The Clinton-Gore administration insisted on the same Treaty design
elements as the first Bush administration: comprehensive (all gases,
sources & sinks) and flexible (emissions trading).
– In 1989-92, Pres. GHW Bush favored FCCC but opposed targets.
• US treaty negotiators are appointed by the President, hence
accountable to the President and in turn to the entire electorate.
• In parliamentary systems, treaty negotiators are often members
who represent local constituencies, or pro-environment 3rd parties
such as the Environment Minister elected by the Green Party.
Institutions: The Congress
• In parliamentary systems in Europe, the government negotiating the treaty also
controls the legislature.
• But a US President signing a treaty is often facing a hostile or at least
independent Senate.
– Under US Constitution (Art. II, sec. 2), joining a treaty requires 2/3 vote
of US Senate = 67 Senators.
– The US Senate voted 95-0 against KP (incl. all Dems) in 1997.
– In October 2003, 44 out of 100 Senators voted in favor of the McCainLieberman cap & trade bill. In June 2005, only 38 voted yes. But 53
voted for a separate resolution (not a law) calling for “comprehensive
mandatory market-based” federal regulation of GHGs.
– Voting in the Senate is not proportionate to population (2 Senators per
state). = Influence of low-pop., high-coal & agriculture states in the West.
• US House: presumably even more opposed. Shift in US population & House
members (& electoral votes) over last 20 years to West, Southwest & South.
• Referenda? Sometimes used in European member states (e.g. the European
Constitution). Also used in some US states, but not for national lawmaking.
Used to elect the US President (but not the EU President).
US Senate Votes on
McCain-Lieberman Climate Stewardship Act
October 2003
From http://www.nwf.org/globalwarming/climatestewardshipact9-05.cfm
June 2005
Institutions: The Courts
• Asymmetric enforcement and problems of credible
commitment
– Widespread view that highly “adversarial” US legal system forces
tight compliance
• government enforcement
• independent “citizen suits” by NGOs in US courts
– whereas European legal systems are more relaxed, corporatist. E.g.
Robert Kagan (Berkeley).
• EU sees KP as aspirational, US sees it as binding, and fears
less aggressive implementation & enforcement in EU than in
US (i.e. sees EU commitment as less credible).
• Hence, ex ante, US is reluctant to commit to costly rules (but
ex post, more likely to implement them).
• Attempts by the EU to reassure the US backfire: “Don’t
worry, it’s only aspirational” only exacerbates the fear.
Institutions: Rent-seeking?
•
•
•
More difficult at international level, where countries must consent, and hence
can refuse to be bound by rules that would extract rents
– as opposed to majority vote or fiat, in which special interests can extract
rents coercively from dissenters. Wiener, 87 Georgetown L.J. 749 (1999).
– Nonetheless: EU seeking to raise rivals’ costs by imposing CO2-only, no
trading regime on US, Japan? US seeking to avoid this?
At domestic level:
– In US, coal/oil industries opposing KP, esp. in US West?
– In France, nuclear energy – favors controls on CO2 to raise rivals' costs,
especially carbon taxes to raise rivals' costs and generate revenue to pay
for (French) nuclear energy in developing countries.
– EU industry seeking to raise rivals’ costs in US, Japan? EU Greens &
industries in “Baptists & Bootleggers” coalition?
– EU Greens seeking climate policy for larger social engineering agenda –
“watermelons” -- green on the outside, but red on the inside?
Recall rent-seeking by US producers of CFCs and CFC-substitutes in mid1980s (seeking “predation by regulation” via Montreal Protocol) (why did
Europe go along? Baptists & Bootleggers?)
Summary: The Institutional Origins of
Discord on Climate
• National Net Benefits
– Use of BCA
– Varying BCA by country
– BCA for US depends on participation by China, India et al.
• Design of the Treaties
– Cost: comprehensiveness, trading
– Participation: failure to engage China, India et al.
• Ideology? Not a major difference
• Domestic Institutions
– Presidency and appointed negotiators
– Congress and rules of the Senate
– Courts and asymmetric enforcement
Ways forward? What to do now?
• New developments at COP 11 in Montreal, December 2005 ?
– Negotiation of post-2012 KP, without the US or China
– Continuing discussion under FCCC without targets
– Study “Compensated Reductions” in developing countries
• USG approach: technology R&D. But that’s only the supply side; also
need a demand side incentive to foster diffusion/adoption. Hence, need to
internalize cost of climate change into transactions on energy, agriculture,
forests, etc.  Taxes or allowance trading.
• Victor et al., bottom-up approaches -- misnamed “Madisonian” -- our reply
letter in Science (20/1/2006) re gradual self-organizing norms vs. need for
some top-down incentives with international transfers.  Taxes or
allowance trading.
• Stewart & Wiener approach: Engaging China & India along with the US
in a parallel regime (plus Australia, India, Brazil). How to manage side
payments?  Trading with headroom allowances. Merge with KP?
• Need to address domestic institutions, e.g. National Net Benefits, votes in
US Senate, expected enforcement.
Next Steps?
1) US stays out of Kyoto (forever)
– Carbon trade wars ?
– EU Emissions Trading System. “Linking” by nonparties?
– Shift to adaptation instead of mitigation?
2) US joins Kyoto now, or in 2nd Commitment Period (>2012)
– Stick with KP as is.
• Costs to EU, Japan, Canada of US accession:
increase allowance prices
• Still little effect on global emissions.
– Renegotiate KP re: sinks, DC obligations, US target?
• Too late after Entry into Force (2/05) (but …
competitiveness concerns in Europe?)
• High transaction costs of achieving universal accord.
Next Steps?
3) Third path: New parallel international regime, in which the US
engages major developing countries -- China, India, Brazil,
Mexico, et al. -- and perhaps Australia.
• Comprehensive -- all GHGs, sinks
•
•
•
•
Full international allowance trading
•
•
•
•
Whole-country CDM projects (reduces leakage)
“Compensated reductions” vs. national baseline
Full formal Emissions Trading
Participation by major DCs
•
•
•
Add black carbon (soot)
Add credit for conserving existing forests
No maximum limit on use of sinks
Headroom allowances to allow growth, sales
Targets set on optimal path to maximize net benefits
Later, this regime could merge with Kyoto
Next Steps?
4) Domestic US action?
• Private sector: businesses, Chicago Climate Exchange
• R&D on energy technologies
•
•
State regulations ?
•
•
•
•
e.g. “FutureGen,” IGCC, nuclear, solar, wind …
Northeast RGGI (incl. Govs. Pataki, Romney)
California vehicles law on CO2
Patchwork … Leakage … Constitutional limits …
Federal regulations ?
•
•
•
•
•
•
EPA list CO2 under CAA ? Secs. 108/109; 202. GC memos.
Clear Skies; voluntary intensity target; 3P or 4P (add CO2) ? …
5P (add CH4) ?
McCain-Lieberman bill: 44 votes in 2003, 38 in 2005. Others:
Carper, Collins, Hagel, Bingaman, Lugar, …
Multi gas; Sink credits; International credits? McC-L: 15% cap.
“Safety Valve” ? At what price ceiling?
Linked to / contingent on action by DCs (China) ?
Gains from New Parallel Regime
• Gains to US:
– greater climate protection benefits, at lower abatement costs
– commercial benefits (trading system design & leadership; avoid
carbon trade wars)
– strategic benefits (e.g. linkage to antiterrorism efforts)
• Gains to China:
– profits from allowance sales
– reduction in co-pollutants; healthier, lower-GHG development path
– China-US strategic partnership & world leadership
• Gains to Kyoto parties (EU, Japan, Canada, Russia): better allowance
price stability if US & China et al. join together, rather than each joining
separately
• Gains to all from Experimentation with plurilateral regime
– Lower transaction costs to negotiate (than universal regime)
– Learning over time