2.2 Decision-making

2.2.1 The ‘public good’ character of climate change

Mitigation costs are exclusive to the extent that they may be borne by some individuals (nations) while others might evade them (free-riding) or might actually gain a trade/investment benefit from not acting (carbon leakage). The incentive to evade taking mitigation action increases with the substitutability of individual mitigation efforts and with the inequality of the distribution of net benefits. However, individual mitigation efforts (costs) decrease with efficient mitigation actions undertaken by others.

The unequal distribution of climate benefits from mitigation action, of the marginal costs of mitigation action and of the ability to pay emission reduction costs raises equity issues and increases the difficulty of securing agreement. In a strategic environment, leadership from a significant GHG emitter may provide an incentive for others to follow suit by lowering their costs (Grasso, 2004; ODS, 2002).

Additional understandings come from political science, which emphasizes the importance of analyzing the full range of factors that have a bearing on decisions by nation states, including domestic pressures from the public and affected interest groups, the role of norms and the contribution of NGOs to the negotiation processes. Case studies of many MEAs (Multilateral Environmental Agreements) have provided insights, particularly on the institutional, cultural, political and historical dimensions that influence outcomes (Cairncross, 2004). A weakness of this approach is that the conclusions can differ depending on the choice of cases and the way in which the analysis is implemented. However, such ex-post analysis of the relevant policies often provides deep insights that are more accessible to policymakers, rather than theoretical thinking or numeric models.