Collective Action and Multilateral Cooperation in Climate Change

The collective action problem provides a framework to understand the political challenges involved in generating multilateral cooperation to address global climate change.
In this context, the collective or public good is defined as a significant cut in carbon dioxide ( $CO_2$ ) emissions intended to stabilize or reduce the concentration of carbon dioxide in the Earth's atmosphere.
Stabilization of atmospheric carbon is considered a public good because it is non-excludable; once the good is provided, it is extremely costly to prevent others from enjoying the benefits of it.
A hypothetical scenario involving exclusion demonstrates the difficulty: to prevent another country from consuming clean air, a state would effectively have to wage war to eliminate the air consumers in that country. This approach is described as being prohibitively costly and straightforwardly impractical.

The high costs associated with excluding individuals or nations from the consumption of environmental quality heighten the political difficulties in reaching international agreements, such as those governing carbon emission reductions.
Individual countries often find it in their immediate interest to "free ride" on the investments and efforts made by other nations toward the public good.
Characteristics of free riding in the context of emissions include:
    * A relative absence of emission standards applied to automobile manufacturers.
    * A relative absence of emission standards for consumers.
    * The exclusion of regulations regarding the exploration, production, or consumption of fossil fuels, specifically oil and coal.
The aggregate result of this individual behavior is a collective failure to rein in growing carbon dioxide emissions produced by businesses and private citizens.

The core dilemma arises from a conflict between individual and collective rationality.
If it is determined to be rational for a single country to avoid restricting its carbon emissions, it becomes equally rational for every other country to follow the same logic.
Even though there is a broad international consensus that cutting carbon emissions is necessary for long-term global health, each specific country adopts policies that actively make that outcome less likely.
Every nation attempts to free ride on the potential efforts of other countries to reduce their own specific carbon outputs.

Solution 1: Leadership by Large Actors
    * Large actors in the global economy, specifically the United States and China, can choose to absorb the costs of free riding themselves.
    * These actors may decide to provide the public good because they benefit enough individually from its supply to justify the total cost.
    * This "leadership solution" would likely involve radical unilateral cuts in carbon emissions by these countries.
    * Specific methods for these cuts include altering national infrastructures for transportation and electricity.
    * The impact of such leadership is significant because the United States and China combined account for nearly $\frac{1}{2}$ (or nearly $50 \%$ ) of total global carbon emissions.
Solution 2: Multilateral Agreements and Coercive Enforcement
    * This involves the construction of an international agreement among many states to reduce emissions.
    * A critical component of this solution is an enforcement mechanism designed to punish countries that fail to comply with the defined provisions.
    * This "coercive solution" addresses the collective action problem by pressuring every participating country to contribute to the public good (cutting $CO_2$ emissions).
    * Cooperation is maintained through the "credible threat" of penalties for noncompliance.
    * An example of a penalty is the imposition of tariffs on the exports of a country that fails to meet its carbon reduction targets.

The application of the collective action problem to environmental challenges suggests that markets generally undersupply public goods.
Because large-scale cuts in carbon dioxide emissions are public goods, market-based solutions may not be reliable for solving the overarching challenge of global warming.
A sustainable resolution to the challenge of global warming will likely require sustained political leadership from the world's largest economic entities, including the United States, China, and the European Union.