TRN 350: Scarcity, Sustainability, and the Future of International Relations

Background

  • Market Solutions to Climate Change:
      - Internalizing Negative Externalities: Mechanisms to incorporate costs into market prices.
      - Examples:
        - Carbon Tax: A fee imposed on the burning of carbon-based fuels to reduce CO2 emissions.
        - Emissions Trading Schemes (ETS): A market-based approach allowing companies to trade emission permits.
        - Solar Radiation Management: Techniques to reflect solar energy away from Earth to mitigate climate change.
      - Effects of Policies:
        - Green (2021) is noted for reviewing 37 papers assessing the effectiveness of carbon tax vs. ETS.
        - Findings indicate a slight effect (0-2%) on emissions reductions, with carbon tax performing slightly better.
  • Maximalist Solutions:
      - Government reorganization of the economy aimed at sustainability.
      - Consideration of interplanetary travel as a long-term solution.
      - Application of the Coase theorem is introduced as a guiding principle in these markets.

Coase Theorem

  • Definition: If trade of an externality is possible and transaction costs are low, parties will negotiate efficient outcomes regardless of the initial property allocation.
      - Example Scenario:
        - Factory A produces smoke that disrupts Family B living nearby.
        - Cost of Filter Installation: $1,000.
        - Scenario 1: Family B can sue Factory A successfully for damages of $5,000; Factory A pays for the filter.
        - Scenario 2: Family B can sue successfully for damages of only $500; Factory A does not pay for the filter.
        - Scenario 3: Family B cannot sue; with $5,000 damages, they install the filter themselves.
        - Scenario 4: Family B cannot sue; with $500 damages, no filter will be bought.

Coase Theorem Applied to Climate Policy

  • Domestic vs. International Climate Policy:
      - For Domestic policy:
        - Relevance of Scenarios 1 and 2: Cost/benefit analysis by both parties influences outcomes.
        - Property Rights Regime: Can affect the likelihood of winning lawsuits and damage calculations.
      - For International policy:
        - The anarchical nature of the international system limits options to scenarios 3 and 4:
          - Countries most negatively affected by climate change must choose to act independently, pay polluters, or do nothing.

Climate Policy Analysis

  • Research by Bergquist & Warshaw (2023):
      - Question Posed: How to measure climate commitments and their effects?
      - Need for Policy Metrics: Understanding the effectiveness of state and regional policies from 2000-2020.
Climate Policy Options
  • Menu of Options: Policies can be complementary or substitutive:
      - Complementary Policies: Have an additive or multiplicative effect.
      - Substitutable Policies: Interchangeable yet redundant.
  • Adoption Metrics: Utilizing Bayesian factor analysis to assess observed policies in terms of stringency.
      - Analyzed 25 policies across 50 US states (plus DC) from 2000-2020, estimating how stringent policies are among states.

Table of Climate Policies

  • Key Policies in Dataset: Included various environmental policies with adoption data by year:
      - CA Car Emissions Standard: Adopted by 18 states.
      - Climate Action Plans: 33 states.
      - Community Solar Initiatives: 21 states.
      - Detailed records of policy adoption indicating temporal and spatial trends in US climate policymaking.

US State Climate Commitments Over Time

  • Graphical representation from 2000 to 2020 indicating climate policy stringency by state, highlighting increases among progressive states like California and New York, as compared to states with less traction on climate policies.

Climate Policy and CO2 Emissions

  • Analysis and Correlation:
      - Electricity Sector CO2 Emissions per Capita (2020): Graph showing the relationship between climate policy stringency and emissions.
      - Statistical Correlation:
        - Results showed regression values indicating a negative relationship between stringency and emissions.

Summary of Results from OLS Analysis

  • Effect of Increased Stringency: Associated with decreased CO2 emissions; a 1 SD increase correlates with:
      - 5% decrease in CO2 emissions from the electricity sector.
      - 2% decrease in overall emissions.
  • Outcomes indicate no increase in renewable energy production but a reduction in direct fossil fuel consumption possibly through increased efficiency or state energy trade.
  • No Negative Economic Impact: Overall economic performance remains stable amidst policy increases.

Key Takeaways

  • More stringent policies indeed lead to CO2 emissions reductions; however, they are insufficient to meet a target of a 50% reduction by 2050, given the current rate of reduction approximately 10% over two decades.
  • Recognized variability exists among US states, with significant disparities in policy implementation and ambition.

Meckling & Karplus (2023) Analysis

  • Research Questions: Investigate how political dynamics influence policy ambition and how actions today can dismantle barriers tomorrow.
  • Primary Obstacles Addressed:
      1. Ambition Gap: The discrepancy between political targets and actual consensus on trajectories.
      2. Implementation Gap: Differences between policy actions and established political targets.
      3. International Action Gap: Limits between the actions needed globally versus those actually observed.
Addressing Climate Change
  • Recommendation for Initial Policies: Initial frameworks can pave the way for future feasibility by mobilizing actors and enabling action across various jurisdictions.

Explaining the Ambition Gap

  • Core Factors:
      - Distributive politics creates opposition by concentrated interests, notably from GHG producers.
      - For political feasibility:
        - Concentrate benefits to diffuse costs (e.g., subsidies).
        - Link issues to broaden support (e.g., linking climate policy with national security).

Spectrum of Opposition to Climate Policy

  • Policy Instruments: Varied resistance levels among initiatives:
      - Higher Opposition: Carbon pricing without redistribution.
      - Lower Opposition: Technology-specific policies, such as mandates and subsidies.

Political Institutions and the Ambition Gap

  • Democracies vs. Autocracies: Democracies, especially proportional systems, tend to have stronger climate policies.
  • Interest Group Interaction: Corporatist systems may negotiate compromises involving stakeholder buy-in, while competitive systems often exclude reluctant interests.

Evaluating Implementation Gaps

  • Policy Durability: Low capacity of institutions leads to failures in maintaining policies, often due to political backlash from visible costs.
  • Positive Feedback Mechanisms: Initial policies should be designed to generate enduring effects to promote policy longevity.
International Action Gap
  • Challenges of International Cooperation: The inadequacy of current models for global commitments highlights the need for strengthened collaborations and deeper engagements among nations, potentially through climate clubs and sectoral agreements.

Cost Analysis of Renewable Energy

  • Onshore Wind and Solar Power Trends: Evolving costs and their implications on economic viability and environmental impact.
Expanding Political Feasibility
  • Dynamic Nature of Feasibility: Initial policy choices have consequential effects on domestic actors, leading to potential feedback for future policies.
      - Necessity to address all three identified gaps through adaptable and robust policy frameworks.
Final Conclusion: Prospects for the Future
  • The discussion revolves around the feasibility of reversing climate change through policy design and collaboration.
  • Considerations for Future Policies: How does a focus on distributive politics shape climate initiatives? Can the Coase theorem provide a paradigm for policy feasibility? What pathways show promise for continuing environmental research and response?