Economics for Today 9th Edition by Irvin Tucker

Exercise 11

WHY IS THE CLIMATE CHANGE PROBLEM SO HARD TO SOLVE?
Applicable Concepts: emissions trading and effluent taxes
With much ado, representatives from 192 countries traveled to Copenhagen (or Hopenhagen, as it was referred to) in late 2009, hoping to build upon the Kyoto Conference to reach agreement on steps to reduce carbon emissions, which the participants believed were contributing to global warming. Two weeks later, they came away with little more than a nonbinding agreement brokered between the United States and China that five countries agreed to mitigate their carbon emissions and that the United States would be able to monitor China's compliance with the agreement. In short, the conference produced almost no progress on greenhouse gas emissions.
Why is this problem proving so difficult to solve? There has been widespread, although far from universal, agreement that human activity is contributing to a warming planet, which could lead to flooding, desertification, weather events such as stronger hurricanes, and the spread of tropical diseases to warming countries.
First, consider Copenhagen. Participants came from both developed and developing countries. Developing countries threatened to walk out on the meetings. Kyoto set a precedent that only developed countries would be expected to pay the cost of reducing emissions. Developing countries would be exempt or would expect to receive subsidies or technology transfer from developed countries to reduce emissions. At Copenhagen, developing countries sought millions of dollars to reduce emissions.
Another controversy is over whether countries, developed and developing, should receive credit for offsets. Brazil, for example, wants credit for slowing or reversing the rate at which it is cutting down its rain forest. Trees store carbon. Countries could receive carbon credits for planting trees or possibly for slowing the rate at which trees are being cut down. Brazil and other developing countries want developed countries to pay them, as they claim they are slowing their own development by growing new forests or slowing the conversion of existing forest to agricultural resources.
Further, there is not even agreement over which countries are still developing. At Kyoto, China was still classified as developing, exempt from taking action at its own expense. After growing its gross domestic product (GDP) at nearly a 10 percent annual rate for the last three decades and becoming the world's largest greenhouse gas emitter in the process, is it still a developing country? For purposes of avoiding the cost of slowing emissions, never mind reducing them; it is advantageous to claim you are still developing. The argument is that developed countries were able to grow and emit greenhouse gases with impunity; it is only fair that developing countries be able to do the same. Developed countries have benefited from industrialization without having to pay for their emissions, so it is fair that they should do so now. China may be moderating its stance, based on a recent agreement between China and the United States to both reduce their carbon emissions.
If countries at an international conference do agree to be financially responsible for reducing emissions, they may face problems when they bring those proposals home. First, they face opposition from those who do not accept the argument that human activities contribute to global warming. Recent surveys of the U.S. population showed a decline in those who were convinced that human activities contribute to global warming. And this was even before the incident that has become known as Climategate, whereby intercepted emails of climate change scientists showed the likely suppression of evidence not favorable to their view and obstacles put in the way of those more skeptical of climate science. Some of the intercepted emails had been written by members of the International Panel on Climate Change (IPCC), a Nobel Prize-winning group containing thousands of scientists, including Nobel laureates in Economics. Even more recently, their work was found to have numerous errors, not the least of which was predicting the melting of Himalayan glaciers by 2035, when the actual studies had arrived at a date of 2350.
But perhaps most fundamentally, a solution will have to address the problems of externalities and public goods. Consumers and producers of carbon-emitting products, such as coal-burning power plants and gasoline-burning automobiles, will, in the absence of government intervention, ignore emissions. Furthermore, any global agreement to reduce emissions will benefit everyone, whether or not an individual has borne the expense of reducing emissions, a classic example of a public good. Benefits are non-rival and non-excludable. And agreeing on whether we will actually reduce emissions or simply slow them down will be contentious. Nor is CO 2 the only greenhouse gas. Methane, of which cows are a major emitter, is smaller in volume, but more potent in effect.
So in sum, taking action to slow or stop climate change is one of the most difficult problems humans have faced. There is disagreement on whether humans have contributed to the problem, what countries are responsible for paying for the solution, and how to develop a mechanism that can overcome externalities and public goods problems. In the end, we may find ourselves left to adapt to climate change, abandoning low-lying lands, accepting millions of immigrants from those countries, switching to hot weather crops, and losing flora and fauna that cannot adapt, unless we can develop new approaches to address this challenge.
Give an example of an equity (fairness) issue that arises in working toward a global agreement to limit greenhouse gas emissions.