Climate Change: An Incentive Problem

     According to the Washington Post’s article written by Joshua Tucker, the primary impediment to establishing a more rigid international institution to combat climate change is neither a domestic or an international problem, but an incentive problem. Indeed, science has been pointing out to the looming hazards of climate change for some time. According to the United States Environmental Protection Agency, from 1900 to 2008, emissions of carbon dioxide from fossil fuels have increased alarmingly by over 16 times. Tucker mentions that according to a report from the Intergovernmental Panel on Climate Change, it is not too late to change our gloomy future: if we act drastically within the next decades and cut emission levels we can still avoid the damages of climate change. However, Tucker is less hopeful that the world will choose to do so.

     What is interesting about Tucker’s article is that he argues that there is an incentive for every individual not to take action against climate change. In social science the discount rate is an effective tool in comparing the future value to the present value. In climate change, Tucker suggests, people have a very low discounting rate. Most likely, those who will be reaping the benefits of cutting emissions at present will not be the ones who are bearing the costs. In other words, there is a collision of interest between generations; the present generation enjoys high levels of green gas emissions at the expense of great suffering of the following generation. Unless the current generation sees an imminent threat of climate change that will directly affect them, they are unlikely to give up their privileges.

     An article written by Bill Mckibben on July 19, 2012 highlights the incentive problem addressed by Tucker. At the Copenhagen climate conference, the world agreed that it could afford only a 2 degrees Celsius increase in global temperature. That’s it. No more. According to Mckibben, that’s roughly equivalent to the release of 565 gigatons of carbon dioxide into the atmosphere. However, a study on the proven coal and oil and gas reserves of fossil-fuel companies suggests that the world is planning to burn 2,795 gigatons in the near future. Although the reserves are still buried deeply underground, they are, economically speaking, aboveground as companies are already borrowing money and nations are planning their budges based on this number.

     Tucker’s article poses a challenge in the climate change debate in that it implies that there should be an effort beyond mere domestic and international politics. An effort must be raised at the individual and the economic level in order to fully tackle the coming Leviathan. Until interests change, it is unlikely that the world will see great divergent from its current path.

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2 thoughts on “Climate Change: An Incentive Problem”

  1. As the author points out, the current generation do not want to pay the cost because of their benefit that they have now; they don’t see what will come in the future. States agreed to reduce the 2 celsius at Copenhagen climate conference, but that was it. I agree with author that an incentive problem is the main impediment to combat climate change. However, I think that it’s an international institution’s role to create that incentive for cooperation for member states.

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  2. The discounting rate Tucker introduces is consistent with multiple studies on the topic of individual capacity to adapt to climate change. Climate Change affects us on all levels- the individual, the local/national, and the international level. Where, on all levels, we can address or do some part to combat the issue. And all levels seem to have drawbacks to mitigate climate change. On an individual level, social scientists, such as Robert Gifford and Neil Adger, list suspicion of climate change science, beliefs that benefits of non-adaption today outweigh costs of maintaining habit, and subjective cultural views of habitat influence a person’s ability to adapt to the changing climate. Collectively, these personal inhibitors are manifested through gridlock in local and national politics. They are reflected at a macro-level. In terms of international stagnation on the subject, mitigation and adaption failure is due to a collective action-like problem driven and perpetuated by economic gain and competition among countries. Countries hold a public interest is mitigating climate change for the future, however their private incentive consists of having an economic upper-hand.

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