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The ultimate climate change challenge: free riders

Scott Tong Oct 2, 2015
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The last of the world’s big economies, India, has submitted its voluntary pledge to regulate carbon emissions. Already, though, some critics say India could do more. And collectively, the world’s total commitments, as the United Nations climate conference in Paris approaches, are projected to be insufficient to meet international targets.

Many economists say the central issue is what’s known as the “free rider” problem: People want to use something available to the masses, say a park or a library, but don’t want to pay for it.

“A good example is Wikipedia,” said Steven Stoft, an energy and climate consultant. “They put in a lot of effort, money and time. And we just go use it for free, and we don’t bother to donate.”

For an individual, it’s particularly tempting to do little, or nothing, when the cost is high and the benefits go to other people. That’s exactly how cleaning up carbon pollution works, except on the scale of nations.

Harvard climate economist Martin Weitzman said that’s why total carbon reduction commitments leading up to U.N. climate talks in December are insufficient.

“It’s not enough to really address head-on this problem,” Weitzman said. “Everyone is tempted to come in with a low target, leaving the rest of the world to mostly determine the abatement level.”

Still, the goal of the climate meeting is to collect the pledges, and then encourage every country to increase its ambition going forward.

Behavioral studies suggest people tend not to work that way.

“Some countries will observe others are not doing their share,” University of Maryland economist Peter Cramton said. “And as a result they’ll say, ‘I’m not going to do my share either.’ And you get an unraveling of cooperation.”

To Cramton, this dynamic doomed a previous treaty, the Kyoto Protocol. Japan and Canada opted out, encouraging others to free-ride.

In an upcoming paper, Cramton suggests any patchwork of voluntary commitments, including current climate talks, will fail. The incentive to ride for free, the paper says, is too strong.

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