Geoscience Reference
In-Depth Information
21
FROM NATIONAL TO HARMONIZED
INTERNATIONAL POLICIES
The last two chapters discussed how governments can harness the mar-
ket to slow the pace of global warming. We saw that a key element is
putting a price on CO
2
and other greenhouse gases (GHGs). We next ex-
plained the two potential systems that would accomplish this: cap and
trade and carbon taxes. These would work at the level of individual na-
tions and indeed have been implemented for almost a decade by the EU
in its Emissions Trading Scheme.
One fi nal facet of an effective global warming policy is . . . that it be
global. The present chapter discusses alternative approaches, including
the failed Kyoto Protocol, and considers ways to introduce more effective
international policies. A key innovation in a new international agree-
ment will be to introduce incentives to prevent free riding.
APPROACHES TO GLOBAL EXTERNALITIES
Global warming is an unusual economic phenomenon known as a
global externality. Global externalities are not new, but they are becom-
ing increasingly important because of rapid technological change and
declining transportation and communication costs—what people some-
times call “globalization.” Global externalities are different from other
economic activities because the economic and political mechanisms for
dealing with them effi ciently and effectively are weak or absent.
Global externalities have long challenged national governments. In
earlier centuries, countries faced religious confl icts, marauding armies,
and the spread of infectious diseases like the plague. In the modern
