The Need for a Coordinated, Effective, Efficient, and Equitable Global Response

3. The Need for a Coordinated, Effective, Efficient, and Equitable Global Response

The tradeoffs and synergies between mitigation and adaptation measures in principle call for an integrated approach to making simultaneous decisions on optimal levels of effort on both fronts.³⁵ But in a simplified framework, one can focus on the optimal level of mitigation efforts and assume that, given the resulting expected climate change impacts, adaptation expenditures will be decided optimally, by taking into account the corresponding costs and benefits of such actions.³⁶ Both the marginal costs and the marginal benefits of mitigating climate change depend on the scale of the emission reductions to be undertaken. On one hand, the costs of additional mitigation efforts tend to increase with the level of emission reductions. Low levels of emission reductions can be attained at relatively low costs; as reduction targets become more ambitious, these cheap solutions are exhausted and more expensive investments are required. The marginal benefits of mitigating climate change (the additional adaptation expenditures and residual damages avoided), on the other hand, tend to fall with the scale of emission reduction efforts.³⁷ The optimal degree of effort to mitigate the consequences of climate change would be the point at which the marginal cost of reducing emissions by one more ton just balances the damages avoided by doing so: Q* in figure 5, with a socially efficient price of carbon of P*. In a world in which all costs and benefits were taken into account by the same decision makers with perfect information, this optimal solution might be reached.

In practice, however, this outcome is unlikely for two reasons. First, emitters only absorb a very small fraction of the associated social costs, which are largely paid by others, most of whom belong to future generations. So individual agents—and countries—have an incentive to “free-ride” on the mitigation efforts of others. Moreover, even if some countries with large expected damages may decide to take mitigation actions unilaterally, the opportunities in these countries are not likely to be as cost-efficient as those in other countries.

Figure 5. Marginal Mitigation and Damage Costs


Indeed, there is no reason to expect that countries with the highest risk exposure would also happen to have the lowest mitigation costs. In summary, global mitigation through uncoordinated individual efforts is likely to be: (a) too small, (b) implemented too late, and (c) undertaken by the wrong countries.³⁸ In order to have any chance of reaching a level of mitigation and adaptation efforts close to that which would prevail in the absence of “free-riding” the world as a whole needs to come to a joint agreement.

But second, even with collective action, determining the optimal level of mitigation effort would be difficult because information required to estimate both the costs and the benefits is very imperfect. In particular, it is very hard to quantify the probabilities associated with specific climate impacts. In this regard, when dealing with climate change policy makers are confronted not only with risk—randomness with known probabilities—but also with uncertainty.³⁹ The chain of causality between emissions today and the future impacts of climate change has many links, and there is a great deal of scientific uncertainty involved in moving from each one to the next.⁴⁰ This greatly complicates expected cost-benefit analyses. Moreover, there are potentially catastrophic climate impacts, the probability of which is thought to be low but is not well known. And the global climate system has a lot of inertia, creating long lags between changes in emissions and the impacts on natural systems, meaning that by the time it is discovered that a catastrophe is coming, it may be too late to avoid it. These considerations may make it prudent for policy makers to adopt an approach based on precaution, in which a large weight is assigned to the objective of avoiding such events.

In practice, this leads to a focus on establishing targets for GHG stocks, for which the probabilities of high levels of global warming with catastrophic consequences are estimated to be relatively small. This implicitly amounts to a willingness to pay an “uncertainty premium” so as to preempt those events. The definition of the specific targets that would inform public policies is akin to an iterative process of risk management, informed by the evolving scientific evidence on the sensitivity of climate to GHG concentrations, the damage costs from climate change, and the technological options for mitigation.

In fact, the 1992 agreement on the United Nations Framework Convention on Climate Change (UNFCCC), which has been ratified by 189 countries, explicitly recognizes as its overarching objective the stabilization of GHG concentrations at a level that avoids “dangerous” anthropogenic climate change. While there is as yet no universally accepted definition of such “dangerous climate change,” one approach is to focus on reducing the prospect of encountering biological and geological “tipping points,”⁴¹ when a system goes abruptly and irreversibly from one state to another, with wide systemic consequences, either for the world as a whole or for some regions. Examples would include the permanent loss of valuable ecosystems and/or species, and the possible disruption of key intrinsic processes of the climate system itself—for example, loss of the Amazon, the disintegration of the West Antarctic, or the Greenland ice sheets. Some socioeconomic impacts could also be considered “dangerous” in the sense that if certain critical levels—for example, large cumulative socioeconomic impacts or serious disruptions of current practices—are reached, there could be consequences for human well-being that could be considered ethically or politically unacceptable (at least from a local perspective), or even produce large-scale social disorder. Examples could include levels of climate change that would trigger catastrophic food or water shortages, extensive coastal flooding, or the widespread dissemination of malaria or other tropical diseases