A Polycentric Approach for Coping with Climate Change

This paper proposes an alternative
approach to addressing the complex problems of climate
change caused by greenhouse gas emissions. The author, who
won the 2009 Nobel Prize in Economic Sciences, argues that
single policies adopted only at a global scale are unlikely
to generate sufficient trust among citizens and firms so
that collective action can take place in a comprehensive and
transparent manner that will effectively reduce global
warming. Furthermore, simply recommending a single
governmental unit to solve global collective action problems
is inherently weak because of free-rider problems. For
example, the Carbon Development Mechanism (CDM) can be
gamed in ways that hike up prices of natural resources and
in some cases can lead to further natural resource
exploitation. Some flaws are also noticeable in the Reducing
Emissions from Deforestation and Forest Degradation in
Developing Countries (REDD) program. Both the CDM and REDD
are vulnerable to the free-rider problem. As an alternative,
the paper proposes a polycentric approach at various levels
with active oversight of local, regional, and national
stakeholders. Efforts to reduce global greenhouse gas
emissions are a classic collective action problem that is
best addressed at multiple scales and levels. Given the
slowness and conflict involved in achieving a global
solution to climate change, recognizing the potential for
building a more effective way of reducing green house gas
emissions at multiple levels is an important step forward. A
polycentric approach has the main advantage of encouraging
experimental efforts at multiple levels, leading to the
development of methods for assessing the benefits and costs
of particular strategies adopted in one type of ecosystem
and compared to results obtained in other ecosystems.
Building a strong commitment to find ways of reducing
individual emissions is an important element for coping with
this problem, and having others also take responsibility can
be more effectively undertaken in small- to medium-scale
governance units that are linked together through
information networks and monitoring at all levels. This
paper was prepared as a background paper for the 2010 World
Development Report on Climate Change.