32
Environmen t & Statecraft The Strategy of Environmental Treaty-Making by Scott Barrett Johns Hopkins University School of Advanced International

Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

Embed Size (px)

Citation preview

Page 1: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

Environment & Statecraft

The Strategy of Environmental Treaty-Making

by Scott BarrettJohns Hopkins University School of Advanced International Studies

Page 2: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

Session 1:The Participation Game

Page 3: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

The rise of the treatyMultilateral Treaties Currently In Force by Date of Adoption

0

50

100

150

200

250

300

1900 1925 1950 1975 2000

Year

1945

Agreements requiringmore than 10 partiesto enter into force

All other treaties

Page 4: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

Treaty participationParticipation in the International Convention for the Regulation of Whaling

-10

-5

0

5

10

15

20

25

30

35

40

45

1948

1951

1954

1957

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

Num

ber

of

With

draw

als

Num

ber

of P

artie

s an

dN

umbe

r of

Acc

essi

ons

No. of Parties(1980)

No. of Accessions(1980)

No. of Withdraw als (1980)

Source: Data supplied to the author by the International Whaling Commission.

Page 5: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

Acid rain case study

Helsinki Protocol (1985) parties must reduce their sulfur emissions 30% from the 1980 level by 1993.

Success?

Page 6: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

"Compliance" with the Helsinki Protocol

Yugoslavia

United States

United Kingdom

UkraineSw itzerland

Sw eden

Spain

Slovenia

Slovakia

RussiaRomania

Moldova

Portugal

Poland

Norw ay

NetherlandsLithuania

Liechtenstein

Italy

Ireland

IcelandHungary

Greece

Germany

France

Finland

DenmarkCzech Republic

Croatia

Canada

Bulgaria

Belgium

BelarusAustria

Armenia

-100% -50% 0% 50% 100%

Percentage Reduction Sulphur Emissions, 1980-93 Less 30%

Source: UNECE web page, June

2000.

Page 7: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

The Helsinki Protocol appears to be a success, but...

• Participation is incomplete.

• “Over-compliance” by most parties.

• Several non-parties also reduced emissions by more than 30%.

Page 8: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

…and the treaty lacks mechanisms essential to success

• Acid rain is an asymmetric game, and yet the treaty does not offer side payments.

• Helsinki does little to encourage participation and nothing to enforce compliance.

Conclusion: Helsinki made little difference

Page 9: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

Oslo Protocol (1994)

The Oslo Protocol is designed differently.– Different emission limits for every country.

– Limits set to meet “critical loads.”

– Allows “JI” for cost-effectiveness.

– Acknowledges need to enforce compliance.

But– Oslo does not sustain full participation.

– And most parties “over-comply.”

Page 10: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

"Compliance" with the Oslo Protocol

-60 -40 -20 0 20 40 60 80 100

Austria

Belarus

Belgium

Bulgaria

Canada

Croatia

Czech Republic

Denmark

Finland

France

Germany

Hungary

Ireland

Italy

Luxembourg

Nethelands

Norw ay

Poland

Russia

Slovakia

Slovenia

Sw eden

Sw itzerland

United Kingdom

Percent Reduction Sulfur Dioxide Emissions from 1980 Level

Required Emission Reduction 2000 Actual Emission Reduction 1999

Page 11: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

Oslo Protocol

Also•Country most in danger of not complying (Portugal) has not ratified it.•“Critical loads” are not achieved.•JI mechanisms not implemented.•No side payments.•Treaty does not specify consequences of non-compliance—except to say that it may be necessary to “assist” countries having problems complying.

Page 12: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

A Contrast: Title IV• Cap and trade; participation mandatory.• Relies on precise, continuous monitoring.• Imposes a fine, set by Congress, of $2,682

per ton (in 2000). Actual marginal costs are about $187.

• Requires that polluters make up for the shortfall in the next year.

• Makes non-compliance a felony.• Result: 2000 compliance rate, 99.99946%!

Page 13: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

1911 Fur Seal Treaty

Page 14: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies
Page 15: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

• Pribilofs discovered in 1786; up to 5 million seals.• Sole owner management reduced the herd to 2m.

The early years

Page 16: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

• Pelagic sealing decimated the herd, and nearly led to war. By 1909 there were less than 150,000 seals left.

Later…

Page 17: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

• The Treaty of 1911 brought a reversal of fortune: by 1917 the herd had tripled in size; by 1940 there were once again 2 million seals.

Later still…

How did it do this?

Page 18: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

By changing the rules of the game

1. Created an aggregate surplus by banning pelagic sealing.

2. Used side payments to redistribute the surplus such that every party gained.

3. Deterred non-participation by means of a “linchpin” punishment.

4. Deterred non-compliance by making pelagic sealing a criminal offence.

5. Deterred entry by banning trade in non-authenticated skins.

Page 19: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

Montreal Protocol

• Negotiated in 1987; adjusted and amended several times since then.

• Bans production and consumption of the ODSs.

• Achieves nearly universal participation.

• By around 2050, the ozone layer is expected to be restored.

• How did the MP succeed?

Page 20: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

The underlying PD

P

A

0 N-1Number of others that play Abate

Card game: You must forfeit $7.50 if you hand in your red card. You get $1 for every red card handed in by anyone.Suppose N = 100.

0

- $6.5

$92.5

$99

Page 21: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

The participation game

0 N-1Number of others that play Signatory

k*-1

n

s

• Must choose to be a Signatory or a Non-signatory.• Signatories must play Abate if at least k* = 8 countries accede; otherwise, signatories can behave as they like. $0

$0.5

$8

$92.5

$99

Note: Not drawn to scale.

Page 22: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

Collective rationality

• Why k* = 8? Why not set k* = 100?

• k* = 8 is the only credible minimum participation level for this game.

• With the Fur Seal Treaty, we were lucky; k* = N.

Page 23: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

An Analytical Approach:The Underlying PD

• For the N-player PD, payoffs are:

i = b(qi + Q-i) – cqi

where qi = {0, 1}; countries either play Abate (qi = 1) or Pollute (qi = 0).

• Assume c > b (play Pollute is a dominant strategy) and bN > c (full cooperation requires that every country play Abate).In the earlier card game we had i = (qi + Q-i) – 7.5qi so that b = 1 and c = 7.5.

Page 24: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

Transformed PD• In the PD, countries can play Abate or Pollute.• But in the real world, countries can do more than

this; they can negotiate a treaty.– Stage 1: Each player chooses to be a signatory or a

non-signatory.

– Stage 2: Signatories choose to play Abate or Pollute with the objective of maximizing their collective payoff.

– Stage 3: Non-signatories choose to play Abate or Pollute.

Page 25: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

Backwards Induction

• When deciding whether to sign, a country will know what the treaty requires (given the participation of others) and what it will do if it does not sign.

Page 26: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

Stage 3

• Since c > b, non-signatories always do better by playing Pollute.

Page 27: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

Stage 2

• Let k be the number of signatories.

• Collectively, signatories will play Abate if kb c; they will play Pollute if kb < c.

• For the experimental game, c = 7.5 and b = 1. Hence, signatories play Abate if k 8 and Pollute otherwise.

Page 28: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

Stage 1• If six or fewer others play Signatory, it

doesn’t matter if you play Signatory—so you might as well play Signatory (s = n = 0).

• If seven others play Signatory, your accession triggers entry into force and you get a payoff of s = 0.5 if you play Signatory and n = 0 if you play Non-signatory.

• If eight or more others play Signatory, you do better by playing Non-signatory.

Page 29: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

Equilibrium

• Treaty requires that parties play Abate.

• Treaty enters into force if ratified by k* countries (where k* is the smallest integer greater than c/b). In our example, k* = 8.

• Precisely k* countries (8 in our example) ratify the treaty.

• All non-signatories play Pollute.

Page 30: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

Implications

• Gains to cooperation are (bN – c)N.• Gains increase in N and b, decrease in c.• k*, by contrast, decreases in b and increases in c.• So k* will be large when the gains to cooperation

are small.• When the gains are large (and payoffs are linear),

(credible) punishments are small and so only a small number of parties can be supported.

• Cooperation harder the larger is N.

Page 31: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

Cost-benefit analysis of the Montreal Protocol

NoControls

MontrealProtocol

UnilateralImplementation

of MP

Ozone Depletion (%)By 2000By 2050By 2100

1.0%15.7%50.0%

0.8%1.9%1.2%

0.9%10.3%49.0%

Payoffs to the US(Billions of 1985 $US)BenefitsCostsNet BenefitsB-C Ratio

$3,575$21

$3,554170

$1,373$21

$1,35265

Source: EPA (1988).

Page 32: Environment & Statecraft The Strategy of Environmental Treaty- Making by Scott Barrett Johns Hopkins University School of Advanced International Studies

Summary so far

• A treaty can transform the underlying game.

• The transformation is constrained by the credibility of the threat to punish non-participation.

• When N is “large,” a treaty is unable to transform a PD by very much.