California Air Resources Board voting to adopt sweeping clean air regulations in Sacramento, Dec. 16, 2010. The new rules set up the nation's most extensive carbon trading market that will provide a financial incentive to cut emissions.
"The National Context of U.S. State Policies for a Global Commons Problem"
Perspectives Series 2011: Progressing Towards Post-2012 Carbon Markets
Author: Robert N. Stavins, Albert Pratt Professor of Business and Government; Member of the Board; Director, Harvard Project on Climate Agreements
Belfer Center Programs or Projects: Harvard Project on Climate Agreements
Why should anyone be interested in the national context of a state policy? In the case of California's Global Warming Solutions Act (AB 32), the answer flows directly from the very nature of the problemóglobal climate change, the ultimate global commons problem. Greenhouse gases (GHGs) uniformly mix in the atmosphere. Therefore, any jurisdiction taking actionówhether a nation, a state, or a cityówill incur the costs of its actions, but the benefits of its actions (reduced risk of climate-change damages) will be distributed globally. Hence, for virtually any jurisdiction, the benefits it reaps from its climate-policy actions will be less than the cost it incurs. This is despite the fact that the global benefits of action may well be greaterópossibly much greateróthan global costs.
This presents a classic free-rider problem, in which it is in the interest of each jurisdiction to wait for others to take action and benefit from their actions (that is, free-ride). This is the fundamental reason why the highest levels of effective government should be involved, that is, sovereign states (nations). And this is why international, if not global, cooperation is essential.
Despite this fundamental reality, there can still be a valuable role for subnational climate policies. Indeed, my purpose in this essay is to explore the potential for such state and regional policiesóboth in the presence of federal climate policy and in the absence of such policy. I begin by describing the national climate policy context and then turn to subnational policies, such as California's AB 32 and the Regional Greenhouse Gas Initiative (RGGI) in the Northeast. My focus is on how these subnational policies will interact with a federal climate policy. It turns out that some of the interactions will be problematic, others will be benign, and still others could be positive. I also examine the role that could be played by subnational policies in the absence of a meaningful federal policy, with the conclusion thatólike it or notówe may find that Sacramento, California comes to take the place of Washington as the center of national climate policy.
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