Within international institutions, strategies of reciprocity (making benefits conditional on contributions to the common good) are often the most effective way to generate cooperation, as is generally the case in the international trade system (Barton et al., 2007). It is conceivable that trade-related reciprocity could be employed to provide incentives for other countries to pursue effective climate-change policies. Over-reliance on such a strategy, however, could lead to acrimony and open opportunities for self-interested protectionism by import-competing firms and labor in wealthy countries. Other strategies must be employed to provide incentives for action.
Among these other key strategies for international engagement, it remains crucial to continue to push for strong domestic GHG reduction policies. Without clear, transparent U.S. leadership on this issue, any attempts at fostering greater international engagement are likely to be unsuccessful. A sustainable U.S. domestic strategy must be based on broad public consensus about the importance of limiting climate change, and on policies crafted to meet the interests of key stakeholders in both the public and private sectors. In general, “environmental regulations work most effectively when systems of regulation confer tangible benefits upon the regulated” (Oye and Maxwell, 1995).
Climate change policy faces an institutional dilemma. High-income countries have the capacity to take strong action to reduce GHG emissions, and they have growing incentives to do so as understanding of the potential damages from climate change grows. But such efforts will be insufficient to limit the extent of global climate change without effective action by the low- and middle-income countries with rapidly growing emissions—countries that numerically dominate multilateral institutions including the United Nations (UN) and the UNFCCC.
The largest of these countries, such as China, India, and Brazil, likewise have incentives to act, as they are major contributors to the problem and may be highly vulnerable to climate change impacts. But having secured exemptions from obligations in the Kyoto Protocol, they are now disinclined to sacrifice those bargaining advantages. The smaller low- and middle-income countries, meanwhile, lack incentives to act vigorously, since climate change is a common-pool resource issue, subject to dilemmas of collective action (that is, small contributors to a common-pool resource problem are strongly tempted to free-ride on the efforts of others).