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Yet governments have used a flawed architecture in their attempts to forge treaties to counter it. The key agreements , the Kyoto Protocol and the Paris climate accord, have relied on voluntary arrangements, which induce free-riding that undermines any agreement.

Otherwise, the global effort to curb climate change is sure to fail. As most independent observers concluded, there was a total disconnect between the need for sharp emission reductions and the outcomes of the deliberations.

At the end of this long string of conferences, the world in is no further along than it was after COP1, in there is no binding international agreement on climate change.

When an athletic team loses 25 games in a row, it is time for a new coach. After a long string of failed climate meetings, similarly, the old design for climate agreements should be scrapped in favor of a new one that can fix its mistakes.

Concepts from game theory elucidate different kinds of international conflicts and the potential for international agreements.

A first and easy class of agreements are those that are universally beneficial and have strong incentives for parties to participate. A second class of agreements, of medium difficulty, rely on reciprocity, a central example being treaties on international trade.

A third class of international agreements confront hard problems—those involving global public goods. These are goods whose impacts are indivisibly spread around the entire globe.

Public goods do not represent a new phenomenon. The quick spread of COVID is a grim reminder of how global forces respect no boundaries and of the perils of ignoring global problems until they threaten to overwhelm countries that refuse to prepare and cooperate.

Agreements on global public goods are hard because individual countries have an incentive to defect, producing noncooperative, beggar-thy-neighbor outcomes.

In doing so, they are pursuing their national interests rather than cooperating on plans that are globally beneficial—and beneficial to the individual countries that participate.

The result is that all parties are worse off. International climate treaties, which attempt to address hard problems, fall into the third class, and they have largely failed to meet their objectives.

There are many reasons for this failure. Since they are directed at a hard problem, international climate agreements start with an incentive structure that has proved intrinsically difficult to make work.

They have also been undermined by myopic or venal leaders who have no interest in long-term global issues and refuse to take the problem seriously.

Further obstacles are the scale, difficulty, and cost of slowing climate change. But in addition to facing the intrinsic difficulty of solving the hard problem of climate change, international climate agreements have been based on a flawed model of how they should be structured.

The central flaw has been to overlook the incentive structure. But countries could buy or sell their emission rights to other countries depending on their circumstances the trade.

The idea was that the system would create a market in emissions, which would give countries, companies, and governments strong incentives to reduce their emissions at the lowest possible cost.

The Kyoto Protocol was an ambitious attempt to construct an international architecture to harmonize the policies of different countries.

Because it was voluntary, however, the United States and Canada withdrew without consequences, and no new countries signed on.

As a result, there was a sharp reduction in its coverage of emissions. It died a quiet death , mourned by few, on December 31, —a club that no country cared to join.

The Kyoto Protocol was followed by the Paris accord of The United States, under the Trump administration, declared that it would withdraw from the agreement.

Even before the United States withdrew , it was clear that the national targets in the Paris accord were inconsistent with the two-degree temperature target.

The accord has two major structural defects: it is uncoordinated, and it is voluntary. It is uncoordinated in the sense that its policies, if undertaken, would not limit climate change to the target of two degrees.

And it is voluntary because there are no penalties if countries withdraw or fail to meet their commitments. Trump announcing the U. Studies of past trends, as well as the likely ineffectiveness of the commitments in the Paris accord, point to a grim reality.

Global emissions would need to decline by about three percent annually in the coming years for the world to limit warming to the two-degree target.

Actual emissions have grown by about two percent annually over the last two decades. Modeling studies indicate that even if the Paris commitments are met, the global temperature will almost certainly exceed the two-degree target later in the twenty-first century.

The bottom line is that climate policy has not progressed over the last three decades. The dangers of global warming are much better understood, but nations have not adopted effective policies to slow the coming peril.

Why are agreements on global public goods so elusive? After all, nations have succeeded in forging effective policies for national public goods, such as clean air, public health, and water quality.

Why have landmark agreements such as the Kyoto Protocol and the Paris accord failed to make a dent in emission trends? The reason is free-riding, spurred by the tendency for countries to pursue their national interests.

Free-riding occurs when a party receives the benefits of a public good without contributing to the costs. In the case of international climate change policy, countries have an incentive to rely on the emission reductions of others without making costly domestic reductions themselves.

Focusing on national welfare is appropriate when impacts do not spill over national borders. However, when tackling global problems, nationalist or noncooperative policies that focus solely on the home country at the expense of other countries—beggar-thy-neighbor policies—are counterproductive.

Many global issues induce cooperation by their very nature. Like players on athletic teams, countries can accomplish more when acting together than when going their separate ways.

The most prominent examples of positive-sum cooperation are the treaties and alliances that have led to a sharp decline in battle deaths in recent years.

Another important case is the emergence of low-tariff regimes in most countries. By reducing barriers to trade, all nations have seen an improvement in their living standards.

However, alongside the successes lie a string of failures on the global stage. Nations have failed to stop nuclear proliferation, overfishing in the oceans, littering in space, and transnational cybercrime.

Many of these failures reflect the syndrome of free-riding. When there are international efforts to resolve a global problem, some nations inevitably contribute very little.

For example, NATO is committed to defending its members against attacks. The parties to the alliance agreed to share the costs. In practice, however, the burden sharing is not equal: the United States accounted for 70 percent of the total defense spending by NATO members in Countries that do not fully participate in a multiparty agreement on public goods get a free ride on the costly investments of other countries.

Free-riding is a major hurdle to addressing global externalities, and it lies at the heart of the failure to deal with climate change.

Consider a voluntary agreement, such as the Kyoto Protocol or the Paris accord. No single country has an incentive to cut its emissions sharply.

Hence, nations have a strong incentive not to participate in such agreements. If they do participate, there is a further incentive to understate their emissions or to miss ambitious objectives.

The outcome is a noncooperative free-riding equilibrium, in which few countries undertake strong climate change policies—a situation that closely resembles the current international policy environment.

In light of the failure of past agreements, it is easy to conclude that international cooperation on climate change is doomed to fail.

This is the wrong conclusion. Past climate treaties have failed because of poor architecture. The key to an effective climate treaty is to change the architecture, from a voluntary agreement to one with strong incentives to participate.

Successful international agreements function as a kind of club of nations. Although most people belong to clubs, they seldom consider their structure.

A club is a voluntary group deriving mutual benefits from sharing the costs of producing a shared good or service.

The gains from a successful club are sufficiently large that members will pay dues and adhere to club rules to get the benefits of membership.

The principal conditions for a successful club include that there is a public-good-type resource that can be shared whether the benefits from a military alliance or the enjoyment of low-cost goods from around the world ; that the cooperative arrangement, including the costs or dues, is beneficial for each of the members; that nonmembers can be excluded or penalized at relatively low cost to members; and that the membership is stable in the sense that no one wants to leave.

Nations can overcome the syndrome of free-riding in international climate agreements if they adopt the club model rather than the Kyoto-Paris model.

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