Thirty years of international treaties like the Paris Climate Accords have not reduced global carbon emissions. Oregon State University economist William Jaeger says that’s because the majority of those involved in policy making will not support climate policies whose benefits arrive mainly after they die. Jaeger argues that we may need to rely on the courts to set legal standards that will help create solutions to climate change. Jaeger joins us to discuss his findings.
Note: The following transcript was created by a computer and edited by a volunteer.
Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. 30 years of international treaties like the Paris Climate Accords have not reduced global carbon emissions. Oregon State University economist Bill Jaeger says that’s because most people won’t support climate policies whose biggest benefits are likely to arrive after they’ve died. So Jaeger says we need a paradigm shift. Around the world, we need courts to set legal standards that enshrine the right to a stable climate. Bill Jaeger joins us now. Welcome to the show.
Bill Jaeger: Thanks, Dave. It’s good to be here.
Miller: It’s great to have you on. I want to start with some of the basics here. Your introduction begins, the climate change problem is an externality problem. Can you remind us what an externality is?
Jaeger: That’s a term we use in economics to refer to effects of something that I may do in a transaction, in a market but that have effects on someone else who wasn’t involved in that transaction, like air pollution or smoking or noise. If I play my stereo loud late at night, that’s an externality that affects my neighbors.
Miller: How does that relate specifically to climate change?
Jaeger: Well, when we emit… just about everything we do in our day to day lives, it has some effect on emissions into the atmosphere and those greenhouse gasses are building up, and so it’s a global externality when we all go about our day to day lives. We’re doing things that have, over a long period of time, led to a buildup of greenhouse gasses and the feedback of that is that it’s changing the climate and in ways that are warming average temperatures and causing more extreme weather events.
Miller: You use an even more specialized term to describe the problem of climate change, one that I guess economists have used for more than 60 years now. You say it’s Coasean, and I’m not even sure if I’m pronouncing that name correctly. What does it mean?
Jaeger: Sure. Well, it’s a reference to an economist Ronald Coase who won the Nobel Prize in economics a long time ago. And his most famous paper is called, “The Problem of Social Cost.” And it’s really fundamental to the way we think about how we create rules in the world that hopefully, in doing so, we want these rules to help people get along, to interact, to allocate resources better. One of the key ones is property rights and ownership. We rely on ownership of private property and then we have all other kinds of institutions related to things that are more common property. And the Coasean idea, that really does form the boundary between economics and law as it relates to property rights, gets at an issue of how important it can be, whether in the case of an externality, the right or the liability goes one way or the other. If I have the right to pollute or you have the right to air that’s free of air pollution or if I have a right to smoke or you have a right to breathe clean air in a classroom on a university campus, that’s in a sense, a Coasean issue about which way it should go.
And what Coase really focused on, his main point really in that paper, was it can be incredibly important which way that property right or that liability goes, especially in cases where there’s no possibility of negotiating over it. If you have a right to smoke in a room, I could, I guess, offer to pay you to stop smoking. But in many cases, the situations are too complex, there are too many people involved and it’s not at all possible to negotiate or to solve that externality problem.
Miller: And just, to bring this specifically to climate change, I guess that the point is that globally, humans in the form of corporations or countries, we have essentially now the right to pollute. And the question is, can we enshrine and codify the right to a stable climate?
Jaeger: Right. Well, the reason we can think of it as having a de facto right to pollute is because we burn things and burn fossil fuels, and the greenhouse gasses go up into the atmosphere and nobody can stop us, really. It’s as if you had a population along a river upstream and a downstream population, the upstream population can pollute the river and there may not be any way for the downstream population to influence that.
In terms of codifying the right to a stable climate, there’s a distinction between the idea of trying to actually legislate or create a right to a stable climate, which I think would have all kinds of political obstacles. What I focus on, and what is going on in a lot of court cases around the world, is the idea that maybe if we look carefully at our constitutions and other laws, we might recognize that the right to a stable climate is implicitly already there and that we just need to go back and interpret laws about human rights or our constitutions more carefully, and we’ve seen some examples of that recently.
Miller: And we’ll talk more about that as we go. But I want to turn back to some of these ideas and economics that help explain why we are where we are right now. And the metaphor of the river is helpful because that is kind of a spatial one. But another distinction that you really focus on here is time-based. How does the time scale involved in climate action and in emissions reductions complicate solutions to climate change?
Jaeger: Yeah, it really complicates it. I mean, you can think of another atmospheric example of pollution. The CFCs and the deterioration of the ozone layer, that was a problem that was recognized several decades ago. But it was something that moved fairly quickly, that we recognized that using chlorofluorocarbons led to a deterioration of the ozone layer that had harmful effects on people fairly quickly, within a few years. And the countries involved in producing and consuming those CFCs quickly came up with a solution, and we’ve mostly gotten rid of CFCs. And it was because of the short time frame between the idea that OK, if we stop using the CFCs, the ozone layer will heal itself in a relatively short period of time.
With climate change, we don’t have that short period of time. Part of the equation, the models that I’ve used [and] looked at, ones done by different groups over several decades to try to understand how changes in human behavior could affect the evolution of greenhouse gasses and temperature and climate, they show that if we reduce greenhouse gas emissions now, by large amounts over the next decade, the benefits, the bulk of the benefits from that change won’t occur until 20, 30, 40, 50, 60, 70, 80 years from now. So to get to the point where the net benefit or the benefits overall of taking strong actions to reduce greenhouse gasses will mostly benefit future generations, and not the people being asked or asking to reduce their use of fossil fuels, for example.
Miller: But I’m sure we can all think of examples where an individual, say a parent, is willing to sacrifice something in their present for the good of future generations, and maybe if they’re thinking very specifically for their kids. Are you saying that we don’t do that on the collective level? I mean, are there economic or social science theories for why that kind of thinking doesn’t scale up?
Jaeger: Yeah, it’s certainly true and I think most people listening will think that yeah, they would make sacrifices for their children, maybe even for their community after they’re passed. But assumptions about what we call in economics, individual rationality and collective rationality, we don’t find examples where larger groups of people, populations of the state of Oregon or of nations, voluntarily make decisions to do things that really make them worse off as a group, and that the benefits come mostly after they’re gone. To some degree, it’s true. We think we would sacrifice to benefit our children. But these models for climate change, actually, you need to go beyond your children’s lives to in many cases come up with an estimate that the net benefits are going to be positive. They’re really long legs between fully benefiting from the costs that would be imposed now, if, for example, we had a cap and trade or carbon tax policy implemented over the next decade or two.
Miller: I guess I’m wondering if you think that we are globally being rational about the near term costs because what you’re saying is the benefits are very real but they go out decades and decades. So for example, one of the ideas of a program like Oregon’s Cap and Invest is that some of the money generated by the reductions, it can be used to ease the transition to a more carbon free economy. So are we overestimating the pain, the near term cost of these policies?
Jaeger: That’s a great question and in a sense, yes, I mean, if you’re asking about public opinion, public perception of the cost of a program like the cap and trade or carbon tax. Public opinion compared to economic models that have estimated how an efficient policy could achieve pretty significant reductions in greenhouse gasses, those models estimate the cost to be quite low, like 1% of income over a period of time. To some degree, the public is not familiar with those kinds of models and studies. It may be that policies couldn’t be implemented as efficiently as they are assumed to be in these economic modeling studies.
But it’s also true that there’s a disconnect or there’s a difference between where the costs are going to affect certain groups of people who know who they are. That is, there are people in sectors of the economy who fear that climate policy will negatively affect them and their livelihood and their employment in their sector of the economy. Whereas people who might actually benefit from carbon, from climate policies, people in renewable energies and solar energy and wind energy, if a climate policy were implemented and suddenly there were more jobs in those areas, the people who would benefit from those probably don’t sort of see a clear line between a climate policy and them getting a job in solar energy five years from now.
Miller: Where you just left off, it reminds me of another thing. I guess I’m just wondering how much of the political ineffectiveness or inaction is a feature of the global power of fossil fuel companies and their connections to many, many governments including our own, as opposed to popular opinion around the world?
Jaeger: Yeah, I think that’s certainly the case. I, as an economist don’t, I’m not sure how to quantify that, but lobbyists and stakeholders, interest groups that are powerful because their industries generate a lot of revenue, have a lot of financial resources to try to influence political processes. And that’s been true, oh, for several decades as the IPCC and the evolving efforts to come to an agreement have developed there. There are many cases of that kind of thing happening internationally and nationally, oil companies that for a long time have tried to undermine the science on climate change. So yeah, there are some big political obstacles as well.
Miller: So, one of your central theses is that because of all of these reasons, global accords, so far, have not been successful. The one that theoretically is the most far reaching is now a couple of years old, the Paris Climate Accords. What was the idea behind that framework? What was it supposed to accomplish?
Jaeger: Well, yeah, it was an international environmental treaty, or the idea that we could move to a treaty where all countries would join and agree to a certain set of emissions reductions. And because of the reluctance of countries to wholeheartedly adopt strict regulations or incentive based policies to do that, it sort of moved along with a set of commitments, but they’re not enforceable. We don’t yet have any kind of basis for enforcing commitments in other countries. No penalties, nothing like that. And in fact, one of the things that’s really difficult about international environmental treaties is that these are sovereign nations. They can’t be forced by other countries. They can sign on to a treaty and two years later, they can decide to drop out. So getting so many countries around the world to agree to firm commitments to reduce greenhouse gasses is a tough sell. And we’ve seen since the first efforts in the early 90s, a lot of effort, a lot of talk, a lot of intention I think but very little concrete.
In terms of a measure of how far we’ve come, in terms of actually introducing restrictions like greenhouse gasses, there’s a measure of the average global carbon tax that, if we wanted to stabilize the climate, should be $40 or $50 a ton of carbon. The global average is somewhere between $1 and $2 dollars a ton. And that global level that we need to achieve to stabilize the climate is rising faster than that estimate of the actual average commitment. So the target is getting farther away. We’re not getting closer to it.
Miller: I know that you are an economist, not a lawyer. But can you remind us the basics of what suits like those brought by Our Children’s Trust are arguing and why you think this globally is maybe a more effective strategy?
Jaeger: Sure. I, as you said, I’m not a lawyer, but it’s an important aspect of the ideas I put together in this paper. And I guess I wouldn’t say that it’s a more constructive way to go. But I think the economic analysis, the conclusion I came to, pulling together economics, political science and other social science analyses, was that the process that has led us to the Paris Agreement is not going to be successful. This other legal tool might be the kind of thing that if it were to spread across more jurisdictions, could add leverage and enough leverage to change that dynamic [and] to make it possible to come to agreements in many countries and move in the direction of an effective climate policy overall.
And the argument being made in many cases where these lawsuits are suing governments is that the existing laws, the existing constitutions, properly interpreted, already call for protections that a stable climate would give on the basis of human rights, on a basis of equal protection, on the kinds of things the clauses in the U.S. Constitution. Most recently in a case in Montana, it was found that the state constitution of Montana should be interpreted as requiring the state to take actions to protect for children, for all people in Montana, to protect a stable climate because a stable climate is necessary for human rights and other responsibilities that the governments have to uphold.
Miller: And I should note that back in the middle of August, we did talk about that first win, that Montana State court win by lawyers at Our Children’s Trust. So folks can listen to that in depth conversation about the legal strategy there and the potential ramifications of that win. Obviously, it’s being appealed and so there are still a lot of questions even just for that one state.
I guess that fact leads to the next question, which is, that’s one state among 50 in one country, among nearly 200 at the U.N. What does the international legal scene look like in terms of this kind of legal idea?
Jaeger: Well, it seems to be a fast moving issue around the world. There are a couple of centers, law centers that are monitoring these cases. And every month, there are a couple of new cases being brought in countries around the world related to climate change litigation. There’s been a few successes elsewhere. In the Netherlands, there was an important case where an environmental group brought suit against the government and the High Court in the Netherlands found in their favor and made it clear the government has to take action under a European Human Rights Convention to do their part, as one of the nations in Europe, to act to protect the climate as best they can. In Pakistan, there was also a case where a Pakistani farmer sued the national government for failure to carry out a national climate change policy and also won in that case, claiming that the climate change had immediate impacts on Pakistan’s water, food, energy security and that basically fundamental right to life. And so that lawsuit was also successful.
But one of the ways, too, I know it can seem like, ok, we have Montana, we have the Juliana case from Oregon still, perhaps in limbo, Netherlands, Pakistan. In a reasonable period of time, how do we get to the point where these legal cases might actually add the leverage we need to reinforce the policy prescriptions for carbon taxes or cap and trade? As I understand it, there’s a legal concept called persuasive authority. And it seems to me, it basically means that courts learn from one another, they read each other’s opinions, there’s cross fertilization both within countries and internationally. And so the case in Montana, the case in the Netherlands, the Juliana case, even though the Juliana case isn’t finished and hasn’t been successful as of yet, some of the rulings along the way provide evidence, provide arguments and are persuasive and that can influence other countries. So there can be kind of a, I don’t know, a contagion effect.
Miller: Finally, I want to go back to the issues we were talking about before, the disconnect between the perceived near term cost of climate action and the longer term benefits. I guess I’m wondering if it’s possible that as more and more people around the world experience climate chaos in any number of forms - heat waves and drought and wildfires and smoke and flooding and hurricanes - if we could just see a fundamental shift in the entire calculus that you were describing?
Jaeger: I mean, that’s an interesting idea. And I think the one way in which, from my perspective it might carry some weight, and that is that the models I used in my analysis that estimate and project the damages from climate change, those are models that were mostly built - well, they’ve been updated but they’re models that were built early on, say a couple of decades ago. And most of the estimates for how the damages from climate change would evolve did not include much in the way of extreme weather events and the kinds of things that you were just pointing to.
And I think, yes, what we’ve seen here in Oregon over the last decade and around the country in terms of wildfires and smoke and hurricanes and floods and droughts, there is, I think, a change in the perception of how climate change will affect us, not just warmer temperatures and ski resorts going out of business because there isn’t enough snow, but these extreme, violent kinds of weather events that take lives. Yeah, I think you make a good point and we’ll just have to see how that pans out.
Miller: Bill Jaeger, thanks very much.
Jaeger: Sure. Thank you.
Miller: Bill Jaeger is a professor of applied economics at Oregon State University.
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