Reviewing: “A Polycentric Approach for Coping with Climate Change”

From the USA withdrawing from the Paris Agreement to the European Union enforcing its Emission Trading System, to China powering with new Coal Plants its green revolution in BRI countries, to other developing countries suffering as front-liners the consequences of the climate crisis: World Countries are individually (or in clusters) facing The Emergency with several unaligned strategies. World Governments, for one more time, will try to align themselves at COP26 IN 2021 by drafting and bargaining to the bottom their own contribution, or with costly signals from the European Union that will unlikely be followed by major carbon producing and exporting countries. With an urgent need, year by year, of increasingly stringent targets, will this approach be efficient to tackle Climate Change?

Dr Elinor Ostrom published “A Polycentric Approach for Coping with Climate Change” in 2009 (the same year of her Nobel in Economics), proposing an alternative approach to tackle global collective action problems. The paper proposes a bottom to top approach at various levels: local, regional, national, international to enforce trustworthiness and common efforts across communities who face similar threats.

Ostrom recognized the likeliness at an international level of facing what Hardin (1968) called the Tragedy of the Commons even without strict assumptions. The Tragedy of the Commons is a Prisoner’s dilemma alike situation that people face when managing common resources like oil, soil, water etc., where if all individuals behave to please their needs the entire community (themselves included) will face the worst outcome. An intuitive example is harvesting without control a fish stock in a lake or letting cattle eating pasture until desertification occurs. Dr Ostrom empirically proved that with sufficient communication and well-established norms, communities themselves can get out from the tragedy of the commons and sustainably provide to their needs. Maori tribes in the past have effectively shared and controlled pasture for their cattle in centuries.

While at the local level, even if challenging, an efficient outcome is attainable, at a global level a polycentric approach (with several cores) might be not sufficient; nevertheless, is likely the best form to experiment strategies customized for different needs and short to middle term threats. While Climate Change is a Global Emergency, Countries differ in their form of experiencing damages. Geographic areas can lead to different conditions: where glacier melts communities suffer different struggles than where desertification occurs. Therefore, a top-down approach is not sufficient nor efficient as a solution. Nobel Prizes Banerjee and Duflo even challenge the effectiveness of Humanitarian Aid as it is conceived nowadays (2019).

Waiting for a single worldwide solution will be problematic, while individual action suffers the free-rider problem: stringent regulation in emissions for one or several countries might lead other countries to have access to cheaper oil prices, polluting more and offsetting the effort of the leading countries (carbon leakage). Olson’s “The Logic of Collective Action” (1965) addresses this problem by underlying that the cost of contributing are beard by the single countries while the benefits are diffused. Actions taken for individual benefit always result in a socially sub-optimal outcome for Climate Change Problems.

Nevertheless, from the development of Behavioural Economics onwards, the approach has changed: with Kahneman’s studies, a great deal was attributed to the concept of trustworthiness and reciprocation, especially at the local level. A town area full of solar panels is likely to pose an incentive to other cities in that area to install solar panels as well (bear in mind that rooftops should have gained particular attention for businesses after lockdowns across the world). From this approach, Poteete, Jansenn and Ostrom have identified a large number of variables to increase cooperation:

  1. Reliable information is available about long term costs and benefits (usually selfish gains are immediate while collective gains take time, while costs work the opposite way)
  2. The individuals see the common resource as important in the long term (clean air, water etc.)
  3. Gaining a reputation for being trustworthy is important (peer effect, social norms etc.)
  4. An individual can communicate with other individuals
  5. Informal monitoring and sanctioning is considered appropriate

In this way, cooperation is achievable through the following characteristics designed by Ostrom:

  1. Many of those affected have agreed on the need for changes in behaviour and see themselves as jointly sharing responsibility for future outcomes.
  2. The reliability and frequency of information about the phenomena of concern are relatively high.
  3.  Participants know who else has agreed to change behaviour and that their conformance is being monitored.
  4. Communication occurs among at least subsets of participants.

Furtherly:

“The problem of collective action does not disappear once a policy […] is made by a government. Even governmental policies need to rely to a great extent on willing cooperation by citizens. When citizens approve of a governmental policy, think they should comply, and this view is complemented by a sense that the governmental policy is effectively and fairly enforced, the costs of that enforcement are much lower than when citizens try to evade that policy”.

At this point, Ostrom recognizes the existence of Local-Level Projects and Alliances to Reduce Local-Level Externalities as well as attempts of free-market harmonization such as the EU ETS focusing and reinforcing the popular and always prevailing motto: “Think Locally, Act Globally!”

The rationale is that multiple benefits are created by diverse actions at multiple scales and that different actors have different skills or methods that should be encouraged locally by uncorrupted institutions, especially in carbon-intensive exporting countries. Citizen and Public Officials who are concerned with solving collective action problems equitably and efficiently should foster associations and local communities to use their experience of local problems joined by experts to harmonize and tackle at a national level similar problems within and across borders.

Further Readings:

Ostrom E. (2009): “A Polycentric Approach for Coping with Climate Change”

Kahneman D. (2011): “Thinking, Fast and Slow”

Banerjee A., Duflo E. (2019): “Poor Economics”

Poteete A., Janssen M., Ostrom E. (201): Working Together: “Collective Action, the Commons, and Multiple Methods in Practice”

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