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Climate Change Governance: Boundaries and Leakage

61 Pages Posted: 25 Nov 2009 Last revised: 20 Oct 2014

Michael P. Vandenbergh

Vanderbilt University - Law School

Mark A. Cohen

Vanderbilt University - Strategy and Business Economics; Vanderbilt University - Law School; Resources for the Future

Date Written: November 24, 2009

Abstract

This article provides a critical missing piece to the global climate change governance puzzle: how to create incentives for the major developing countries to reduce carbon emissions. The major developing countries are projected to account for 80% of the global emissions growth over the next several decades, and substantial reductions in the risk of catastrophic climate change will not be possible without a change in this emissions path. Yet the global climate governance measures proposed to date have not succeeded and may be locking in disincentives as carbon-intensive production shifts from developed to developing countries. A multi-pronged governance approach will be necessary. We identify a new strategy that will be an important component of any successful effort. Our strategy recognizes that in the context of climate change the simplified Coasian approach to pollution should be updated to include a more complete view of the options firms face in response to emissions reduction pressure and the sources of that pressure. We demonstrate how governments and non-governmental organizations can use expanded corporate carbon reporting boundaries and product carbon disclosure to harness social norms in developed countries. This informal social license pressure, in turn, will create incentives for firms to seek emissions reductions from their domestic and global supply chains. The private market pressure conveyed through supply chains will reduce leakage from developed countries, create new incentives for developing country firms and national governments, and play a surprisingly important role in the formation and implementation of a successful post-Kyoto global policy architecture.

Keywords: climate change, greenhouse gases, carbon footprints, governance, environmental law, international law, corporate behavior, labeling, leakage, reporting, informational regulation

Suggested Citation

Vandenbergh, Michael P. and Cohen, Mark A., Climate Change Governance: Boundaries and Leakage (November 24, 2009). NYU Environmental Law Journal, Forthcoming; Vanderbilt Law and Economics Research Paper No. 09-25; Vanderbilt Public Law Research Paper No. 09-31. Available at SSRN: https://ssrn.com/abstract=1511797

Michael P. Vandenbergh (Contact Author)

Vanderbilt University - Law School ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States

Mark A. Cohen

Vanderbilt University - Strategy and Business Economics ( email )

Nashville, TN 37203
United States
615-322-0533 (Phone)

HOME PAGE: http://https://business.vanderbilt.edu/bio/mark-cohen/

Vanderbilt University - Law School

131 21st Avenue South
Nashville, TN 37203-1181
United States

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States
202-328-5000 (Phone)

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