Climate Contracts

42 Pages Posted: 20 Apr 2011 Last revised: 14 Dec 2011

See all articles by Eric W. Orts

Eric W. Orts

University of Pennsylvania - Legal Studies Department

Date Written: September 22, 2011


Many policymakers and academics argue that a comprehensive global treaty is the only effective method by which to regulate greenhouse gas emissions. Some of them therefore see the failure to reach a post-Kyoto agreement at Copenhagen in 2009 as “catastrophic.” This Article argues instead that the Copenhagen Accord and the negotiations surrounding it reveal some inherent limits to the comprehensive approach. It recounts a number of pitfalls in any comprehensive solution, including “leakage” in economic production and distribution, weaknesses in disclosure and monitoring, limited methods of enforcement, constrained incentives for compliance, and other factors. As an alternative, this Article proposes that comprehensive global agreements should recognize that a plurality of lower-level “climate contracts” of various kinds are likely to provide effective and efficient responses to climate change in the long run. The dynamic complexity of the climate change problem suggests that the best solutions will leverage broad-based social movements favoring the production and maintenance of many kinds of legal, economic, and political agreements involving many institution – not just nation-states negotiating international treaties, but also other agreements involving regional and municipal governments, non-profit organizations (including educational, religious, and environmentalist groups), business firms, and consumer groups. The idea of “climate contracts” is invoked metaphorically to describe these various kinds of non-comprehensive agreements and initiatives. From this perspective, the Copenhagen Accord, rather than a failure, provides useful lessons and direction for the future about what mix of legal, economic, political, and social solutions will work best to address global climate change.

Keywords: climate change, climate contracts, tragedy of the commons

JEL Classification: D62, D83, D91, H41, K32, Q20, Q30, Q42

Suggested Citation

Orts, Eric Wills, Climate Contracts (September 22, 2011). Virginia Environmental Law Journal, Vol. 29, p. 197, 2011, U of Penn, Inst for Law & Econ Research Paper No. 11-31, Available at SSRN:

Eric Wills Orts (Contact Author)

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