Why soft climate deals are better than tough ones

By Richard Fairchild, University of Bath and Baris Yalabik, University of Bath

The Paris climate talks have been heralded as a historic deal. But while they have been praised for the very feat of reaching an agreement and for setting an ambitious aim to keep warming below 2℃ and endeavouring to limit it to 1.5℃, the agreement has been criticised for being weak. In terms of achieving the 1.5℃ limit, it is up to the states themselves to change their behaviour and they can pull out of the agreement at any point. This, however, might not be such a bad thing.

A significant amount of research into the mixed successes of past international environmental agreements shows that tough agreements are not always as successful as less ambitious ones. There was failure to reach agreement in the Hague negotiations in 2000, then failure by the US to ratify the Kyoto protocol in 2001. Triumphs, including the Bonn and Marrakesh Accords in 2001, have been put down to some provisions in the original treaty being watered down considerably.

In fact there is significant evidence that softer, more accommodating agreements have resulted in greater compliance, for the betterment of the planet. The same evidence indicates that the agreements with the toughest targets for reducing emissions have failed. Countries either quit the agreements or break the rules and return to old, selfish, excessive polluting ways. And there are analyses using game theory that demonstrate how softer targets are more successful.

When the going gets tough …

With any environmental conference, the public discussion revolves around how “tough” an agreement should be. Environmental advocates and NGOs support the creation of agreements with “legally binding” targets. Countries pledge positive action, but approach matters more cautiously, burdened as they are by competing priorities from industry and their electorates.

Before the 2014 conference in Lima, countries were happy to mention legally binding targets, but there was sufficient evidence that some things would be agreed on “handshakes”. Indeed, the agreement that came out of Lima had more “may’s” than “shall’s”. In Paris, a number of countries, including oil rich Saudi Arabia and Venezuela, pushed for soft targets.

The theoretical analysis on tough versus soft agreements suggests that corporate greed or politics (which was blamed for the US withdrawing from the Kyoto Protocol) is not the only reason for a lack of strong agreements, although there is a big role for corporations and politicians to play.

From our application of behavioural economics principles to international environmental agreements, we have found that the number of nations signing an agreement and adhering to it over the long-term future is increased and strengthened when there is fairness, trust and empathy between the nations involved.

Golden handshakes: trust is needed to tackle climate change.
REUTERS/Ian Langsdon/Pool

We examined the relationship between the level of empathy between nations, the stringency of the agreement, and the level of global pollution. The encouraging aspect of this research is that, if empathy between nations is sufficiently high, then tough, ambitious agreements can be achieved. If nations are self-interested, however, with little empathy or understanding for others, then agreements need to be soft; tough ones are doomed to fail.

The problem with legally binding agreements therefore partly arises due to a lack of understanding between countries. If the citizens of a nation do not feel any direct benefit on their doorstep from improving global conditions then they are less likely to support environmental investments that may be imposed by tough agreements.

This idea of a tangible benefit may be posed in different ways. Empathy may take on the form of a very abstract “warm glow” on one end of the spectrum, to a clear understanding of how local economies are influenced by other economies at risk due to climate change on the other end.

Feeling the love

Examples of such empathy do exist. Last year Norway agreed to pay Liberia US$150m to stop deforestation activity. It’s a mutually beneficial carbon exchange, with Liberia being paid to transition to a less carbon-intensive economy. Only when this type of understanding is established can tougher agreements be enforced. Until then, softer agreements have a higher chance of success, as they keep everybody at the table and keep the conversation going without a “threat” of being penalised.

Softer agreements also have the added advantage of building empathy, which in theory pushes us towards harder deals further down the line. As the US special envoy for climate put it in the lead-up to Paris:

An agreement that required actually legally binding targets would have many countries unable to participate. Contrary to what I think many people might assume, in our view a structure of this kind [in other words the softer kind] will actually enhance ambition. We are quite convinced that there are many countries who would be inclined to put in a lower target than they’re really capable of if they were worried about the legally binding nature of the targets themselves.

So we should not be dismayed by the soft nature of the Paris agreement. If nations can be encouraged, at the Paris meeting and beyond, to become empathetic, caring and cooperative, either through warm messages or through economic incentives, then they may even be able to negotiate tougher, more ambitious agreements that have a strong chance of survival. More important than nations signing up to a tough agreement is that they come together with purpose, building trust and empathy that lays the foundations for vigorous future agreements which can secure the future of this planet.

The Conversation

Richard Fairchild, Senior Lecturer in Corporate Finance, University of Bath and Baris Yalabik, Senior Lecturer in Operations and Supply Management, University of Bath

This article was originally published on The Conversation. Read the original article.

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