Governance, overuse and under-provision of global commons

February 11, 2017

Mercator Research on the Global Commons and Climate Change

We define global commons as natural resources requiring global cooperation for their sustainable use and provision, such as the atmosphere, land and forests. Global economic growth has led to the overuse of these assets though: The atmosphere has been overburdened as a depository for greenhouse gases leading to climate change, increasing global demand for agricultural products and urban sprawl has intensified pressure on land and led to rising food prices and the destruction of rain forests.

In addition to this overuse, there is an under-provision of the so-called social commons. These are public goods providing access to health services, education, clean water, sanitation, energy, or transport and communication infrastructure. They are essential for human well-being as the level of provision of these goods has significant effects on both growth and inequality. We therefore include them in our understanding of global commons and in our research work (see figure). Consequently, the role of cities and the infrastructures provided therein is another focus of MCC’s research.

Figure 1: The MCC´s understanding of the global commons (Source: MCC)

The challenge: Governance of global commons

The 21st century challenge of managing the global commons is twofold: first, avoiding the overuse of global commons where no effective governance mechanisms regulating access and use are yet in place and, second, overcoming the under-provision of public goods, such as certain infrastructure, that are essential for human well-being.

To maintain global prosperity and human well-being, a technological, social and political transformation is required that establishes a sustainable governance of global commons. There are three aspects making that inherently difficult:

  • First, global commons are either outside national jurisdiction or their conservation and sustainable use conflicts with national sovereignty and regulation. Their use may affect different levels of governance in distinct ways, often requiring global cooperation.
  • Second, global commons also interact with one another, i.e. management of one common will most likely impact the use of others, thereby making effective governance a complex task.
  • Third, the implementation of policies to govern global commons will conflict significantly with existing patterns of resource use, sovereignty rights and related well-established interests.

While Nobel Laureate Elinor Ostrom and others have made great progress towards understanding the management of local common pool resources, Ostrom pointed out the need for more research into the governance of global commons in order to face the challenge of establishing global institutions to manage biodiversity, climate change, and other ecosystem services.

MCC addresses these multiple-objective, multi-level commons governance problems jointly. It aims to assess trade-offs, to exploit synergies and to address the distributional dimension of the challenge.

Energy Transition

The study “Advocates or cartographers? Scientific advisors and the narratives of German energy transition” just published by Anna Leipprand and Christian Flachsland from the Mercator Research Institute on Global Commons and Climate Change (MCC) together with Michael Pahle from the Potsdam Institute for Climate Impact Research (PIK) in the scientific journal “Energy Policy” examines political narratives, which had originally been in conflict with one another, and that have gradually converged over time. “The studies have supported this process by building bridges between the opposing positions,” says lead author Anna Leipprand. “Together, they now form the basis for a kind of political map of the energy transition, which shows different policy paths and their respective consequences against the background of different values.”

On the basis of their analysis, the authors also suggest that the accelerating debate on German coal phase-out should become a new focus of scientific policy advice. “The current discussion about the path and—primarily—the speed at which the end of coal should come is very controversial,” says Flachsland. “However, if we make explicit the values behind the political proposals, it is easier to find compromises.”  The new MCC study is an example of empirical research on the theoretical model of scientific policy advice, which the institute has specifically created for that purpose: the “Pragmatic Enlightened Model” (PEM) assumes that science experts, decision-makers and the society successively learn from each other in a continuous interplay. Together, they can explore alternative policy paths and their chances and risks in order to make social conflicts, synergies and uncertainties transparent, and to present viable political solutions. Leipprand, Anna; Flachsland, Christian; Pahle, Michael (2017): Advocates or cartographers? Scientific advisors and the narratives of German energy transition. Energy Policy, volume 102, pages 222–236.

Climate change, equity and the Sustainable Development Goals: an urban perspective in Environment and Urbanization, 30.01.2017 Peer Review, Land Use, Infrastructure and Transport. Reckien, D.; Creutzig, F.; Fernandez, B.; Lwasa, S.; Tovar-Restrepo, M.; Mcevoy, D.; Satterthwaite, D.

Climate change is acknowledged as the largest threat to our societies in the coming decades, potentially affecting large and diverse groups of urban residents in this century of urbanization. As urban areas house highly diverse people with differing vulnerabilities, intensifying climate change is likely to shift the focus of discussions from a general urban perspective to who in cities will be affected by climate change, and how. This brings the urban equity question to the forefront. Here we assess how climate change events may amplify urban inequity. We find that heatwaves, but also flooding, landslides, and even mitigation and adaptation measures, affect specific population groups more than others. As underlying sensitivity factors we consistently identify socioeconomic status and gender. We synthesize the findings with regard to equity types – meaning outcome-based, process-oriented and context-related equity – and suggest solutions for avoiding increased equity and justice concerns as a result of climate change impacts, adaptation and mitigation.

Climate and Development Working Group

 The working group’s research is driven by the question how climate change mitigation can be achieved without comprising poverty eradication and sustainable development. It explores the interrelation between sustainable development processes and climate change mitigation in three research foci: i) Carbonization patterns; ii) Structural change; iii) Infrastructure and Inequality.

Nemet, G.F.; Jakob, M.; Steckel, J.C.; Edenhofer, O., 13.12.2016 Addressing policy credibility problems for low-carbon investment 2016, Peer Review, Task Force Public Economics for the Global Commons, Task Force Public Finance, Klimaschutz und Entwicklung, Michael Jakob, Jan Steckel, Director, Ottmar Edenhofer.  A combination of characteristics of the climate change problem make the credibility of future commitments crucial for climate policy: the long lifetimes of carbon dioxide in the atmosphere and of energy infrastructure requires a long term perspective; the inherently global aspects of the atmosphere as a public good requires international coordination; decarbonizing the global economy depends on the incentives for investment in innovation; and persistent uncertainty— both about the problem and potential solutions—necessitate adapting to new information. Even in a first best world, climate policy design needs to navigate a tradeoff between making commitments that are sufficiently credible to stimulate transformation and retaining flexibility to adjust. The goal of this paper is to use the experience in other policy areas to assemble a broad set of possible remedies for addressing credibility problems and then characterize the advantages and disadvantages of each. We first review the theory and practice of addressing credibility problems in monetary, fiscal, and trade policy. From this we derive a taxonomy of four policy design categories. As a preliminary example, we then apply this framework to assess the credibility of climate targets made by selected developing countries as part of the United Nations Framework Convention on Climate Change process. Finally, we evaluate the items in the taxonomy as policy alternatives in terms of their effects on incentives for investment in low-carbon technology.

Steckel, J C.; Jakob, M.; Flachsland, C.; Kornek, U.; Lessmann, K.; Edenhofer, O., 13.11.2016 From climate finance toward sustainable development finance 2016, Peer Review, Director, Governance, Task Force Public Economics for the Global Commons, Klimaschutz und Entwicklung, Task Force Public Finance, Ottmar Edenhofer, Christian Flachsland, Michael Jakob.   Decarbonizing the global energy system requires large‐scale investment flows, with a central role for international climate finance to mobilize private funds. The willingness to provide international finance in accordance with common but differentiated responsibilities was acknowledged by the broad endorsement of the Paris Agreement, and the Green Climate Funds in particular. The international community aims to mobilize at least USD 100 billion per year for mitigation and adaption in developing countries. In this article, we argue that too little attention has been paid on the spending side of climate finance, both in the political as well as the academic debate. To this end, we review the challenges encountered in project‐based approaches of allocating climate finance in the past. In contrast to project‐based finance, we find many advantages to spending climate finance in support of price‐based national policies. First, the support for international climate cooperation is improved when efforts of successively rising domestic carbon pricing levels are compensated. Second, carbon pricing sets incentives for least‐cost mitigation. Third, investing domestic revenues from emission pricing schemes could advance a country’s individual development goals and ensure the recipient’s ‘ownership’ of climate policies. We conclude that by reconciling the global goal of cost‐efficient mitigation with national policy priorities, climate finance for carbon pricing could become a central pillar of sustainable development and promote international cooperation to achieve the climate targets laid down in the Paris Agreement.
Hirth, L.; Steckel, J.C., 07.11.2016 The role of capital costs in decarbonizing the electricity sector2016, Peer Review, Klimaschutz und Entwicklung, Jan Steckel, Lion Hirth.  Low-carbon electricity generation, i.e. renewable energy, nuclear power and carbon capture and storage, is more capital intensive than electricity generation through carbon emitting fossil fuel power stations. High capital costs, expressed as high weighted average cost of capital (WACC), thus tend to encourage the use of fossil fuels. To achieve the same degree of decarbonization, countries with high capital costs therefore need to impose a higher price on carbon emissions than countries with low capital costs. This is particularly relevant for developing and emerging economies, where capital costs tend to be higher than in rich countries. In this paper we quantitatively evaluate how high capital costs impact the transformation of the energy system under climate policy, applying a numerical techno-economic model of the power system. We find that high capital costs can significantly reduce the effectiveness of carbon prices: if carbon emissions are priced at USD 50 per ton and the WACC is 3%, the cost-optimal electricity mix comprises 40% renewable energy. At the same carbon price and a WACC of 15%, the cost-optimal mix comprises almost no renewable energy. At 15% WACC, there is no significant emission mitigation with carbon pricing up to USD 50 per ton, but at 3% WACC and the same carbon price, emissions are reduced by almost half. These results have implications for climate policy; carbon pricing might need to be combined with policies to reduce capital costs of low-carbon options in order to decarbonize power systems.

Professor Benjamin Sovacool, Director of the Sussex Energy Group at the University of Sussex, believes that the next great energy revolution could take place in a fraction of the time of major changes in the past.

But it would take a collaborative, interdisciplinary, multi-scalar effort to get there, he warns. And that effort must learn from the trials and tribulations from previous energy systems and technology transitions.

In a paper published in the peer-reviewed journal Energy Research & Social Science, Professor Sovacool analyses energy transitions throughout history and argues that only looking towards the past can often paint an overly bleak and unnecessary picture.

Moving from wood to coal in Europe, for example, took between 96 and 160 years, whereas electricity took 47 to 69 years to enter into mainstream use.

But this time the future could be different, he says – the scarcity of resources, the threat of climate change and vastly improved technological learning and innovation could greatly accelerate a global shift to a cleaner energy future.

The study highlights numerous examples of speedier transitions that are often overlooked by analysts. For example, Ontario completed a shift away from coal between 2003 and 2014; a major household energy programme in Indonesia took just three years to move two-thirds of the population from kerosene stoves to LPG stoves; and France’s nuclear power programme saw supply rocket from four per cent of the electricity supply market in 1970 to 40 per cent in 1982.

Each of these cases has in common strong government intervention coupled with shifts in consumer behaviour, often driven by incentives and pressure from stakeholders.

Professor Sovacool says: “The mainstream view of energy transitions as long, protracted affairs, often taking decades or centuries to occur, is not always supported by the evidence.

“Moving to a new, cleaner energy system would require significant shifts in technology, political regulations, tariffs and pricing regimes, and the behaviour of users and adopters.

“Left to evolve by itself – as it has largely been in the past – this can indeed take many decades. A lot of stars have to align all at once.

“But we have learnt a sufficient amount from previous transitions that I believe future transformations can happen much more rapidly.”

In sum, although the study suggests that the historical record can be instructive in shaping our understanding of macro and micro transitions, it need not be predictive.

More information: Benjamin K. Sovacool. How long will it take? Conceptualizing the temporal dynamics of energy transitions, Energy Research & Social Science (2016). DOI: 10.1016/j.erss.2015.12.020

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