Battling Global Crises Locally

Covid and climate change have both shown that the key is national mitigation efforts

- Arvind Panagariya

Experiences with the provision of two global public goods – defence against climate change and Covid – graphically illustrate the difficulty of collective action at the international level. They also offer useful insights into complementary policy actions required at the national level to compensate for the failure of optimal action at the international level.

The global public-good nature of defence against climate change manifests itself in the spillover of benefits of defensive actions by one country to all others: When a country cuts its carbon emissions, benefits of it in terms of reduced prospects of global warming become automatically available to all other countries.

The cost of such action falls exclusively on the country undertaking the reduction, however. Therefore, left to itself, each country has the incentive to leave the task of emission reduction to others. The result is less than optimal reduction in emissions.