Global Public Goods, Governance Risk, and International Energy

INTRODUCTION For years, scholars have considered the great bane of international cooperation to be the much-scorned free rider. International public goods such as climate change mitigation, vaccination against disease, reduction in acid rain, and preservation of the ozone layer all require incentivizing states to participate in international institutions when often the individually rational thing to do is remain on the sidelines. Lawyers, policymakers, and scholars have come up with a host of devices to deter free riding and encourage participation in global public goods. Issue linkages, trade sanctions, financial assistance, and minimum participation requirements are just some of the carrots and sticks that states use in international public goods institutions. And these tools are frequently successful. For example, the Montreal Protocol, which governs ozone-depleting substances and uses financial assistance for developing countries as a carrot coupled with the stick of trade sanctions against non-members, has near-universal membership and has been haled as the single most successful environmental agreement to date. (1) But as the end of 2012 draws near, the inability to conclude a successor agreement to the Kyoto Protocol is forcing commentators to rethink their approach to supplying global public goods. The traditional tools of international governance have proven inadequate to generate meaningful international cooperation on climate change mitigation. What, then, is the way forward? I argue that the scholarly focus on increasing participation and deterring free riders has caused commentators to underestimate the ways in which common features of international legal institutions can undermine those institutions' ability to facilitate cooperation. International institutions can be designed in a number of ways that compound the risk of that international cooperation will fail, which I refer to as governance risk. In this brief article, I focus on two features of institutional design that are intended to encourage participation in public goods institutions but can create the risk of gridlock and governance failure. I illustrate the argument with examples drawn from institutions bearing on international energy governance. First, many public goods institutions are epistemic institutions. They establish processes for exchanging and evaluating information in an effort to reduce scientific uncertainty as a barrier to bargaining over substantive regulation among states with diverse epistemic and normative commitments. However, states and private actors do not invest in research on environmental harms behind a veil of ignorance. They frequently know the distributional consequences of regulating a particular activity; that is, they know which states (and domestic constituencies) stand to win and which to lose from governing a particular activity. Institutions that merge the knowledge-exchange and development processes with the ability to negotiate and impose binding legal regulations thus run the risk that states that oppose the imposition of substantive regulations will use epistemic processes as a way to try to block the adoption of substantive regulation. Second, governance risk can be systemic. Policies adopted in one institution can lead to governance failures or higher costs to cooperation in other institutions. Governance risk is systemic when institutions are linked in some way: institutionally, as when institutions have overlapping jurisdiction or competence; at the bargaining table, as when states hold cooperation in one institution hostage to extract concessions in an otherwise unrelated institution; or functionally, as when two otherwise unrelated institutions regulate different aspects of the same underlying activity. Systemic governance risk is an underappreciated negative externality of cooperation in the fragmented international legal system. For example, cooperation in an area such as energy security, with its focus on stable and cheap access to fossil fuel supplies, can crowd out cooperation on climate change, with its focus on raising the prices of carbon-intensive energy sources. …