As was shown in Part I, one of the key challenges of the global commons issue is to define governance structures capable of navigating complex systems, involving multiple scales, and exposed to abrupt and unpredictable changes. This second part is therefore devoted to the question of the optimal level of governance, in particular whether to govern the global commons at the global or the local level. As the contributions of this part will make clear, the answer is not obvious. Although most contributors (Ostrom, Groom et al., Bréchet and Eyckmans) argue in favour of polycentric and localized solutions to overcome problems of country heterogeneity, Ellerman demonstrates that a globalized solution in the form of the European Emissions Trading Scheme (EU ETS) can be successful. Such opposite views can be reconciled in a broader framework that takes into account the nature of the environmental issue, the extent of information asymmetries at various scales, inequalities, and inertia in institutional reforms.
The chapter by Elinor Ostrom makes a strong argument against the existence of a universally best policy regime of environmental governance. Accordingly, the scales of governance need to be matched with the types of collective action problems under consideration. Her claim is supported by empirical field studies of well-established institutions for the governance of natural resources which show that sustainable management of common-pool resources is possible at the local level. Often, such polycentric governance structures offer more flexibility to match institutions with environmental governance problems. Therefore leaving intact lower local tiers of organization pays off due to better availability of specific information on the particular problem. Thus, polycentric systems do often outperform hierarchical top-down agency-based governance structures.
The chapter by Ben Groom, Rupert Gatti, Timo Goeschl and Timothy Swanson analyzes the conditions for the emergence of stable international regimes by considering the joint contributions of countries to the provision of (p.104) public goods. Their key point is that without prior agreement about the distribution of the gains, the issue of cooperation for providing global public goods may not even be considered. A major difficulty for reaching an agreement is the existence of inequalities with respect to the benefits from the public goods: the most developed states have the capacity—in particular the human capital—to capture benefits from these goods, while the less developed countries do not. Cooperation for biodiversity protection benefits then less to the “South” than to the “North.” Not only is the world trapped into an inefficient equilibrium, but this equilibrium tends to be worsened by the game played by the poorest nations to enhance their bargaining positions. It becomes indeed rational for them to threaten to destroy their resources, which are needed by the “North” to innovate (e.g. reservoir of genes, traditional knowledge, etc.). Therefore long-term stable regimes require a better recognition of the actual inequalities in the distribution of assets among nations and sharing agreements on the surplus generated by the international cooperation.
The chapter by Thierry Bréchet and Johan Eyckmans focuses on climate governance, by analyzing the conditions of emergence and stability of coalitions in climate change negotiations. Their analysis, which relies on the integrated assessment model CLIMNEG, shows some of the contrasting features of climate agreements and possible ways to mitigate the less desirable outcomes. Agreements bringing together relatively homogenous countries with similar emission-reduction costs and climate-change characteristics tend to be more stable than arrangements among heterogeneous countries. However, homogeneous coalitions tend to aim for less ambitious greenhouse-gas emissions reduction targets than larger heterogeneous coalitions. Designing appropriate transfer schemes may, however, stabilize the larger coalitions. They also show that a governance structure based on a multitude of small agreements can yield better global results than restricted cooperation in a single large agreement.
In contrast to the previous chapters of Part II, Denny Ellerman’s contribution shows how and why a global governance system can work. The EU ETS is an example of a governance arrangement involving a heterogeneous set of national governments in the context of a weak federal structure. Such a pioneering public policy system illustrates the possibility to design large-scale governance architectures, which might be successfully extended at an even larger scale. Ellerman analyzes the ingredients of the EU ETS experience that were potentially amenable to a successful global governance system. He shows that the initial trading periods were characterized by decentralized cap-setting and allocation systems. The period of decentralized experimentation and incremental change played an important role for the success of the system, in spite of the lack of harmonization in the allocation decisions in the various EU member countries. But, once the system was operating, agreements on further development and improvements of the system became easier. The success of the EU ETS is also fundamentally based on the possibility to delegate to an entity of limited power (the European Commission) the enforcement of the agreed policy regime, suggesting that a similar function will also be needed in a global system.