Leadership and Climate Change Policy

In response to the problem of climate change, many countries are undertaking costly actions to limit emissions. While major CO2 emitters have not signed up for a meaningful and binding emission reduction, many countries have embarked on major abatement po licies. A way to interpret this unilateral action is as taking leadership responsibility with the goal of enhancing global cooperation. Much of the existing body of economic theory underlines the disadvantages of unilateral measures in solving global prob lems. This is partly due to the free-rider problem i.e., the problem in which countries would find it in their unilateral interest to contribute lower abatement when other countries contribute more abatement. The other main reason is carbon-leakage: more abatement in one country may lead to emission increases in those countries without environmental policies. Due to the public-good nature of slowing climate change and non-comprehensive participation by countries, economic theory has been critical to unila teral measures to address global problems. However, this line of reasoning ignores the role of leadership i.e., actions that might motivate other countries to follow with similar actions. Indeed, leadership has been an important ingredient of most of the great projects in human civilization and probably it might hold an important solution for the climate policy crisis. Studies indicate that leadership takes a form of providing direction, communication, and inputs for continual improvements through leading by being an example and coordinating various cooperating countries to achieve a clearly defined goal. During my stay at Harvard, I plan to extend the existing literature through sub-projects by investigating the importance of leadership and how domestic and international measures need to be designed to maximize the benefit of leadership. Thus, I plan to develop models with the potential to provide new insights about leadership in climate policies.