How can we best secure the provision of international environmental public goods (IEPGs)—public goods offering benefits that span multiple national jurisdictions? It is well understood that markets undersupply public goods, and there is a wealth of evidence that many environmental public goods have been systematically undersupplied over a long period of time (Millennium Ecosystem Assessment 2005
). If environmental public goods occur at the scale of the nation state or below, the failure of markets to supply public goods may be offset by the actions of local or national governments. There exist many national agencies with responsibilities for the provision of environmental public goods such as habitat for rare and endangered species, clean water, environmental health protection, and so on. There also exist many offset or mitigation systems for securing private provision of public goods at a national level (Madsen et al. 2010
). At the international level, where there is no supranational authority to take responsibility, the failure of markets to deliver environmental public goods is more difficult to offset. Depending upon the magnitude and distribution of the payoffs to public good provision, individual countries will have a stronger or weaker incentive to commit resources to their provision. Doing more than that depends upon agreement between nation states (Kaul et al. 2003a
; Barrett 2007
Many IEPGs are strictly global. Examples include the conservation of the genetic diversity on which all future evolution depends, the mitigation of climate change, the control of emerging infectious diseases, and the management of sea areas beyond national jurisdiction. Many more are regional, such as the control of acid rain, the management of multi-country river basins, and the protection of international watersheds (Touza and Perrings 2011
). Like all public goods, IEPGs exhibit both consumption indivisibilities and non-excludability. Non-excludability means that once the good is provided, none can be excluded from enjoying the benefits it confers. Indivisible consumption occurs when one country’s enjoyment of the benefits does not diminish the amount available for others. Public goods are said to be ‘pure’ when they are both non-exclusive and non-rival (indivisible) in consumption. They are said to be impure if they are either partially excludable or partially rival—the most common form of which are local public goods, particularly the local common pool resources analyzed by Ostrom (1990
). In most cases, it is not possible for any single state to provide such goods on its own. International public good supply depends on either international coordination or international cooperation (Anand 2004
This article focuses on IEPGs whose benefits extend to people in multiple countries. Such IEPGs frequently also deliver benefits across multiple generations (Kaul et al. 1999
), but we do not address this aspect of the problem. In practice, the beneficiaries of international public goods include national populations and their representatives, nation states, transnational corporations and non-governmental organizations, as well as a newly emerging set of institutions. Globalization has altered the way that members of civil society organize themselves across national boundaries. The information revolution has also stimulated new forms of social participation. New networks, frequently built around environmental websites, enable the exchange of ideas and implementation techniques. These new relationships and interactions have created a ‘global environmental public’, interested in asserting new rights and responsibilities to the resources of the planet. Its concerns span both the ethical responsibilities of individuals, organizations, countries and corporations, and the alternative forms of governance of the biosphere.
Following the Millennium Ecosystem Assessment, we suppose that the benefits people obtain from biosphere depend on a set of ecosystem services comprising:
- Provisioning services: products people obtain from ecosystems, such as food, fuel, fiber, fresh water, and genetic resources.
- Cultural services: nonmaterial benefits people obtain from ecosystems through spiritual enrichment, cognitive development, reflection, recreation, and aesthetic experiences.
- Regulating services: benefits people obtain from the regulation of ecosystem processes, including air quality maintenance, climate regulation, erosion control, regulation of floods and droughts, regulation of human diseases, and water purification.
- Supporting services: those that are necessary for the production of all other ecosystem services, such as primary production, production of oxygen, and soil formation.
These services affect human wellbeing in many ways: through their role in the production of consumption goods, their support of human health and security, or the satisfaction of peoples’ cultural and spiritual needs. A number of these services have the characteristics of IEPGs, the most important of which involve the regulating and supporting services. Figure indicates the relation between categories of ecosystem services and components of wellbeing identified by the Millennium Ecosystem Assessment. Of these, only the provisioning services consistently generate benefits that are both divisible (rival) and exclusive. The other services yield benefits that are generally indivisible and non-exclusive. We focus on the group of ecosystem services that are both public and international. These are services that: (i) cover more than one group of countries; (ii) benefit not only a broad spectrum of countries but also a broad spectrum of the global population; (iii) meet the needs of both present and future generations (Kaul et al. 1999
; Anand 2004
). International public goods generated in any one county must therefore generate spillover effects beyond a nation’s boundary (Morrissey et al. 2002
Linkages between ecosystem services and human well-being (arrow’s width intensity of linkages between ecosystem services and human well-being) (adapted from Millennium Ecosystem Assessment, 2003)
IEPGs can further be classified according to their ‘technology of supply’ (Sandler 2004
). The standard treatment of public goods focuses on demand (Hirshleifer 1983
). However, understanding the technology of supply of IEPGs is critical to the development of appropriate incentives. Three common examples of public good supply technologies are ‘additive’, ‘best shot’, and ‘weakest link’ technologies. As the name implies, in the additive case, the socially available amount Y
of a public good is nothing but the ‘simple sum’ of the separate amounts, yi
, produced by each of m
participating countries, the i
= 1,…, m
. In the case of simple sum public goods, such as carbon sequestration, each unit of carbon sequestered has the same value no matter where it occurs. In the case of weighted sum public goods, such as habitat protection, the contribution of each hectare protected depends on its characteristics (Sandler 2004
). For ‘best shot’ public goods, the benefit to all countries is determined by the most effective provider. For example, the Centers for Disease Control and Prevention are funded by the U.S.A., but provide information on infectious diseases to all countries. For ‘weakest link’ public goods, the benefits to all countries are limited to the benefits offered by the least effective provider. The best example of this is the control of infectious diseases. So for HIV and tuberculosis, the level of protection available to all countries is only as good as the control of the disease exercised in the poorest, most densely populated, and least well-coordinated country (Perrings et al. 2002
Social composition functions
Of all the Millennium Ecosystem Assessment ecosystem services, the regulating services are most often supplied as IEPGs. Examples include disease control, which is frequently supplied as a weakest or weaker link public good, climate regulation through, e.g., carbon sequestration, which is supplied as an additive pure public good, or watershed protection which is generally an additive but impure public good (Holzinger 2001
; Dombrowsky 2007
; Touza and Perrings 2011
). Many international public goods are also jointly produced with local public goods. Biodiversity in tropical forests, for example, yields a set of private benefits in the form of timber and other products including medicinal plants, hunting, fishing, recreation, and tourism. At the same time, tropical forests are a source of carbon sequestration, genetic information, hydrological and microclimatic regulation—commonly described as co-benefits (Perrings and Gadgil 2003
An important feature of IEPG is that their spatial extent depends partly on the natural hydrological and atmospheric flows, and partly on the social linkages between countries—the flow of goods, people, and information. The global reach of carbon sequestration is a property of the general circulation system, but the global reach of disease regulation is a property of the global trade and air transportation systems. In fact, the closer integration of the world economic system has rapidly increased the number of environmental public goods that are global in reach (Kaul et al. 2003b
- New technologies increasingly enhance human mobility as well as the movement of goods, services, and information around the world (e.g., case of transmission of human diseases and air pollution as international environmental public bads).
- Economic and political openness have provided further impetuses to cross borders and transnational activities (e.g., case of transmission of human diseases and air pollution as international environmental public bads).
- Systematic risks have increased (e.g., case of climate change as an international environmental public bad).
- International regimes are becoming more influential, often formulated by small groups of powerful nations yet often claiming universal applicability (e.g., case of bio-prospecting contracts to find cure for cancer and other human diseases).
The central problem addressed in this article is how to secure environmental public goods that (a) are provided at particular locations but offer benefits over a wider area, and (b) generate local benefits that are below the local cost of supply. These are the IEPGs that are most likely to be undersupplied. This article is organized in four sections. The following section reviews the fundamental problem with IEPGs—the incentive that each country has to free ride on the efforts of others. A third section then considers the options for addressing the problem. This reviews the applicability of currently popular instruments, such as payments for ecosystem services, in terms of the characteristics of the public good concerned. A final section draws out the implications for national and international environmental policy.