An alternative to doing nothing

Bill McKibben summarises progress on reducing greenhouse gas emissions: 

Last month the world's nations, meeting in Rio for the 20th-anniversary reprise of a massive 1992 environmental summit, accomplished nothing. Global warming's terrifying new math, Bill McKibben, 'Rolling Stone', dated 2 August

 And again: 

everyone at the Rio conference renewed their ritual calls for serious international action .... The charade will continue in November, when the next Conference of the Parties (COP) of the U.N. Framework Convention on Climate Change convenes in Qatar. This will be COP 18 – COP 1 was held in Berlin in 1995, and since then the process has accomplished essentially nothing.

No surprises here. Mr McKibben writes eloquently of the financial disincentives for governments and energy companies to do anything to cut greenhouse gas emissions. It's one policy area where there's insufficient scientific proof to persuade political parties to take actions that adversely affect the people who make contributions to their election campaigns. More precisely: the relationship between imposing a carbon tax (say) and benefiting human, animal and plant life is too indirect to persuade policymakers that it's in their interests to do anything beyond paying thousands of bureaucrats to fly round the world drafting meaningless documents. Our current policymaking system lets governments off the hook if they can point to uncertainties in the scientific relationship between cause and effect: in this case, between cutting greenhouse gas emissions and an improved environment. Sure, politicians might privately be quite convinced by the evidence but, if it's not obvious to everyone, they are unlikely to take action that brings long-term benefits to society while imposing upfront costs on themselves and their supporters.

Here's another suggestion. If we want to do something about cleaning up the environment, let's pay people to clean up the environment. If we want to tackle climate change, let's (after defining exactly what we want to achieve) tackle climate change. We need to target outcomes, rather than wait decades for government to agree on what's required and then make policy that might, or might not, do something to achieve it. What is important is not how our urgent social and environmental problems are solved, but that they are solved. Social Policy Bonds are one way of getting government to focus on what we as a society actually want to achieve and out of the business of identifying genuinely (or not) difficult scientific and social relationships. The first is something that democratic governments can actually do quite well. The second is something that they do badly, whether because coming to a consensus about most scientific and social relationships is unachievable, or because of their incompetence or self interest.

Climate change is quite possibly such a huge and urgent challenge that we can't wait for politicians to be persuaded that they have more to gain by dealing with it than by pretending to deal with it. If the world's governments collectively issued Climate Stability Bonds it would be motivated bondholders, not motley interest groups, who would decide what needs doing and how best to go about doing it. Governments - and taxpayers - could relax in the knowledge that if, in fact, the doubters are right, and there's no climate change problem, then the way the market works would ensure that costs to society are minimised. And, if there is a problem, investors in the bonds would have incentives to explore and implement the most cost-effective ways of solving it. They would do all this in ways that take account of our rapidly expanding scientific knowledge - something that no government can do. By targeting outcomes, rather than the supposed ways of achieving it, a bond regime would be more efficient than any other policy mix. Perhaps even more important, a bond regime would compel government to do its duty and address big, urgent problems, rather than, as now, get away with pleading uncertainty and doing nothing.