Economic Analysis Of Institutions Addressing Climate Change

Society today has entered into a society full of comprehensive and systemic risk. Many problems may evolve into an international problem, and can also bring a huge risk to the international community. Climate change is one of the problems which can wake up the awareness of risk in the international community. The development of national economy is based on the greenhouse gas emissions. As the emissions increases gradually, the resource of the atmospheric capacity is exhausted. And then the international economic growth will also face stagnation. With the shrink of greenhouse gas emission space, all countries compete fiercely for the emission rights of greenhouse gases, and then it becomes a scarce resource.Action on climate change is to explore the supply, distribution and exchange of global public goods under the external conditions. And it is the refinement of state collective action rules under the premise of sovereignty equality. Although there are still uncertainties in scientific knowledge, and the system to address climate change effects have not yet fully played out, it is still very necessary to explore the institutions of climate change. Because of the effective and practical features, the study of law and economics has not only opened a new field of theoretical study of law, but also has played a unique value and functionality. To deal with the problem of climate change with law and economics analysis method, using the theory of supply and demand theory, cost and benefit analysis, collective action theory, rational choice theory, to explore the feasibility and effectiveness of the climate change institution, particularly on the economic analysis of climate change related to specific emission reduction measures, can help find the reason of low effectiveness of the law to deal with climate change, and it can help choose the most optimal institutional arrangements and help achieve the goal of a fair global climate governance, efficiency and sustainability.Under the background of global climate change, deeply analyzing the supply and demand of the legal system to tackle climate change, exploring the role in the global climate change governance, is conducive to examine the function of institutional constraints and incentives of sovereign state behavior. The international climate change institution is the result of the political game, which is produced on the basis of the conflict and coordination of the interests of each country. The rationality of the international climate change institution including power struggle between each countries is open to debate. Because of the different development stages of different countries, there are many disputes on gas emissions. But the consensus is that all countries want to develop an effective system through national cooperation to provide international climate institution. In the process of institution building, it is unrealistic to make all countries play the same role for concerted action. Thus those major countries should play more important roles, especially the United States,China,other economies and the cooperation among them.They can make the greatest contribution to carbon emissions. The supply of institution bases on the major counties reaching an effective reduction agreement in international climate cooperation. Otherwise it will make climate negotiations stall, only to increase the cost of climate and environment governance.Economic analysis of institutions addressing climate change includes the economic analysis of the general international system of climate change. Besides, it includes the economic analysis of the special system to solve the concrete problems of climate change. Because of the universality and complexity of the international climate system, we can only choose some representative system or system of consensus in the international climate governance in many fields, such as economic analysis of the carbon emissions trading system, economic analysis of the international climate patent transfer and licensing system, economic analysis of the trade measures related to climate change. All of these are based on the concrete institution of international cooperation on climate change.Through the carbon emissions trading system of the cost and benefit analysis, although the operation of the system needs to pay a lot of cost, but on the whole, it can get more revenue. The essence of the carbon emissions trading system is the trading system of the right to the use of climate capacity. It is a means to control environmental problems through economic methods. In order to pursue the benefit maximization, the system can reduce the emission of greenhouse gases at a lower cost, and thus encourage the active of the emission reduction actions, and coordinate the contradiction between economic development and environmental problems. Carbon emissions trading system not only shoulder the task of institutional efficiency, but also take the responsibility to reflect the equitable development. If the carbon emissions trading system can protect the parties involved in the transaction to get a fair interest, and reflect the efficiency of reducing the greenhouse gas emissions, the system is a good institutional arrangement.The development and sharing of green technology is an effective way to realize the global emission reduction plan. From an economic point of view, the atmospheric resource is belong to the global public goods. Climate capacity is for all human sharing. The activities of global emissions in response to climate change and green technology innovation also has the attribute of public goods to some extent. The developed countries have the duty as a pioneer in global emission reduction actions, and actively develop and transfer advanced green technology to help developing countries to improve their ability to cope with climate change. International transfer and licensing of developed countries technology will improve the green patent capacity to cope with climate change of developing countries, and ultimately will benefit the international economic development and global environmental governance. Research from the perspective of law and economics is helpful to promote the establishment and improvement of green international patent transfer and license system.Trade measures related to climate change are produced in international trade. It is a kind of economic means to adjust trade in the market mechanism under the background of climate change. Unilateral trade measures will restrict the climate negotiations. And it will have a negative effect on the international trade produced. In the trade with countries taking unilateral trade measures, China may bear unnecessary burden which will affect the development interests of our country. In response to climate change related with trade measures, we should show the attitude against unilateral trade measures and implement equal dialogue mechanism. At the same time, we should also actively promote the low carbonization of international trade, accelerate the transformation and upgrading, minimize the impact of trade measures related to climate change. At the same time, we should seize the opportunity, strive to cultivate the competitive advantage of international trade, and create a favorable development space for trade.Taking into account historical emissions responsibilities of developed countries, the principle of "common but differentiated responsibilities" provides for absolute emission reduction by developed countries and relative reduction by developing countries comparatively. And this shows fairness of the reduction process in the institutional level. Because of the institution of tackling climate change is principled and imperfection, each country will focus on their own interests while applying the institution. So it is difficult to achieve substantial equity. Theory of Law and Economics suggests that the demand of the legal system is in short supply or oversupply, which will increase the transaction cost. The original intention of the institution to deal with climate change is to promote the global emission reduction negotiations, reduce the cost of negotiations, and promote the global emission reduction process. Thus, climate change institution should consider the fairness and efficiency. The fairness of this article refers to the pursuit of reasonable distribution of benefits on the basis of the recognition of the reasonable differences. Thus, although the principle of maximizing the efficiency is beneficial to social efficiency, it intentionally or unintentionally ignored the problem of how to allocate the income from the climate negotiations between different sovereign states. With the development of society, the conflict between efficiency and fairness will exist for a long time, but the equilibrium point of the two games will be changed. In the climate change institution, the game between the two will change with the status of the two camps of developed countries and developing countries. Although there are still many imperfections to deal with climate change system, the demand for more fairness and efficiency can be sent to all countries to recognize the concept of international law and the further efforts of the countries themselves.The significance of economic analysis of institutions addressing climate change consists in that it demonstrated the basic functions of climate change institutions while dealing with international environment problem. Namely, the institution makes all the countries try to use an appropriate legal language to clear the relationship of rights and obligations between countries, and to maximally reduce the uncertainty of international climate cooperation, and enhance the expectations of stable behavior. It has reduced the transaction costs of dealing with climate change issues and has promoted international cooperation to a large extent. As the market subjects, developed and developing countries should make a rational choice to their most effective climate change regime in the international cooperation on tackling climate change. Then they can effectively reduce the transaction cost. This can not only accelerate the development of the international cooperation on climate change, but also realize the optimization of the institution itself.