[ This is Essay # 17 in our Spotlight Series. Click here for the archives.]

India and the Politics of Climate Change Negotiations

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Dweep

The Bali Conference on climate change concluded last December much as had been expected – with no real agreement on a post-Kyoto framework. Throughout the discussions India maintained its principled stance of a “common but differentiated responsibility.” However, as pressure continues to mount on India and China to take action on the issue, the question of what strategy is best in emerging negotiations becomes particularly pressing. Should it engage the world, or remain aloof?

Discussions on this issue generally take either an ethical or an economic perspective, with very few considering the politics of climate change negotiations. Yet, that analysis is particularly important for India, because the costs of climate change are so high for it.

By some measures, India has the most to lose from climate change, which is unsurprising given its vast rural population, overwhelmingly dependent on natural weather patterns that can be easily disrupted by rising temperatures. Therefore, India should be at the forefront of efforts to establish a post-Kyoto treaty for collective action. Even as its involvement is sought, it should be encouraging developed economies to tackle climate change. Yet, it has resisted calls for binding emission cuts that would spur other countries to do likewise, and has not participated actively in current negotiations.

Such resistance can perhaps be explained by the fact that western policymakers have seldom acknowledged the vulnerability of the developing world. Nor have their policy proposals, including Kyoto, included substantive provisions for helping vulnerable countries adapt. In the absence of assistance on adaptation, India has little incentive to participate in global mitigation efforts. Instead, India’s approach reflects the advice of Nobel Prize winning economist Thomas Schelling that given their limited ability to adapt, “the best way for developing countries to mitigate global warming is through economic growth.”

We are presented, therefore, with a dilemma. In the long run, India would benefit from a collective response to global warming. But in the short term and with no current agreement on a post-Kyoto framework, a unilateral strategy of high emissions growth would be more beneficial. Both parties in this situation would benefit from cooperating, but cooperation is hindered both by trust and the asymmetrical cost of cooperation.

The Case for Engagement

There are compelling reasons for India to engage. Economically, anything India can do to encourage the developed world to reduce emissions is welcome. But a more compelling argument is political – by not participating in negotiations India risks the creation of a framework that does not reflect its concerns.

There are increasing signs that this will happen, particularly with American business lobbying for a “global framework” that reduces their uncertainty and prevents dilution of their competitive advantages. Not surprisingly, the American Congress has proposed legislation proposing to tax imports from countries that do not restrict carbon emissions. Earlier this year, the European Commission announced it too was considering import taxes for carbon-heavy imports, triggering the prospects of a future trade war with China and India.

There are some parallels from the incorporation in 1995, of the TRIPS agreement, into the World Trade Organization. Then, the US, Europe, Japan, and Canada (known then as “the Quad”) together decided to create a new international framework encompassing intellectual property. To do so, the Quad created the WTO and forced developing countries to accept all three agreements. Few developing country concerns were reflected therein – a bias that has not been adequately corrected since despite the Doha Declaration on TRIPS and the currently stalled “Doha development round”.

The lesson is simple – it is better to establish a favorable international policy, rather than try to change such a policy after the fact.

The Case for Disengagement

If the case for engagement is strong, the case for waiting for action by others is even stronger, though less obvious. Arguments for not participating in negotiations lie in the dynamics of bargaining power – and how participation in negotiations affects that power.

International negotiations result in agreement not because there is an economic or ethical case for it. Rather, agreements are based on quid pro quo. Countries that loose from the agreement sign on when they are appropriately compensated by those that gain.

So, who loses and who gains from climate change?

The economic models of Nordhaus & Boyer estimate the economic cost of global warming will be highest for India, Africa, and Europe. In comparison, Russia will gain a boost to its GDP, while the impact on America and China is likely to be relatively low. This explains why America has historically been resistant to Kyoto – because Kyoto did not compensate it sufficiently for the economic costs of carbon mitigation. It also explains Europe and Africa’s enthusiasm for a collective response.

Most importantly, it suggests it may be smart for India not to participate in negotiations right now. As a country that loses from climate change and benefits directly from a collective response to it, India’s case for compensation for its own mitigating action is weak. India’s bargaining power derives not from its ability for give-and-take, but rather from the world’s desire to include it in a future treaty. The moment India indicates a desire to participate in negotiations it weakens its own bargaining power.

A Middle Path: Free Riding on China

How then is India to proceed? The best option, perhaps, may be to free ride on China’s negotiations with the US. Within the developing world, China is the counter-point to the US – it loses little from climate change, yet its involvement is essential to any future treaty. Therefore, China is much better positioned to bargain for compensation (e.g. technology transfer, R&D financing, or adaptation assistance). In terms of bargaining power, therefore, it is China not India that should be at the vanguard of negotiating a climate treaty with the US and EU.

There is still much India can do, even as it reiterates the principle of “common but differentiated responsibility.” For instance, India needs to reframe the issue as one of adaptation, not mitigation (which is a Euro-centric view). It also should work closely with China, as well as Brazil, South Africa, and Russia to define what the developing world needs in return for signing a climate change treaty. Not only would such collective bargaining improve the potential outcome in favor of the developing world, it would also support and reflect India’s political rise and ability to convene.

Conclusion

A climate change treaty that binds India to mitigation action is no longer an option but a virtual certainty. Such a treaty will become fact either through negotiation or through unilateral measures of the developed world. To avoid lockout, India must have a strategy to approach such negotiations.

Current disagreement rests on a vast gap in perceptions between India on the one hand, and Europe and the US on the other. A solution is unlikely until a new climate treaty narrows this gap, essentially by allowing payments from winners of the agreement, to the loosers. This will involve establishing a payment mechanism, similar to Kyoto and its Adaptation Fund, through which developed countries pay for economic growth and adaptation in the developing world. India should continue to cherry-pick initiatives that are domestically economically viable. But at the international level, India can only prepare for the negotiations both by promoting collective bargaining with China, and by signaling its resistance to such bargaining – a signal which would strengthen India’s position.

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Dweep writes on international politics, public policy and development issues at The Discomfort Zone.