John Whalley and Ben Zissimos
CSGR Working Paper No. 63/00
We evaluate possibilities for a new World Environmental Organization (WEO), with our discussion motivated both by recent calls for such an organization in light of WTO trade and environment conflicts and the relative absence of internalization of global externalities. We propose an organization building upon the idea of facilitating Coasian deals on the global environment. This contrasts to attempts to agree on a statement of global principles, as in the Rio declaration and Agenda 21 as the main vehicle for global environmental improvements. To motivate the establishment of such an organization, we itemize the ways in which global environmental deals are presently restrained by various impediments, including free riding, property right ambiguities, and mechanisms for authentification and verification. We indicate how such a WEO might help in each of these areas, stressing the differences from the WTO which is a much narrower bargaining framework. We conclude with a discussion of why the developing countries might or might not be interested in such a proposal, and emphasize their potential both to secure significant resource transfers in exchange for environmental concessions, and to cooperate in bargaining with the WEO as a focal point and secure sharply better terms. We note, however, both their broad systemic concerns over another global agency which they fear might be used to pressure them, and what some countries see as the inability of such an entity to deal with their central concerns in the area; namely ameliorating internal environmental problems via transfer of technology. We conclude by arguing that a WEO can offer joint benefits; raising environmental quality for those willing to pay for it, and acting as a vehicle for securing transfers of resources in return for environmental commitments.
Keywords: Coasian bargain, environmental agreement, global environment externality, World Environment Organisation.