Enforcement or Management: Two Schools of Thought in the Institutional Design of the Kyoto Regime

The international negotiations on climate change continue to prepare for the entry into force of the Kyoto Protocol to the Framework Convention on Climate Change (FCCC). If the political momentum behind this treaty is to be maintained, fundamental change may be needed. To this effect, a distinction is made between the Enforcement School and the Management School in designing a compliance regime for implementing the Kyoto Protocol. The distinction is important because without it, one school of thought tends to naively negate the elements of the other. Recognizing the logical chain of reasoning in both approaches will benefit the (re)design of the Protocol by streamlining activities and establishing a better regime. The reasoning of both schools of thought is analysed. Firstly, there are those who advocate stringent enforcement, favour sanctions to achieve compliance and dismiss all discretionary elements. Further, when its supporters see that the Protocol's targets are ambitious, they favour international market mechanisms, universal and simple rules to implement these, with national emission trading as a domestic policy option. Questions frequently addressed to this school ask whether national environmental numerical targets are enforceable by the democratic process, and whether economy-wide emission trading is politically and institutionally feasible. In contrast, those who advocate facilitative and cooperative compliance support another logic: no sanctions for noncompliance, discretionary elements in the hands of the Parties, incremental change in traditional environmental domestic policy instruments. Questions frequently asked of them include whether Parties would make efforts in the absence of sanctions and whether these would be cost-effective. While the ideas of the Enforcement School have a successful record in some issue areas including domestic SOx regulation in United States, the Kyoto Regime is too young to be burdened with these notions. Past experiences of multilateral environmental agreements suggest that the Kyoto regime should be designed in line with the ideas of the Management School, at least for its fledgling stage, including the First Commitment Period.