All institutions based on international cooperation face free riding by
signatories who obtain the benefits of an international agreement while avoiding
the costs by non-compliance. The likelihood that signatories to a Climate Change
Convention might try to avoid meeting their commitments poses the question of
monitoring, verification and enforcement of compliance.
Monitoring and verification
Analysts concur that a multi-gas agreement will be much harder to monitor and
likely impossible to verify. Taxes, traceable permits, and abatement services
all require monitoring to ensure that the terms and conditions of the scheme to
fulfil commitments under a Climate Change Convention are being met. Monitoring,
however, must be scientifically credible. Monitoring of nonCO2
greenhouse gases such as methane from paddy fields or from diverse, mobile point
sources such as cattle is not feasible due to the uncertainty as to emission
rates. While rice production is relatively well known, methane emissions vary
greatly with soil type, nutrients, light, and temperature. Estimates for rice
paddy in Spain and Italy vary by more than 100 per cent.
Also, sinks for and terrestrial reservoirs of greenhouse gases must also be
monitored, both to ensure that sinks endowed as property rights are maintained,
and to verify any claims made as to additional carbon fixation. Yet rates of re-
and de-forestation are highly contentious, and satellite-based remote sensing
cannot yet provide adequate monitoring and verification of biotic carbon sinks.
The deforestation rate in Brazil, for example, is highly controversial
(estimates range by a factor of five). Similar arguments apply to other
greenhouse gases such as nitrous oxide.
For all these reasons, therefore, I conclude that it is only meaningful to
cost monitoring and verification of carbon dioxide released from fossil fuels at
the outset of the implementation of the Convention.
In Chapter 5, however, I assumed that property rights are created in
proportion to national carbon sinks that are the basis of determining
permissible emissions in future years. It is possible to monitor and verify the
status of the forest stocks and thus carbon reservoirs in those forests although
it is not feasible to track the carbon flows to and from them. A monitoring
system is feasible that would use remote sensing and in situ, ground-based
validation to determine the fulfilment of commitments made to maintain or to
expand these reservoirs. I assume, therefore, that biotic stocks of carbon will
be included eventually under a protocol for monitoring and verification,
although not the carbon emissions from these sources.
Verification is the international control of compliance with agreed measures
and behaviour by means of tools and procedures agreed upon in an instrument of
international law - for example, a protocol on compliance to a Climate Change
Convention. Verification can be defined as having different densities depending
upon the level of distrust between parties to the agreement and the technical
difficulty of obtaining information with an adequate level of confidence on the
I assume that the verification procedures that are adopted in a verification
protocol will be multilateral rather than bilateral in implementation (although
they may rely heavily on national/unilateral monitoring and verification
capabilities such as satellite systems). Assuming that all parties will be
accorded equal treatment in the protocol, it is reasonable to suppose that all
parties also will be subject to monitoring and verification by an implementing
organization established under the Convention.
Nature of emission sources
Anthropogenic sources of CO2
vary greatly with respect to characteristics that affect greatly their
suitability for monitoring and verification. Some are stationary, emit copiously
and continuously, and are suitable for direct, quantified monitoring. Power
stations and large factories exemplify this type of emitter. Other sources are
stationary and numerous but only emit intermittently very small quantities of
gas. Fireplaces and open fires are typical. There are also very many mobile
point sources that are sporadic emitters such as vehicles and livestock.
Finally, there are very diffuse sources such as non-commercial fuels based on
Only the first category is suitable to direct monitoring and verification.
There are, for example, well-developed techniques for determining gaseous
emissions such as ultrasonic instruments in the off gas stack which measures the
effluent density and velocity and thereby volume to within 3-5 per cent
accuracy. The other sources all exhibit characteristics that would make
information collection enormously onerous due to their number or the lack of
Good statistics are available for energy
production and consumption balances for most countries. However, to convert
these energy data to emissions on an international basis, energy balances must
be made more complete and accurate, carbon content and conversion into emissions
must be made more precise, and statistics must be collected according to
consistent and compatible ground rules. The parties to the Convention must agree
on the types of data, required disaggregation and detail, and common reporting
rules for national reports. Fortunately, the Intergovernmental Panel on Climate
Change has already produced a set of guidelines of this nature, which are being
refined and updated. In particular, rules are needed to determine whether
emissions are based on energy production or consumption. The latter is
particularly problematic because of the difficulty of ascertaining conversion
The implementing organization must be able to verify the accuracy of data
such as ash content of coal or oxidation rates of conversion in power plants,
etc. It cannot hope to collect the requisite data independently but only to
analyse the data supplied by parties to the convention by cross-checking the
reported fuel cycles and conversion to emissions with 'spot' cheeks including
on-site visits to 'cheek the books' of very large, stationary emitters. In most
nations, however, the latter checks would only cover 1-5 per cent of a given
country's emissions. It is crucial to an effective greenhouse regime that
verification be conducted routinely by subjecting national reports to
independent, critical scrutiny and assessment, treated as an expert technical
rather than political process.
A verification system that combines data analysis with spot checks would
likely enable the implementing organization to detect an emission infringement
of the Convention by a party that deviates 10 per cent or more from the party's
commitments. Similarly, a verification system that uses remote satellite and
air-based sensing with local inspections should be able to detect departures
from declarations to maintain or to expand biotic carbon pools such as forest
reserves, to within a five per cent deviation from commitment. (The verification
protocol would have to define the ground resolution at which it requires
monitoring, the calibration and interpretational rules to be followed, and the
density of selective observation needed for confidence to exist that parties are
complying with their commitments.)
The cost of the verification system will consist
of the direct costs of the implementing organization engaged in checking the
annual national reports of compliance and field inspections, plus the indirect
costs of obtaining independent sources of information needed to cross-check
national claims about emissions or the status of carbon stocks or sinks.
It is reasonable to assume that the implementing organization will not have
to meet the capital or direct operating costs of remote sensing satellites.
Rather, these costs will be covered in the budgets of the space agencies in
Europe, Japan, and the United States which already pay for the huge cost of
By way of comparison, the International Atomic Energy Agency's (IAEA)
safeguards department currently consists of 450 persons including 190 field
inspectors. The implementing organization for verifying a Climate Change
Convention would probably require about twice as many staff given the much
larger number of facilities to be visited and much broader international scope
of the verification system compared with that applied in the nuclear field.
In 1987 the IAEA safeguards applied to about 230 tonnes of plutonium, 30,000
tonnes of enriched uranium, and 50,000 tonnes of depleted uranium, thorium or
uranium. In 1983, the IAEA safeguards agreements applied to a total of 881
installations such as power reactors and other fuel cycle facilities. A carbon
monitoring system will apply to billions of tonnes of fuels, and millions of
hectares of forest at hundreds of thousands of sites a much bigger task.
The safeguards surveillance and materials balance inspectorate system for the
sensitive nuclear materials run by the IAEA costs about US$30 million per year.
The cost of a system that verifies compliance with a Climate Change Convention
might therefore approach $100 million per year. It is doubtful that more than
three times the IAEA's budget would be provided to the implementing organization
at a time when the IAEA already finds it difficult to obtain funds for such a
politically sensitive field of concern to great powers.
The source of the funds for the implementing organization and its activities
would either be charges that follow the UN scale of payments or a special
formula similar to that developed by the IAEA in 1971 (and later revised) that
levies states on a per capita income basis (with a ceiling) and a cap on
contributions by poor states.
Verification or confidence building?
The previous sections have
argued that the greenhouse arena is characterized by complexity due to multiple
gases (unless limited to carbon dioxide); an effectively infinite number of
point and mobile pollution sources; mostly national information on energy use
which is subject to distortion, withholding, and differing reliability, varying
analytical methods, and underlying assumptions; reliance on extrapolation from
existing energy statistics rather than new monitoring of greenhouse gas
emissions; and a long lead time before an effective monitoring system and
verification could be created.
In Chapter 5, I analysed three mechanisms to achieve agreed reductions and to
fund the South's 'excess' incremental abatement costs: carbon taxes, traceable
permits, and trade in abatement services. Each of these mechanisms poses
different demands on a verification system. A carbon tax system, for example,
requires that a baseline emission be set and updated each year to confirm that
states are reducing emissions to agreed targets. A traceable permit system
within an overall global emissions target demands that trading be monitored
continuously in addition to establishing national emissions relative to an
agreed baseline. Trade in abatement services requires that claimed reductions by
one country actually have been achieved in another country. Monitoring
compliance of such claims could be politically difficult for an international
In all three cases, achieving a high degree of certainty seems to require an
extensive monitoring system and bureaucracy. Yet most states do not (yet)
perceive the stakes in the greenhouse regime to demand monitoring and
verification like that imposed on flows of special nuclear materials. Only a
small international bureaucracy based on national reports and data
cross-checking seems politically feasible at this time.
The history of international arms control and environmental agreements offers
six important lessons for a greenhouse verification system. First, environmental
costs and benefits do not accrue as fast as the costs and benefits of abandoning
arms control agreements and the stakes are not perceived as central to the
immediate security of the state nor (usually) to regime survival in that state.
States may therefore be less demanding of a verification system for
environmental agreements than in other domains. Moreover, when states coordinate
because of self-interest, there is little reason to defect or cheat and little
or no verification or enforcement is needed. If the costs of carbon abatement
are as low as suggested in the studies reported in this book - at least for the
first 20 per cent reduction and therefore the first decade or two of an
agreement - then verification measures are needed mostly to build confidence in
the regime rather than to raise the question of non-compliance and enforcement.
Second, it is inevitable and proper that enforcement responsibility will be
lodged primarily at the same level as implementation responsibility, that is,
within nation states. The bulk of the monitoring and verification should be
conducted at this level, rather than internationally.
Third, most military control regimes were created in confrontational contexts
under conditions of secrecy and with little or no participation. These
characteristics led to many problems of implementation for arms control
agreements. This experience implies that a greenhouse regime should strive for
maximal transparency and openness, including a strong role for non-governmental
organizations in monitoring compliance.
Fourth, some states have skillfully used verification issues in the past to
block international agreements (most notoriously, the United States with regard
to the Complete Test Ban Treaty). If the analysis in previous sections is
correct, then this problem should not arise in the greenhouse gas arena.
Fifth, there are important precedents for monitoring and verifying
international atmospheric agreements, at the regional level in Europe, and
globally in ozone depletion convention. This experience should provide some good
signposts for the greenhouse regime, especially for regional (in Europe) and
subregional greenhouse gas agreements (in Northeast Asia) that could be
developed to supplement a global greenhouse regime.
Sixth, the history of international monitoring and inspection of nuclear
power provides some useful lessons. The IAEA's history suggests that an
international secretariat should be created to audit national reports and ensure
that they are bona fide, consistent and follow internationally recognized
procedures. An independent technical committee could be appointed to define the
reporting requirements of states to the parties to a Climate Change Convention.
The same technical committee could also explore with states qualitative
anomalies (such as refusal to allow an on-site inspection of emission rates or a
claimed efficiency improvement) and quantitative discrepancies (such as
inconsistencies between national reports and international statistics) that
might arise from time to time.
Disputes and enforcement
Article 14 of the Convention states that disputes between parties should be
settled by negotiation or by any peaceful means that they care to select,
including arbitration by the International Court of Justice, and/or in
accordance with procedures yet to be adopted by the parties to the treaty. Thus,
the Convention provides little guidance as to what methods of dispute resolution
should be incorporated into a protocol. It casts no light at all on the
appropriate means of enforcing compliance with treaty commitments.
At a meeting in The Hague in 1989, twenty-four national leaders called for a
'new institutional authority' to set and implement environmental standards.
Currently, however, only national institutions can implement standards
authoritatively. Moreover, there is no compulsory dispute settlement
jurisdiction relating to multilateral environmental regimes. Invariably,
agreement by disputants is required before it is submitted to third party
adjudication. The major stumbling block had been the socialist bloc rejection,
and more recently, US rejection of compulsory third party arbitration.
In relation to disputes involving the failure of developing countries to
comply with emission reduction targets, it would likely be highly
counterproductive to try to enforce agreed targets by economic sanctions. These
would worsen the very technological and economic difficulties that cripple many
developing countries' ability to comply. It would also impose substantial costs
on states that meet their commitments and thereby reduce the benefits to new
signatories considering joining the Convention. Moreover, using the trade system
to enforce climate change policies would likely prove to be unmanageable because
every product and service that is traded internationally results in greenhouse
Consequently, alternatives to supranational regulation have emerged. States
recognize each other's licensing rather than ceding licensing powers to an
international authority. Such reciprocal recognition schemes operate in many
areas including phytosanitary certificates for exports, shipping oil pollution
prevention certificates, marine waste disposal permits, hazardous materials
trade, and trade in endangered species. States also harmonize standards and
standard-setting laws and procedures, often by adopting models from overseas.
(For example, the environmental impact assessment, green labelling and pollution
Many states have also committed themselves, outside treaties, to providing
early warning and notification, for example, with respect to banned chemicals,
exchange of standards, or adjustments to trade-controlled items (such as
endangered species). Regimes also create transnational networks of lower level
'operational' national officials who short-circuit hierarchical communications
across boundaries, or who communicate directly with international organizations
that may then reintroduce environmental information at much higher political
levels in the same nation state. Such structures can defuse and even prevent
disputes arising in the first place.
Non-adversarial techniques have also developed to resolve international
disputes from escalating to interstate conflicts. Local legal challenges have
been mounted across borders thereby achieving settlement without involving the
states themselves. (In Europe and North America, this technique requires that
legal systems grant status to foreign parties in local judicial or
administrative procedures). The filing of complaints and the launching of
infringement hearings are two other techniques that have been used (in the
Montreal Protocol and in the European Economic Community, respectively).
Reporting requirements are also an important means of imposing national
'discipline' on treaty parties, especially when combined with international
expert auditing and public debate in committees or annual conferences. Such
procedures are already well developed in the occupational health and safety
agreements administered by the International Labour Organisation. Similar
procedures are used by the International Monetary Fund, and multilateral funding
agencies also conduct national and sectoral audits as preconditions for or
requirements of development loan agreements. Environmental auditing, however,
has a weak tradition although the Montreal Protocol requires substantial
reporting to permit monitoring of compliance and administration of various
aspects of the agreement.
As noted earlier, it seems inevitable that the national reporting
requirements of a Climate Change Convention will be the heart of a monitoring
and verification system, and the key to effective enforcement through
self-regulation. National reporting will the core confidence-building measure
that will build widespread commitment to the regime. It can be supplemented by
international auditing of the kind referred to above, but such reports (as
occurs with the International Energy Agency reports) buttress only the normative
power of domestic proponents of fulfilling treaty commitments and have no direct
These measures may be supplemented by other measures that increase the
incentives of signatories to comply. Large emitters, for example, can offer to
match the abatement of new signatories. They can also threaten to punish
offenders by reducing their own abatement by as much or more than that of the
defector, thereby reducing the benefits of free riding by increasing the costs
of climate change. States can also lock in their own commitments so as to reduce
the uncertainty facing potential signatories as to whether they will reap the
benefits of reduced climate change.