Effective strategies for managing the dangers of global climate change are essential yet difficult to design and implement. One of the greatest difficulties is in devising a policy that will engage developing countries in the global effort. Those nations, so far, have been nearly universal in their refusal to make credible commitments to reduce growth in their emissions of greenhouse gases. Most put a higher priority on economic growth—even at the expense of distant, global environmental goods. And most have little administrative ability to control emissions in many sectors of their economy. Even if they adopted policies to control emissions it is not clear that firms and other actors within their countries would follow. To be successful, a strategy for engaging developing countries must create stronger incentives for these countries to adjust their development patterns while also fixing (or navigating around) the administrative barriers that would make it difficult for these governments to honor international commitments.

Such problems are hardly new in international affairs. Diplomats have considerable experience designing instruments to address situations where countries have little interest in cooperation or are unable to implement their commitments. Those instruments have included sticks (e.g., trade sanctions) and carrots (e.g., subsidies for projects that reduce emissions and for administrative capacity building). So far, however, the sticks and carrots that have been mobilized in the area of climate change have not had much impact on investment and behavior in developing countries. All the sticks that have been considered are costly to deploy in the real world. Trade sanctions and border tariffs, for example, have been widely discussed and included in some draft legislation.