This article is about climate change and Indonesia. But we cannot sensibly talk about climate change only in one country. The impacts of climate change know no boundaries. Neither do contributions to the mitigation of climate change. The only solutions are global, with participation from all substantial economies. Failure to find and to apply effective global solutions will hurt some countries earlier and more than others, but in the end it will affect all countries.The science and economics of climate change are discussed at length in Garnaut (2008, The Garnaut Climate Change Review, hereafter ‘the Review’). While there are large uncertainties about the detail, the overwhelming weight of relevant global scientific opinion says that human-induced climate change is happening, built around a pace and extent of global warming that has no precedent since human civilisation emerged about 10,000 years ago (Garnaut 2008: chs 2 and 4). It is caused by rapid growth in the concentrations of carbon dioxide and other greenhouse gases in the atmosphere, principally from the combustion of fossil fuels. There are also large contributions from changes in patterns of land use, especially deforestation. The concentrations have been growing particularly rapidly in the early 21st century—at least until the recessionary impact of the 2008 global financial crisis was felt—because the beneficent processes of modern economic growth have moved powerfully into the world’s most populous countries—China, India, Indonesia—and other developing countries (ch. 3). Without strong measures to reduce global emissions, the costs of climate change will accelerate rapidly from a few decades hence and continue to increase, with large and potentially catastrophic economic as well as environmental effects. The 2008 global fi nancial crisis is a timely reminder of how closely we are joined across the world today, as societies and economies. The problems of some of us quickly become the problems of all of us. That is the way it will be with climate change. The crisis is also a reminder that short-term policy issues can deflect attention from long-term structural issues. I will return to this matter below.

I describe climate change as a diabolical policy problem, because of its complexity; because of the mismatch of time frames between the costs of mitigation (which come early) and the benefits (which come much later); and because of the prisoner’s dilemma that inhibits international cooperation on mitigation (with each country having an incentive to do as little as possible if it thinks its own actions will not affect the policy decisions of others). The prisoner’s dilemma intrudes here in a way that it does not in trade policy. In trade policy, while each country pretends that it is reluctant to reduce import barriers when it is negotiating with others, the economic reality is that each
country benefi ts from its own liberalisation, whatever other countries do. So if the trade negotiations fail, countries may and often do unilaterally reduce their protection. By contrast, with climate change, strong mitigation by one country alone—Australia, Indonesia or any but the two biggest economies—will have negligible effects on the cost of climate change to that country, except to the potentially significant extent that its actions affect the policies of other countries. The resolution of the prisoner’s dilemma requires close communication and the development of potential agreements that share the benefi ts of cooperation in ways that are acceptable to all countries whose participation is essential to a global solution.

But while an effective response to climate change must be global, it must be built from the national contributions of sovereign countries, acting alone or together with others. Indonesia and Australia individually and together can contribute much to the global effort and to the success of the climate change policies of developing countries in the western Pacific region that we share.

IndonesiaAndAustralia.pdf