Reports of the Intergovernmental Panel on Climate Change (IPCC) make it clear that the risks of global climate change are even greater than previously realized. Yet commensurate progress in negotiating a meaningful future agreement remains elusive. Since maintenance of a stable climate is a public good, both theory and history suggest it will be undersupplied. Furthermore, the costs of climate change will largely fall on politically weak developing countries, whereas the costs of emissions reduction will largely fall on industrialized countries. Consequently, agreement on any meaningful international regulatory system has been and will continue to be very difficult. With the 1997 Kyoto Protocol coming to an end in 2012, however, the design of a new regulatory regime is essential.

Any international regime aimed at the mitigation of climate change must solve three problems: (1) secure sufficient participation to be effective; (2) achieve agreement on rules that are meaningful, so that if they were followed, climate change would indeed be mitigated; and (3) ensure compliance with the rules. That is, it must solve problems of participation, effectiveness, and compliance. Solving all three problems simultaneously is particularly difficult, since these goals are often in tension. The most direct trade-off is between participation and the strictness of the rules, since as rules become stricter, reluctant states become even more reluctant to be bound by them. Similarly, as participation becomes wider, agreement may only become possible on lax rules.