Public Participation in Market-based Climate Policy : A Political Economy Perspective and the Cases of Japan and Germany

Abstract

Due to the increasing threat of irreversible, dangerous global warming, effective climate policy is one of the most urgent political challenges. And as mitigation costs are going to increase even in the case of cost efficient measures, government action against global warming needs the sovereign's support. So what is the role of public participation in modern market-based climate policy? Public Choice theory has been analyzing respective questions since the 1970s, mainly because economists' recommendations for expanding the use of economic incentives had been ignored in practice. However, recently carbon taxes and cap-and-trade have been spreading, raising questions on the validity of Public Choice arguments anew. Against this background, in this paper I summarize Public Choice's hypotheses on public participation in climate policy instrument choice, survey respective empirical studies, and add new case study data on carbon market decision making in Germany and Japan. I mainly argue, that public opinion will play an increasingly important role in effective and efficient climate policy, that political support by citizens becomes most effective via environmental groups' activities, and that strengthening citizen participation calls for lowering information costs and for supporting the civil society.