What are Global Public Goods?
Global public goods are a subset of public goods.
Public goods (which can be local, national, global, etc.) are goods/services that are “non-excludable” and “non-rivalrous”:
Non-excludable means that the good is accessible to everyone (within a defined geographical region).
Non-rivalrous means that consumption of the good by one person doesn't detract from the quantity/quality of the good for another person.
These characteristics are frequently displayed in a matrix. The bottom, right box represents public goods:
Public goods’ scope is defined geographically (depending on the bounds of their non-exclusivity) -- e.g., local public goods, national public goods, global public goods, etc.
A tornado siren is a local public good. Anyone living in the area near the siren can hear it. Therefore, it’s non-excludable, locally. And, an individual listening to the siren doesn’t detract from someone else’s ability to hear the siren. Therefore, it’s non-rivalrous.
National defense is a national public good. Anyone within the country’s borders is protected by the country’s defense systems. Therefore, it’s non-excludable, nationally. One person being protected doesn’t prevent other people from being protected. Therefore, it’s non-rivalrous.
Ozone layer protection is a global public good. Everyone in the world benefits from ozone layer protection, regardless of any efforts to restrict access. Therefore, it’s non-excludable, globally. Also, no person is able to prevent another from being protected. Therefore, it’s non-rivalrous.
Why are public goods underfunded?
Public goods are predictably underfunded due to their non-excludability. People realize that they can consume public goods — e.g., rely on a tornado siren — without paying. As a result, producers have trouble collecting appropriate compensation in a traditional market. This problem is called the “free-rider problem” (since non-consumers can free-ride on paying customers).
This is distinct from a private good, such as bread. Bread is excludable because a baker can prevent someone from eating their loaf. If people want the bread, they need to pay for it — making it easy for the baker to collect appropriate compensation.
The solution to the “free-rider problem” is typically government taxation and subsequent spending. This works ok on the local and national levels. However, since (1) international organizations like the United Nations can’t tax and (2) countries have incentive to free-ride, global public goods are especially underfunded.
Categories of Global Public Goods
Global public goods can be categorized into four buckets1:
International security (e.g., nuclear non-proliferation)
International economic stability (e.g., taming global inflation)
International environmental protection (e.g., ozone layer protection)
Knowledge (e.g., new vaccine formula)
Adapted from Stiglitz, “The Theory of International Public Goods and the Architecture of International Organizations” (1995).