The basic issue: distribution of jurisdiction – distribution of benefits

Environmental problems are natural phenomena. They are caused by human activities. But once so caused, they follow the laws of nature. Thus, they tend to ignore political boundaries drawn by man. But the regulatory powers to deal with these problems are distributed according to the principle of territorial jurisdiction. No state has jurisdictional powers outside its borders unless the state where such powers are exercised consents to it. That principle of the territorial distribution of regulatory powers is complemented by the principle of freedom in areas where there is no territorial jurisdiction.

The first problem triggered by this situation is that of effectiveness. How can a state deal effectively with a problem that has its origins elsewhere? Can it be expected that a state deals effectively with a problem the consequences of which are felt elsewhere? In economic terms, this is the problem of externalities. Activities of events taking place in one state have (positive or negative) effects on the territory of other states or in areas beyond national jurisdiction. These externalities pose the major problem in terms of both regulatory effectiveness and equitable allocation of burdens and benefits.

The territorial division of the land surface of the Earth has another, yet related consequence: the benefits derived from the resources situated in a particular territorial state belong to that state. This has been called the principle of sovereignty over national resources.