How to share the burden of combating climate change

Vijay Joshi 06 November 2009

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There is now a growing consensus among governments that aggressive climate change mitigation would be desirable, though they remain bitterly divided about how the associated burden should be shared between advanced and developing countries (see World Bank 2009 Chapter 5 for an overview).

Fair distribution of the cost of mitigation is important on moral grounds and for obtaining universal participation. But the concept of ideal fairness is highly controversial, and philosophers have debated it for centuries. Progress in the pivotal climate-change negotiations in Copenhagen will require the adoption of a non-ideal but acceptable notion of fairness that could bridge differences in negotiating positions.1

Developing countries have two different lines of argument about fair burden sharing. The first concerns “historic responsibility” for the accumulated stock of carbon emitted by the developed economies. These advanced countries have used up a large part of the safe carbon-absorbing capacity of the atmosphere and should therefore compensate the developing countries for this “expropriation”. This is a persuasive point. Even so, it runs up against some powerful moral intuitions. The rich countries did not expropriate knowingly. They acted in the belief, universally held until quite recently, that the atmosphere was an infinite resource. Moreover, the “expropriators” are mostly dead and gone. Their descendants, even if they could be identified, cannot be held responsible for acts they did not themselves commit. These points do not entirely overturn “historic responsibility” since developed economies benefit hugely from their past carbon-intensive industrialisation. Even so, the extenuating factors alluded to above surely count to reduce the fair liability of the advanced countries.

The second line of argument advocated by the developing countries concerns the fair distribution of the burden of reducing the future flow of carbon emissions. Suppose overall global emissions are controlled by issuing tradable carbon permits. The developing countries argue that the permits should be allocated on a population or per capita income basis. The rationale of the former is rights-based. Each human being has an equal right to use global carbon space. The rationale of the latter is egalitarian; permits should be given to the very poor because they are very poor. Both these principles imply that most of the permits should be given to developing economies. This is because these countries contain most of the world’s people as well as most of the world’s poor. The trouble is, however, that the above principles are not generally accepted in international relations. There is no agreement that natural resources should be equally shared. Why should the atmosphere be any different? Nor is there any enthusiasm about stringent egalitarian obligations. Foreign aid has never reached even half the UN target of seven-tenths of one per cent of advanced countries’ GDP.

The way out of this maze is to focus on a principle that is widely accepted as a minimal requirement of fairness. The principle is simply “do no harm”. In the climate change context, doing no harm means that developing economies should be enabled to reduce their cost of mitigation to zero until they have eliminated abject poverty. In practical terms, this would imply allocating enough tradable carbon permits to poor countries to allow them to maintain the growth of their living standards along the business-as-usual path, say for the next two decades. (Two decades is an average. The time-horizon would be less for China and longer for Africa.) After that time, developing countries’ permit allocations would be progressively reduced. Climate models are capable of calculating the requisite time path of permit allocations (see, for example, Jacoby et al. 2008). (So far, I have assumed that the instrument of mitigation is tradable permits. Alternatively, a worldwide carbon tax could be adopted. In addition, carbon-saving technology could be transferred, when it becomes available. This makes no essential difference to the above argument. There would have to be a revenue or technology transfer to developing economies of an amount sufficient to reduce their cost of mitigation to zero for a defined period.)

The no-harm approach to burden sharing has many desirable features. It takes some account of ”historic responsibility”. This is because a significant portion of the damage inflicted by the accumulated large stock of carbon consists of raising the cost of future mitigation for all countries. In the no-harm scheme, however, developing countries’ mitigation costs would be covered for a defined period. The scheme also takes some account of rights-based and egalitarian arguments by skewing the allocation of permits towards poorer countries, which would result in a significant financial transfer to them, unlike an allocation of permits based on current emissions, which would strongly favour the advanced countries. But the transfer to the developing countries would not go beyond offsetting the welfare cost of mitigation policies for an agreed length of time. This would be more acceptable to the governments and citizens of advanced countries than distributing permits on a population or per capita income basis, which would result in much larger annual financial transfers to developing countries, several times larger than foreign aid flows today.

The stakes in climate change are so high that inflexible bargaining positions would be a recipe for disaster. The “no harm” principle could provide the basis for an acceptable scheme, since it would go some way towards meeting the concerns of all negotiating parties.

Footnotes

1 Some of the arguments in this article are based on my joint paper with Urjit Patel (Joshi & Patel, 2009), which also contains a detailed critical examination of India’s position in climate change negotiations.

References

Jacoby, Henry D., Mustafa H. Babiker, Sergey Paltsev and John M. Riley (2008), “Sharing the burden of GHG reductions”, The Harvard Project on International Climate Agreements. October.

Joshi, Vijay and Urjit Patel (2009), “India and Climate Change Mitigation”, in Dieter Helm and Cameron Hepburn(eds.) The Economics and Politics of Climate Change, Oxford University Press, 2009.

World Bank (2009), World Development Report 2010

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Topics:  Environment Global governance

Tags:  climate change

Fellow of St John's College, Oxford, and Emeritus Fellow of Merton College, Oxford.

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