Allocating the Costs of the Climate Crisis: Efficiency Versus Justice
62 Pages Posted: 27 Jul 2011 Last revised: 4 Nov 2011
Date Written: July 27, 2011
In the international negotiations aimed at reaching an agreement to reduce the greenhouse - gas emissions that are driving global warming, the developed and developing countries are talking past each other. The developed world is speaking the language of efficiency, while the developing world speaks the language of justice. Economic theory and the concept of efficiency are fine for answering the question of who should reduce, but that is not the contentious issue. When it comes to the hotly contested issue of who should pay, economic theory offers no guidance, and the developing world is right to insist that we look to principles of justice. This Article considers three kinds of approaches to the who-should-pay question: 1) those that take status quo emissions levels as their starting point; 2) those that allocate emissions rights on a per capita basis; and 3) those that allocate the costs of emissions reductions on the basis of ability to pay.
The Article then considers three possible models for conceptualizing the who-should-pay question in light of widely shared principles of justice: 1) the property model views it as a problem of dividing and allocating a commonly held property right - the capacity of the atmosphere to absorb greenhouse gases; 2) the tort model views it as a question of how to allocate costs when one party causes injury to another and 3) the tax model views it as a situation in which a group of persons or entities are all engaged in a common enterprise to promote the common good and must allocate the costs of that enterprise.
The Article evaluates each of the three approaches to the who-should-pay question under each of these three models of justice, and concludes that the per capita approach is the clear winner. It comports best with the property and tort models of justice, and with respect to the tax model, it comes in a close second. A rough calculation reveals that, if a per capita approach is indeed the most just, then the recent proposals by developing countries that the developed countries each contribute 1% of their gross domestic product to adaptation and mitigation efforts in the developing world is quite reasonable, perhaps even a bargain. Finally, the Article considers and responds to several counterarguments against the per capita approach.
Keywords: climate change, environment, justice, international, cap and trade, per capita, economics, economic theory, distributional justice, carbon tax, contraction and convergence, efficiency, greenhouse gas emissions, property allocation, tax
JEL Classification: K11, K13, K32, K33, K34
Suggested Citation: Suggested Citation