Pay the Global South for climate damage, but only if it prices carbon, says economist Greenstone

Michael Greenstone | Photo Credit: michaelgreenstone.com

Rich countries should pay people in developing countries for the climate damage their emissions cause, on condition that those countries put a price on carbon. That is the central proposal of a forthcoming book, Just Economics, by University of Chicago economist Michael Greenstone, with Nobel-Prize winning economists Abhijit Banerjee and Esther Duflo.

“We’re proposing Indians receive money unencumbered,” Mr. Greenstone, who is Director, Energy Policy Institute, University of Chicago, said in an interview. “Spend it on whatever you want. That is based on the amount of damage the OECD countries’ emissions are doing.” The payment, he said, “would go directly to the people, not to the government.”

The Organisation for Economic Co-operation and Development (OECD), is a grouping of mostly wealthy, industrialised countries that has contributed to most of the accumulated carbon in the atmosphere driving global warming. This contrasts with the “Global South”, meaning low- and middle-income countries but whose emissions are fast rising.

“82% of the emissions going forward are projected to be outside the OECD and moral appeals have failed,” he reckoned, “the better angels-argument ain’t working.” However the transfer would be “contingent on the Global South adopting carbon pricing. It’s not for free. It’s a deal. You have to give something to get something.”