Thursday, November 11, 2010

Solving Global Warming and Poverty Simultaneously

Solve global warming while ending global poverty? Yes, it can be done:
Quiggin: a global emissions entitlement could eliminate global poverty
by John Quiggin

The continuing global financial crisis has distracted attention from more fundamental problems facing the world: the seemingly eternal problem of global poverty and the threat of climate change.

The seeming intractability of these problems promotes an attitude of despair and defeatism. In reality, however, the world has the resources to address global poverty and climate change. The impact on living standards in wealthy countries would be barely perceptible.

Political resistance to, and scepticism about, foreign aid has meant that most countries have failed to deliver on commitments to the very modest target of providing 0.7% of their national income in development aid.

For the moment, after Copenhagen, the same is true of climate change. But the reality of climate change has not gone away and will sooner or later be pressing itself on the attention of even the most delusional sceptics. And the longer the delay the more pressing the need will be for an effective global agreement.

The need for a global agreement on climate change will tie the needs of poor and rich countries together. Potentially it could provide the opportunity for a substantial step towards the end of global poverty.

The only sustainable solution to climate change is a “converge and contract” model in which all countries converge to a common target in terms of emissions per person. Those wishing to maintain higher emissions would need to buy permits from holders in countries willing to reduce emissions below the entitlement.

So far discussion of these issues has focused on negotiations between national governments. Adopting a principle of equal entitlements per person could potentially be the basis of a serious step towards the end of global poverty.

It’s worth looking at some numbers to see whether a global emissions entitlement would be significant in relation to the problem of global poverty. To put it another way, if everyone on the planet had an equal claim on rights to carbon emissions, would the value of those claims be enough to lift poor people out of poverty?

Estimates based on a target CO2 concentration of 450 ppm suggest that emissions per person need to be reduced to somewhere between 1.5 and 2.5 tonnes per person. Such a reduction would probably require a carbon price of the order of $US200/tonne of CO2.

This would, for example, raise the price of coal-fired electricity by about 20c/kWh (making it uneconomic in competition with gas or wind) and raise the cost of petrol by about 50c/litre.

With an entitlement of two tonnes per person per year, and a price of $US200/tonne, a person with no net emissions would attract an entitlement worth $400 per year, or $1.10 per day, which is just below the World Bank’s extreme poverty line of $1.25 per day. So, in principle, the provision of a global emissions entitlement would yield enough income to the billion or so people now in extreme poverty out of that state. As well, assuming they could sell half their entitlement, most of the next billion people in poverty (incomes between $1.25 and $2 a day) would be lifted above $2/day.

The cost to purchasers of emissions in middle-income and rich countries would be about $600 billion a year, or 1% of global income.

Of course, this accounting exercise glosses over all kinds of difficulties in implementation. Nevertheless, the orders of magnitude are close enough to suggest that a policy package combining a global emissions entitlement with a commitment to end extreme poverty in the world would be feasible and, for wealthy countries, eminently affordable.

Even more significantly, the recognition of a universal right to CO2 emissions could form the basis of something even more momentous: a recognition that everyone on the planet has a claim on at least some minimal access to our common resources.

The ultimate goal ought to be one in which, everyone, no matter where they happen to be born has access to the basic requirements for a decent life. That doesn’t entail a world government (at least in the sense in which we typically understand the word “government” today) but it does entail a break with ideas based on nation-states as the ultimate focus of sovereignty.

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