“Polluted Pay”

The final strand of economic realist argument is its hostility to justice. Such hostility comes at a price. It puts economic realists at risk of endorsing strikingly counterintuitive conclusions about international climate policy. Consider, for instance, the Chicago lawyers:

Like it or not, the only way for other nations to ensure Chinese cooperation is through a special inducement, such as cash or extra emissions rights. Here is the harder question: should the United States also be paid for its participation? No one is suggesting such an approach and this should be puzzling.3

[An optimal climate treaty] could well require side payments to rich countries like the United States and rising countries like China, and indeed possibly from very poor countries which are extremely vulnerable to climate change—such as Bangladesh.4

Suppose, as seems clear, that India and Africa would pay little and gain a great deal from an agreement, whereas the United States would pay somewhat more and gain somewhat less ... the standard resolution of the problem is clear: the world should enter into the optimal agreement, and the United States should be given side-payments in return for its participation.5

In short, the Chicago suggestion is that the most vulnerable countries (primarily, poor and low-emitting nations such as Bangladesh) should pay off the large emitters (e.g., the United States and China) to stop emitting so heavily.

This “polluted pay” (and also “polluters get paid”) principle will strike many as outrageous. It also contrasts dramatically with the more familiar “polluter pays” principle in international law. Nevertheless, it cannot be dismissed as simply a peripheral feature of the Chicago view. Instead, “polluted pay” appears central to their basic logic and proposed solution, as the core mechanism through which they confront “International Paretianism” (IP): their demand that all nations benefit from climate policy.

Consider that, according to their favored cost-benefit analyses, poor countries have the most to lose from negative climate impacts, since they are much more vulnerable (largely because they are poor) than the richer, big emitters (since, being rich, they are better able to cope). For instance, Posner and Sunstein emphasize that standard CBA shows that the United States, China, and Russia have relatively little to lose, “the poorest nations will be the biggest losers by far,” and India and sub-Saharan Africa specifically will be “massive losers.”6 Consequently, the critical thought is that poor countries should be willing to “compensate” the big emitters for making cuts that are larger than the big emitters themselves would choose in their own self-i nterest. Such a transaction makes sense because it makes both rich and poor nations better off than they would be otherwise, if global emissions continued to rise unchecked. Crucially, without polluted pay, the allegedly “pragmatic” policy approach will not work to check dangerous climate change. If the big emitters are driven solely by narrow self-interest, there will be a shortfall in their mitigation efforts from the point of view of the more vulnerable. On the Chicago approach, the more vulnerable must find some way to make meeting this shortfall in the interests of the big polluters; hence some form of “side-payment” is absolutely required.

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