Global South must be paid for climate damage, but only if it prices carbon, argues economist, Pg10

Key Highlights:

• Economist Michael Greenstone, alongside Nobel laureates Abhijit Banerjee and Esther Duflo, proposes that wealthy nations compensate developing countries for climate damage.
• The central idea, detailed in their forthcoming book Just Economics, suggests direct payments to individuals in the Global South, not governments.
• These payments are contingent upon the recipient countries implementing carbon pricing mechanisms.
• The Organisation for Economic Co-operation and Development (OECD) countries are identified as major historical contributors to atmospheric carbon.
• Greenstone advocates for market-based solutions, citing the success of the Surat Emissions Trading Scheme in India for pollution control.

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Detailed Insights:

• The proposal aims to address climate justice by acknowledging the disproportionate impact of historical emissions from developed nations on the Global South.
• Payments would be "unencumbered," allowing individuals in developing countries to utilize funds as they deem fit, bypassing governmental channels.
• The condition of carbon pricing is designed to incentivize emission reduction efforts in rapidly industrializing economies.
• The Surat Emissions Trading Scheme, launched in 2019, demonstrated high compliance (99%) and reduced particulate pollution by 20-30% when robustly enforced.
• This market-based approach suggests that effective enforcement and clear pricing signals can significantly reduce pollution at a lower cost.
• The proposal suggests that such agreements could be bilateral, for instance, between the European Union and India, rather than requiring global consensus.

Key Concepts Involved:

• Carbon Pricing: A mechanism that assigns a monetary cost to greenhouse gas emissions, making polluters pay for the climate damage they cause.
• Emissions Trading Scheme (ETS): A market-based approach, also known as "cap-and-trade," where a limit is set on total emissions, and permits to pollute are traded among entities.
• Global South: A term referring to low- and middle-income countries, primarily across Asia, Africa, and Latin America, sharing common developmental and historical concerns.
• Organisation for Economic Co-operation and Development (OECD): An intergovernmental economic organization of mostly high-income, democratic countries that promotes economic progress and world trade.