By James K. Boyce, Director of the Political Economy Research Institute’s program on Development, Peacebuilding, and the Environment and Professor, Department of Economics, University of Massachusetts
To combat global warming we must confront two tragedies of open access.
The first used to be called the “tragedy of the commons,” a misnomer since societies often devise rules to manage common property sustainably. The problem is that when there is open access to a scarce resource, individuals have no incentive to conserve it and instead will overexploit it, even to the point of collapse. In this case the scarce resource is the limited capacity of the Earth’s biosphere to absorb and recycle our emissions of carbon dioxide and other greenhouse gases.The second tragedy of open access is less widely recognized but no less real. Although in theory open-access resources are equally available to all, in practice some people are, in George Orwell’s haunting phrase, “more equal than others.” Open access often generates short-run benefits for those who least need them and long-run costs for those who can least afford them. Global warming is a good example. Rich countries burn more fossil fuels than do poor countries, generating more carbon dioxide emissions. And within any given country, richer people benefit most from the fossil-fueled economy by virtue of the facts that they consume more goods and services.
Meanwhile it is poor countries and poor people who stand to bear the greatest costs of global warming. They are less able to invest air conditioners, sea walls, or other adaptations. They live closer to the edge: the rich can weather a 20 percent decline in their real incomes, for example, with relative ease, but for the poor the same decline may be the margin between life and death. And the places that climate models show will be hit hardest by global warming — including drought-prone regions of sub-Saharan Africa and coastal south and southeast Asia — are home to some of the world’s poorest people.
Crafting climate solutions requires us to address both tragedies. At the international level, the key to a comprehensive agreement to reduce emissions is the principle that every person in the world has an equal right to the planet’s limited carbon-storage capacity. In exempting the developing countries from emission targets, the Kyoto Protocol implicitly embraced this principle. But by basing targets for industrialized countries on past emissions, Kyoto ignored it and instead rewarded countries for their past pollution. To devise an accord that is acceptable to all nations, it will be necessary to build it around the principle of equal entitlements.
Does this mean that the majority of people in the industrialized countries must suffer a cut in their standard of living to safeguard the global environment? Not if the same egalitarian principle is applied within countries, too. The creation of national “sky trusts,” which receive revenue from the sale of carbon permits to the firms that bring fossil fuels into the economy, and then recycle the money equally to every woman, man, and child, will protect the real incomes of lower-income and middle-income households. The cost of carbon permits ultimately will be passed to consumers, so all households pay more for goods and services, with the amount depending on how much they consume. Upper-income households, who generally consume the most, will pay the most. Since all receive the same sky-trust dividend, households who consume less than the average will come out ahead financially. Because incomes and consumption are skewed toward the rich in every country, this revenue recycling would protect the real incomes of the middle class as well as raising the incomes of the poor.
Well-designed policies can combine environmental protection with income protection for the majority of the world’s people. This combination is not only ethically desirable, but also politically necessary to win support for effective policies to fight global warming.