Economist Michael Greenstone details direct-payment climate deal for Global South in forthcoming book

UPDATE - follow-up to Pay the Global South for climate damage, but only if it prices carbon, says economist Greenstone: Michael Greenstone, Director of the Energy Policy Institute of the University of Chicago, has outlined details of a forthcoming book titled Just Economics, co-authored with Nobel-Prize winning economists Abhijit Banerjee and Esther Duflo.

Core Proposal

The central proposal argues that rich countries should pay people in developing countries for climate damage caused by their emissions, on condition that those nations put a price on carbon. Mr. Greenstone stated in an interview that Indians would receive money unencumbered to spend as they wish, and funds would go directly to individuals rather than governments based on OECD emissions damage.

Negotiations And Terms

Mr. Greenstone noted that 82% of future emissions are projected to be outside the OECD, and moral appeals have failed. The financial transfer remains contingent on the Global South adopting carbon pricing as part of a deal. He explained that calculating damage to India is possible, though exact parameters require negotiation, and such agreements could be struck between smaller groups like the European Union and India rather than the whole world.

Market Solutions

The economist highlighted past market-based pollution work, including the Surat Emissions Trading Scheme involving 150 textile plants that achieved 99% compliance through strict enforcement and fine structures. Similar mock trading for sulphur dioxide is underway in Maharashtra for power plants, with ongoing talks in Rajasthan, Uttar Pradesh, Madhya Pradesh, Bihar, and Haryana. He also noted that tracking emissions second by second remains a major challenge for environmental regulation globally.

Context

This proposal arrives ahead of the annual climate meet in Turkey next month, addressing ongoing shortcomings in global climate finance. Carbon pricing and market-based permit trading represent growing economic strategies aimed at making pollution reduction more efficient and enforceable for industrial sectors.