Rich countries owe 500 billion US dollars per year in “moral debt” to poor countries, estimates Nobel Prize winner Esther Duflo, who proposes making developed countries assume responsibility for global warming through two taxes.
“This is what I call a moral debt. This is not what it would cost to adapt; that’s not what it would cost to mitigate. This is what we must,” detailed the recipient of a Nobel Prize in economics in an interview with Financial Times Monday, based mainly on the effect of global warming on mortality in poor countries.
“There will be enormous damage,” continues Mme Duflo which is based on a study carried out by the Global Impact Lab in 2020. The latter showed that the number of heat-related deaths was likely to jump in poor countries by the end of the century.
Large CO emitters2
“This damage will be concentrated in poor countries outside the OECD,” she adds, pointing out the responsibility of rich countries for climate change.
The G7 countries (Germany, Canada, United States, France, Italy, Japan, United Kingdom), or 10% of the planet’s population, emit around 25% of CO2 linked to the global energy system, according to the IEA.
Esther Duflo is based on the work of the American economist Michael Greenstone who, based on a given monetary value for a year of life and the effect of global warming on the increase in mortality, estimates the cost of a ton of carbon. Multiplied by the quantity of annual emissions attributable to Europe and the United States, i.e. 14 billion tonnes of CO equivalent2the price of the “moral debt” then rises to 518 billion, maintains Mme Duflo.
To finance it, she proposes increasing the minimum tax rate for multinationals and taxing large fortunes, two mechanisms which she believes would make it possible to cover the annual envelope.
Climate financial aid owed by rich countries to developing countries is currently set at $100 billion per year. COP29, in November in Baku, must establish the new amount beyond 2025.
The future objective, crucial for rebuilding trust between the North and the South, will remain, whatever happens, well below needs: developing countries (excluding China) need 2,400 billion dollars per year by 2030 to finance their transition and adapt to climate change, according to a calculation by UN experts.
At the same time, multiple avenues are at the heart of international negotiations to find how to close the gap, including debt relief for poor countries or financial innovations via new international taxes.