THE EQUITY PRINCIPLE

Charges

Economists argue that if the money collected from pollution charges is spent on something as worthwhile as the lost environmental quality, the community is no worse off.

Charges and taxes on individuals can have various impacts on equity. Charging people too high a price for entry into a national park, for example, may restrict the use of a community facility to the wealthier members of the community. It may also be inequitable for users of a scenic area to pay the full cost of conserving an area that is there for the benefit of the whole community as well as future generations.

In general, flat charges - that is, charges that are the same for everyone - have most impact on the poorer members of a community because the charges make up a higher proportion of their income. The impact of a fuel tax will therefore be more painful for lower income households (see table 12.1 below). Similarly, increased charges for industry are also often borne disproportionately by the poor and disad­vantaged, because they are passed directly on to consumers as increased prices for goods and services, which take up a higher propor­tion of a poor person's income. Such charges become, in effect, a regres­sive tax.

Table 12.1 Proportion of budget spent on fuel in UK households

Most affluent 20% 4.2%

Poorest 20% 12.1%

Single pensioners 16.0%

Source (Robinson amp; Ryan 2002: 238)

Increased energy costs aimed at encouraging people to use less energy by purchasing more energy-efficient appliances such as fridges, cars and light globes may impact hardest on those who can least afford to replace such goods. Tenants are also disadvantaged, because landlords are less likely to spend money on energy-saving measures such as roof insulation or solar water heating than homeowners are, since landlords won't per­sonally benefit from the energy savings.

A tax will only work as an incentive to change behaviour if there are alternatives available. Otherwise it only serves to penalise some sectors of the community and is inequitable. For example, a petrol tax has most impact on people who have to travel long distances to get to work and don't have access to public transport. Since it is often the poor who are forced to live in outer suburbs, because that is where the cheapest housing can be found, such a measure imposes its greatest burden on those least able to pay. People in rural areas and on the out­skirts of cities are also worse off because of the longer distances they have to travel. Rural industries will also be badly hit because of the longer distances and the heavy fuel requirements of agricultural machinery.

Carbon colonialism

The Kyoto Protocol recognises that different nations have different responsibilities for reducing greenhouse gases. Nations which are at an early stage of industrial development need to be able to increase their industrial production - which also means increasing the amount of greenhouse gases they produce. The countries that have fully industri­alised are responsible for 80 per cent of the greenhouse emissions added to the atmosphere since 1800, and for 65 per cent of those discharged in the mid-1990s. The USA and the EU are responsible for 45 per cent of CO2 even though they are home to just 10 per cent of the world's popu­lation (Bachram 2004: 1; Ott amp; Sachs 2000: 9). This is why, despite US protestations, the Kyoto Protocol does not include limits for developing nations. Nevertheless, those nations may be subject to limits in the Protocol's second compliance period after 2010.

Emission allowances and targets

By basing greenhouse emission reduction targets on the 1990 emission levels of each country, those that were emitting the most at that time were given a greater allowance under the Kyoto Protocol.

Larry Lohmann (1999) also claims that the Kyoto emission targets are inequitable:

Any measure requiring all countries to reduce emissions by similar percentages, for example, would allow the US to go on producing roughly one-quarter of the greenhouse gases released yearly, even though it has only four per cent of the world's population. Similarly, North-South 'carbon trading' suggests that it is legitimate for rich countries or companies who already use more than their share of the world's carbon sinks and stocks to buy still more of them - using cash which has itself been accumulated partly through a history of overexploiting those sinks and stocks.

Lohmann (2004: 9-11) estimates that carbon pollution rights allocated to large industries in the United Kingdom, as part of the EU Emissions Trading Scheme, will give them the saleable rights to some 5 per cent of the world's estimated assimilative capacity for carbon. Yet he questions whether the United Kingdom has the moral right to grant such rights, given that assimilative capacity 'does not fall, geographically or other­wise, under UK legal jurisdiction, but is a capacity inherently spread around the world'. This is why he argues that the handing out of rights as part of emissions trading schemes is 'one of the largest, if not the largest, projects for creation and regressive distribution of property rights in human history'.

Clean development mechanism

Another problem is that at this early stage of emissions reductions, wealthy corporations and affluent nations are grabbing all the cheap and easy reductions: the 'low hanging fruit'. When, in a few years, poorer nations will be expected to make their own reductions, there will only be expensive options left for them to take:

Instead of being able to meet emissions reductions quotas for the now relatively low price of installing modern pollution reduction technology, developing nations will have to forego production, invent new technologies, or attempt to purchase emissions credits from other countries.

Alfred Mumma (cited in Richman 2003: 155-7) points out that some developing nations do not have sufficient resources to ensure that emis­sions trading or CDM projects are beneficial to them, nor to bargain for the best deals. For example, at the Buenos Aires conference on climate change, while the USA had an 83-person contingent, most African states were only able to send two to four people. In addition, the US and EU contingents were supported by an array of think tanks and business organisations working out what policy positions would be most favourable to their economic interests.

Differences in economic power between nations also make it difficult for poor nations to say no to deals proposed by powerful nations, like the USA, which have the power to influence World Bank lending and impose damaging trade sanctions on nations which are out of favour. The conse­quence of the CDM, of course, is that most of the industrial activity and growth of greenhouse gas generating activity continues to occur in the affluent countries while third world countries are supposed to soak up these extra gases.

What is more, if developing nations have to develop resources and infrastructure to be able to negotiate and monitor CDM projects, this dis­places resources that might otherwise be used for development more closely tailored to the needs of local people. There is also the danger that money directed to CDM projects will come from aid budgets, so that much-needed development assistance is reduced: 'Instead of building wells, rich countries can now plant trees to quot;offsetquot; their own pollution' (Bachram 2004: 3).

Share of carbon sinks

The use of plantations to create carbon offsets occupies millions of hectares of land in poor countries that are then unavailable to local people. This expands the ecological footprint of affluent nations at the expense of other nations: 'Carbon forestry proposes to lessen the atmos­pheric effects of the mining of fossil fuels by colonizing still other resources and exerting new pressures on local land and water rights'.

The idea of tree plantations as carbon sinks also threatens intergener- ational equity:

Temporary carbon sinks credits directly breach this principle by allowing this generation to park carbon in trees and on paper to meet their reduction commitments, while leaving the responsibility for permanent reductions in greenhouse gas emissions to future genera­tions - generations which are likely to already face far stiffer emis­sion reductions to avert the dangers of climate change. (Kill amp; Pearson 2003: 7)

Market-based instruments can restrict access to environmental services that were once communally owned. The commodification and privatisa­tion of forests, for example, can turn ecosystems which some 100 million people depend on for food, medicines, fuel, water and other services into a resource that is owned or managed by corporations for its carbon storing potential and which provides services that must be paid for (Lovera 2005).

'Carbon neutral' schemes can also be seen as inequitable in terms of resource usage:

An organization called Future Forests offers a scheme which allows a British family of 'two parents, two children with a car' to be able to claim it is 'carbon-neutral' at a cost of a mere US$420 a year by planting 65 trees a year in Mexico or Britain.

On this view, US citizens' use of 20 times more of the atmosphere than their Indian counterparts entitles them to use 20 times more other resources too: 20 times more tree plantation land, 20 times more 'carbon workers' to plant and maintain them, and so forth. In fact, it obligates them to do so.

This 'ecological' resource grab is bound to exert new pressures on local land and water rights, particularly in the South, and pass on new risks to people who can ill afford to take them. (Lohmann 2000) Economic instruments fail to recognise that not all emissions have the same social value.

Inequity between businesses

Just as a few nations are responsible for a large bulk of the world's carbon emissions, so do a few large transnational companies contribute more than their fair share. One study found that the largest 100 firms on the UK stockmarket directly contributed 1.6 per cent of the world's emissions:

Just five of these companies - Shell, BP, Scottish Power, Corus and BHP Billiton - generated more than two-thirds of the FTSE 100 aggregate [and] the products sold by five UK oil and mining compa­nies accounted for more than 10% of total global emissions from fossil fuels. (Robins 2005)

Just as the Kyoto Protocol allocates greenhouse gas targets on the basis of past emissions, so the grandfathering involved in allocating green­house gas emission allowances to individual firms allocates allowances or credits on the basis of a company's past emissions and clearly rewards the worst polluters by awarding them the most allowances.

Grandfathering also favours existing firms and disadvantages firms wanting to set up. In order to establish itself, a new firm must buy up enough pollution rights to cover its emissions. Existing firms may be unwilling to make room for the new company. Ironically, it is often easier and cheaper to install clean technology processes when a firm is newly established than to refit an older established firm that has outdated and polluting equipment. A government can increase the amount of rights available to give the new firm an allocation, but this will increase the overall amount of pollution.

On the other hand, auctioning allowances advantages the wealthiest companies and those most able to pass their costs on to their customers. Auctioning also means that each firm has to bear additional costs as they have to buy permits to emit gases they had previously been emitting for nothing. This is especially hard for firms that are competing with firms in other countries which do not have to bear these costs. For these reasons auctioning appears to be less acceptable to industry than grandfathering.

In Australia, tree plantations have become unpopular because of the way they are replacing farmers with absentee landlords and decimating rural communities in the process. Investors spent $3 billion between 2000 and 2005 on tree plantation schemes which will translate into some 105 000 hectares of trees planted each year. One farmer called it 'tax-sub­sidised social annihilation'. Another estimated that the 60 farms that have been bought up in his area by timber companies would take over $75 million 'in income from the area' (Hooper 2005).