Friday, March 21, 2008

Climate Change and Getting Out of the Way

Imagine for a moment that you are Abdul, a Bangladeshi rice farmer. You have farmed rice your entire adult life, and you plan to continue into the foreseeable future. Unfortunately, Bangladesh is an extremely low-lying nation; almost all of the country's land lies below 10m above sea level, and your farm is no exception. As global temperatures rise and progressively less ice covers the Earth's surface, the sea level will predictably rise slowly over the next century.

Fortunately, Bangladesh already has a system of dykes, originally built to withstand storm surges in harsh weather, which can be bolstered to hold back the rising ocean. Your land will likely avoid becoming permanently submerged. But as sea water mixes with the water table, your rice crops could end up unable to survive the increase in salinity.

Now let's say that we were able to satisfactorily trace the rising sea levels to global climate change, and were able to trace the changes in salinity directly to the rise in sea level, so that we knew that the impacts on your land were the result of climate change. Would there be any injustice here, and if so, what kind of injustice would it be?

On one hand, it does seem like you could reasonably object to any damage directly caused by the increase in sality. Clearly we would have a problem with a group of people directly dumping a bunch of salt on your land and killing your rice crop. It seems that the problem would persist if, using underground piping, they pumped salty water into the water table under your land, even if they never left their own property. I don't see why the injustice would disappear if, using a giant oceanic turbine, the individuals propelled ocean water towards the Bangladeshi dike system, resulting in the salinization of your land. If this would be a problem, then it seems odd to say that there would be no wrong done if, using a giant furnace, the individuals melted away Arctic ice until the sea level rose, sending ocean water into your water table. Finally, then, it seems odd to think that it would be acceptable if the group of individuals released a gas into the atmosphere which would predictably result in ice melting and sea level rise, which would in turn result in ocean water entering your water table. Accordingly, it seems that if we could establish a causal link between the emitters' actions and the salinization of your land, then you would be entitled to compensation.

An important question, though, is what exactly you should be compensated for. For example, what if there were a salt-resistant variety of rice that you could use instead of the kind you had been using? Or what if you could sell your land to prawn farmers, for whom the saltier conditions were ideal? Would these alternatives lessen the injustice done to you? As Nozick writes in Anarchy, State, and Utopia, "Does the compensation to X for Y's actions take into account X's best response to these actions, or not? If X responded by rearranging his other activities and assets to limit his losses (or if he made prior provision to limit them), should this benefit Y by lessening the compensation he must pay? Alternatively, if X makes no attempt to rearrange his activities to cope with what Y has done, must Y compensate X for the full damage X suffers?" Nozick doesn't provide an answer, but it's clear that this is a question that will need to be dealt with in any conversation like this one.

Do we have an obligation to "get out of the way" of damage? Do boundary crossers have an obligation to compensate us for the inconvenience of getting out of the way, and any residual damage? Or do boundary crossers have an obligation to compensate us for the damage that would have occurred if we didn't get out of the way, regardless of what we do? This is no trivial matter. Let's say that you anticipated the sea level rise, and purchased salt-resistant rice in order to be ready. If the salt-resistant rice worked as advertised, and you could continue to farm your rice, would that be the end of the discussion? Could the emitters simply say that you adapted, and therefore they were freed from responsibility? It seems clear to me that you could still reasonably demand compensation for the inconvenience of having to switch crop varieties. And if the genetically modified rice were more expensive, or more difficult to farm, I think you could fairly demand compensation for those things as well.

But would that be the end of it? I think that on some level, this is reasonable. I could see how someone might take the alternative view, and say that you were entitled to compensation for the damage that would have occurred in the absence of adaptive behavior, and that your adaptation should benefit you, and not the boundary crosser. However, I think that perhaps we might placate the holder of this view by conceding that perhaps you are not obligated to adapt, and if you don't, you might be entitled to compensation for the damage that is done, even if you could have prevented it. This too will be objectionable, but it at least offers a starting point for debate.

There is another reason we might want to say that you should only be entitled to compensation for the inconvenience of adapting and for any residual damage: such a policy would be more efficient. Efficiency is certainly not an overriding concern in matters of justice, but that doesn't mean it is unimportant. By compensating for the inconvenience of adaptation and any residual damage, the boundary crosser would be paying for all of the actual external costs produced by her actions. Making her pay for damages which never actualize would seem to mean that we would be, in a sense, "overcharging." For boundary crossings that we don't think are worthy of prohibition, we would effectively rule out an entire class of actually net beneficial actions which, if adaptive measures were not taken, would not be net beneficial.

In the preceding discussion, however, we have implied that by switching to salt-resistant rice, you avoided more costs than you incurred during the switch. In other words, we have assumed that in the absence of compensation, it was profitable for you to switch. Given the fact that in our story you switched, it seems pretty clear that you believed it would be profitable to do so. But what if you were wrong? What if the salt-resistant rice was not a worthwhile investment? Could you reasonably demand compensation for the additional costs produced by your bad decision? On one hand, it seems like you should be held responsible, since it was your choice to try the salt-resistant rice. But on the other hand, it seems like the only reason you bought the salt-resistant rice in the first place was because you knew your land was going to be, essentially, "invaded" by salt "sent" by the emitters. I'm not completely sure what to say about this.

So where do we stand? It seems like we can legitimately say that you have reason to object to the salinization of your land, and that if you could demonstrate a causal link, you could reasonably demand compensation from those responsible. But from there, things get a little less clear. I think I'm comfortable with the idea that you are entitled to compensation for the costs of adaptation, and for any residual damage. I'm less comfortable with the idea that someone should be responsible for "adaptation" costs that actually increased the total costs of the incident (we might make the case that such behavior isn't even properly considered "adaptive"). So I guess I've arrived somewhat short of a firm conclusion. But I hope this will be a good starting point for future discussion.


Anonymous said...

For an economic background on this problem the work of Ronald Coase ( Wikipedia isn't the best explanation I have ever seen but it is a good place to start.

The economic implication is that in order to find an efficient solution we should focus on minimizing transaction costs such that the externality producers can effectively compensate the externality victims to adapt in the most efficient way possible. Introducing government regulation crowds out private solutions that would more effectively address the transaction (information) cost problem.

Kailash Chand said...

Hi Danny Shahar,

First of all srry to that I am not ever say that my blog is my creation.... I am always say this is the collection of global warming information.

Thanks & Warm Regrads
Bhuvan Chand

Danny Shahar said...

Gregory, I take it you're agreeing with my identification of the injustice involved? I ask because Coase stopped short of offering any view on who should have property rights. But if we agree that there's injustice involved, then I agree that the problem in this example is one of transactions costs.

The purpose of this post was not to advocate any government program. My intention was to address one example of injustice, and to develop an opinion regarding the interplay between adaptation and compensation. If I'm understanding your point correctly, it doesn't seem like you're actually objecting to anything I wrote, but rather to what you think my recommended solution would be. Since I haven't even come close to discussing an ideal policy anywhere on my blog, I'm not sure how to respond.

Bhuvan, I apologize for the misunderstanding. In the future, you might consider placing links to the original articles on your blog so that people can see who actually wrote them.

Anonymous said...

Granted I might seem to be jumping the gun somewhat, but my point is to show that in a well developed market the injustice you describe would not exist because the polluter and the victim could efficiently come to a mutual agreement. In other words, having your farm destroyed is only an injustice if you are not compensated for it.

Looking at this in a broader context I would argue that the real injustice is that so many people are not able to participate in the market.

Danny Shahar said...

I think it's mostly a terminological disagreement. I think I'd rather say that the farmer is compensated because the destruction of his farm is an injustice. That is, it's an injustice until the farmer is compensated. So in a completely functioning market there would still be injustice, but those injustices would be corrected through compensation. If your usage of the word differs slightly from mine, though, I don't think that's a real problem.

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