The Developing World, Leading on Climate Change?

By VIVEK DEHEJIA:  International Herald Tribune, November 9, 2011

In what may turn out to be one of the abiding ironies of global geopolitics, leadership on climate change seems to have suddenly passed from the developed to the developing world, as has public anxiety about the damaging effects of a changing climate.

As recently as the Copenhagen summit in late 2009, the West blamed large developing countries such as China and India for scuppering the chances of a “grand agreement” to curb the emission of greenhouse gases. Poor developing countries argued they needed the right to pollute in order to catch up to the West in terms of economic development, while the rich nations clucked that the world could ill afford more carbon emissions.

On the flip side, at the Cancun summit a year later, India’s then environment minister, Jairam Ramesh, was pilloried in the domestic press, and accused, by his own admission, of “caving in to the United States” in the final near-consensus plan that was agreed.

How quickly things have changed.

In the unfolding presidential election campaign in the United States, climate change is not a major issue. According to a recent poll, only 59 percent of Americans even believe that the planet is warming, as compared to 79 percent in 2006.

In the developing world, which was long accused of ignoring the environment in order to focus on growth, concern about the environment has been growing. A 2010 survey found that more than 70 percent of people in China, India and South Korea would be willing to pay more for energy if this would help mitigate the effects of climate change. Fewer than 40 percent of Americans are willing to do that.

While it may not be surprising that Americans’ enthusiasm for tackling climate change is flagging in lockstep with the stagnating economy, the evolution of attitudes in India and elsewhere in the developing world is surely noteworthy.

The conventional wisdom suggests that most people in poorer countries blame the rich world for creating the problem of global warming, which goes hand in glove with the belief that rich countries are both morally and economically responsible for fixing it.

Scientists, meanwhile, have long argued that the developing world is likely to pay the highest price for the effects of global warming. The apparently increasing occurrence of extreme weather events in places like India, such as worsening problems caused by flooding, may be evidence of this point of view, and hence responsible, in part, for the changing mindset in poorer countries.

To the extent that changed attitudes feed through into policy, one might expect increasingly stringent environmental regulation in India in future. That could help mitigate the effects of climate change, but what impact is it likely to have on economic growth? With their rapidly growing populations that harbor ever-higher aspirations, political stability and social harmony in India and China require increased and more widely shared prosperity.

To understand the likely effect of strengthened environmental regulation, it is worth taking a look at the impact, both in terms of well-being and economic growth, of existing regulations.

Unfortunately, the way that economists have generally modeled the relationship between the environment and economic development precludes a fully-fledged answer to these questions. They typically assume that the channel of causation runs from a given level, or growth rate, of economic activity to the level of environmental degradation. This makes it impossible to explore the possibility that causality may run in the opposite direction, feeding back from a worsening environment to economic growth.

Even still, some useful results may be found in a recent study by economists Michael Greenstone of M.I.T. and Rema Hanna of Harvard’s Kennedy School. Using a rich trove of data, the authors conduct a statistical analysis to determine if government regulations have been effective in their stated objectives of improving the quality of air and water, and whether there has been any discernible impact on infant mortality.

The results reveal that air pollution regulations have been effective at reducing ambient concentrations of particulate matter, sulfur dioxide, and nitrogen dioxide, all of which are contributors to global warming. The fact that this has occurred during a period of rapid economic growth is striking.

Likewise, the effect of air pollution regulations on infant mortality works in the “right” direction of improved outcomes, but the effect is statistically indiscernible. By contrast, the water pollution regulations have had no statistically measurable effect on water quality.

So why have the air pollution regulations been effective while the water quality regulations have not? Mr. Greenstone and Ms. Hanna argue that “bottom-up environmental policies,” such as Supreme Court-mandated air quality regulations coming out of public interest litigation, “are more likely to succeed than policies, like the water pollution regulations that are initiated by political institutions.”

This tallies with the opinion of environmental policy experts. Rajendra K. Pachauri, who chairs the Intergovernmental Panel on Climate Change, an organization that shared the 2007 Nobel Peace Prize with former Vice President Al Gore, recently told India Ink that the resources devoted to cleaning India’s rivers have not led to tangible results. He blamed the lack of an “appropriate oversight mechanism” which would create transparency and accountability.

So, do the Greenstone-Hanna findings represent good news? The answer depends on your point of view. To the extent that they establish the effectiveness of air, albeit not water, pollution regulations, supporters of a cleaner environment have something to cheer about. However, this leaves open whether the improved environmental outcome has been “bought” at the expense of a reduction in the rate of economic growth.

Until that larger question is addressed by scholars and policy analysts, critics of more stringent environmental regulation in India and elsewhere in the developing world are unlikely to be silenced.