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It is widely, although by no means universally, held that, to paraphrase Lord Keynes, economic growth by itself is only a means to certain ends. In other words, after an agreeable quality of life has been thereby achieved, society should consider placing its emphasis elsewhere. More explicitly, after reaching some, admittedly difficult-to-define, level of adequate physical well-being (ethical criterion), individuals should no longer expect special assistance by the broader society to help them develop further economically. This philosophy also is consistent with the physical reality inherent in a finite world; that is, there should be incentives to use finite physical resources in ways that lead to quicker achievement of these minimum levels by humanity at large (efficiency criterion).
One aspect of this approach that has not been well explored is what it implies for the measures of efficiency (indices) that should be used to judge various human activities. Rather than indicators such as income or energy use, which are usually open-ended, it implies the use of thresholds or indicators that actually have fixed ranges, that is, have a maximum corresponding to achievement of the level of adequacy, as already incorporated in the UN scale, for example.
It is thus no accident that our indices both for ability to pay (ATP) and for responsibility contain indicators with thresholds and that ATP is also based on an indicator with finite extent, PQLI. This means that as 100 per cent is neared, the indicator gives little credit for further advancement. Incentive then shifts to promotion of other objectives. If, on the other hand, an open-ended measure such as income is used, an extra 10 per cent looks to be as good for the rich as for the poor, no matter how rich the rich might become.
Implicit in the use of PQLI, therefore, is acceptance that the objective of development assistance and policy should be an improvement in the quality of life. It has long been recognized, however, that there exists a strong positive relationship between GNP (GDP, PPP) and many measures of quality of life, such as PQLI. As a result, it has been argued that PQLI tells us nothing new and should be rejected as an indicator. There are two counter-arguments: First, although there is a strong overall correlation, the GNP to PQLI ratios are quite different for different countries, an important consideration when assigning international responsibilities and costs. Second, it sends the quite different message that simple increases in per capita income should not be taken as ends in themselves, but as means to improve the quality of life.
Although the index proposed here includes a measure of historical responsibility (based on past greenhouse gas emissions), it counts for only half of the total obligation. The other half is based on current income. Thus, the obligations of countries that have economic problems, such as those in Eastern Europe and the former USSR, will be adjusted accordingly. In addition, only emissions since 1950 are counted, a concession to the political and practical difficulties of determining responsibility previous to the modern era. Combining both indicators also takes into account circumstances in which past emissions may be high, but current income low (for example, Eastern Europe), or vice versa (for example, Norway, which has been blessed with substantial hydropower).
We have now looked separately at indices of both responsibility and resources to determine the relative obligation for the costs of a global programme. Ways to combine the two together would be determined by direct negotiation in international fore, although the simplest combination is presented here as a start. What this chapter does is derive a way of measuring where the world is today, in terms of the present distribution of wealth and greenhouse responsibilities. Before we can judge the distribution of payments for greenhouse remediation projects, however, we need indicators of where the best projects are and where the world ought to be heading (the Who Can? and Who Should? questions of the bottom line on Figure 4.1). This is the task of the next chapters.
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