Contents - Previous - Next

This is the old United Nations University website. Visit the new site at


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.



Agarwal, A, and S Narain, 1991. Global Warming in an Unequal World: A Case of Environmental Colonialism, Centre for Science and Environment, New Delhi, India

Arrhenius, S. 1896. 'On the Influence of Carbonic Acid in the Air Upon the Temperature of the Ground,' Philosophical Magazine and J of Science S15, 41(251): 237-276

Feiveson, H A, et al., 1988. 'Princeton Protocol on Factors That Contribute to Global Warming,' Woodrow Wilson School of Public and International Affairs, Princeton University, Princeton, NJ, USA

Grubb, M, 1989. The Greenhouse Effect: Negotiating Targets, Royal Institute of International Affairs, London, UK

Gurney, K., 1991. 'National Greenhouse Accounting,' Nature 353: 23

Krause, F. W Bach and J Koomey, 1992. Energy Policy in the Greenhouse, J Wiley & Sons, New York

Michaelis, P. 1992. 'Global Warming: Efficient Policies in the Case of Multiple Pollutants,' Environmental and Resource Economics 2: 61-77

Morris, M, 1979. Measuring the Condition of the World's Poor, Overseas Development Council, Elmsford, NY, USA

Mukherjee, N. 1992. 'Greenhouse Gas Emissions and the Allocation of Responsibility,' Environment and Urbanization 4(1): 89-98

NZMERT (New Zealand Ministry of External Relations and Trade), 1990. 'United Nations Handbook,' Wellington

Smith, K R. 1977. 'The Interaction of Time and Technology', Ph.D. Dissertation, University of California, Berkeley

Smith, K R. 1989a. 'Developing Countries and Climate Change: Implications for Risk Management,' in D. Street and T. Siddiqi, eds, Proceedings of the Workshop on Responding to the Threat of Global Warming: Options for the Pacific and Asia, pp 237-2-39, Argonne National Lab/East-West Center, Argonne, IL, USA

Smith, K R. 1989b 'Have You Paid Your Natural Debt?' Environment and Policy Institute, EastWest Center, Honolulu, Hl, USA

Smith, K R, 1991. 'Allocating Responsibility for Global Warming: The Natural Debt Index,' Ambio 20(2): 95-96

Smith, K R. and D R Ahuja, 1990. 'Toward a Greenhouse Gas Equivalence Index: The Total Exposure Analogy,' Climatic Change 17: 1-7

Smith, K R. J Swisher, R Kanter and D R Ahuja, 1993. 'Indices for a Greenhouse Gas Control Regime That Incorporates Both Efficiency and Equity Goals' Chapter 5 of C Suddayas, ed, Energy Investments and the Environment, Economic Development Institute, World Bank, Washington DC

Solomon, B D, and D R Ahuja, 1991. 'International Reductions of Greenhouse-Gas Emissions: An Equitable and Efficient Approach, 'Global Environmental Change 1(4): 343-350

Summers, R. and A Heston, 1988. 'A New Set of International Comparisons of Real Product and Prices: Estimates for 130 Countries, 1950-1985,'] of the International Association for Research in Income and Wealth 34(1): 1-26

Summers, R. and A Heston, 1991. 'The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950-88,' Quarterly l. of Economics (May): 327-368

UN (United Nations), 1989. 'Evolution of the Methodology for the Scale of Assessments and Its Current Application,' Committee on Contributions, A/CN.2) R.532, New York City, USA

UN, 1992. 'Report of the Committee on Contributions,' GAOR 47th Ses., Supp.11, New York City, USA

UNDP (United Nations Development Programme), 1991. Human Development Report, Oxford University Press, NY, USA

UNEP (United Nations Environment Programme), 1992. 'Report of the Seventh Meeting of the Executive Committee of the Interim Multilateral Fund for the Implementation of the Montreal Protocol,' UNEP/OzL.Pro/Ex.Comm/7/30, NY, USA.

USNAS (US National Academy of Sciences), 1991. Policy Implications of Greenhouse Warming Report of the Mitigation Panel, NAS Press, Washington, DC, USA

Westing, A H. 1989. 'Law of the Air,' Environment 31(3): 34

Wirth, D A, and D A Lashof, 1990. 'Beyond Vienna and Montreal, Multilateral Agreements on Greenhouse Gases, 'Ambio 19 (6-7): 305-310

World Bank, 1990. World Development Report, Oxford Press, NY, USA

World Bank, 1992, 'Global Environmental Facility: The Pilot Phase and Beyond,' with the UNDP and UNEP, Working Paper1, Washington, DC, USA

Contents - Previous - Next