Home / Opinion / Columns /  It’s time to institute a climate change reparations fund

Around the world, we have had one of the worst ever summers in terms of extreme weather events. Unprecedented floods in western Germany and Belgium, drought and wildfires in the Pacific Northwest, flash floods in the Chinese city of Zhengzhou, mudslides in Maharashtra and heatwaves in Scandinavia and Russia are only the most egregious examples.

Researchers are just beginning to unravel the web of climatic, environmental and social factors that have contributed to these catastrophic events, but climate change is emerging as a major common factor. As global warming continues apace, extreme weather events have been rising sharply. The frequency and intensity of heatwaves, droughts, downpours, storms, hurricanes and floods have jumped in the last decade. The explanation for the record-breaking heatwave in North America’s Pacific Northwest lies in the formation of a ‘heat dome’ trapped in place by a high-pressure westerly jetstream. The strength of the heat dome that Canada witnessed was so statistically rare that one might normally expect it only once every several thousand years, on average. Climatologists believe that this high-pressure trap, called an ‘omega block’ after its Greek-letter shape, will be more likely in the future because of the relentless warming of the Arctic region. Recent floods and mudslides were caused by downpours that in many instances beat all previous precipitation records over a 24-hour period. For every additional 1° Celsius of warming, the atmosphere is capable of holding an additional 7% of water vapour, and this has already had devastating consequences from Germany to Maharashtra to Henan.

If there is one lesson from this summer, it is that postponing action on climate change or ‘climate delay’ is no longer an option. In the last two decades, the world moved from denying the existence of climate change, a state of ‘climate denial’, to climate delay as a tactic. Today’s proponents of climate delay come either from the earlier climate-denial camp or from one arguing that humankind will invent technologies to eventually cope with climate change. Emerging countries have been demanding tough climate action from developed nations in a variation of this climate delay strategy. The idea that “it is now our turn to pollute" since “you did it over the past 200 years" could unfortunately boomerang on all of humanity with its negative consequences.

Since the 2015 Paris Agreement on climate change, emerging markets have generally been asking developed countries to pledge stronger action, while they themselves have undertaken milder pledges and set longer timelines for carbon neutrality. This approach is no longer tenable. The only way that all countries can be made to act adequately fast is to create a global climate change reparations fund (CCRF). Faster collective action will benefit both current recipients and contributors. Economists have long recognized that this type of collective action problem requires strong incentivization.

The dictionary meaning of ‘reparations’ is “the action of making amends for a wrong done, by providing payment or assistance to those who have been wronged." The practical implementation of a reparations programme runs into challenges about who has wronged whom, and how compensatory assistance may be calculated and funded. Countries generally fall into three categories: 1) Developed markets like the US and Europe that were the initial carbon emitters; 2) Developing markets that began the process of growth and change after World War II such as Japan, China, Korea and India; and 3) Developing markets, particularly those in Africa, that are still at an early stage in their development journey, and, in this special context, island nations like the Maldives and Marshall Islands that are at risk of drowning. There is ample evidence to suggest that a significant contribution to our 1.2° Celsius warming from pre-industrial times can be traced to countries in the first category. Those in the third category should be the direct beneficiaries of any reparations programme. The story of those in the second group is mixed, with countries like China being significant recent contributors to global warming and those like India being both contributors and victims. These countries should be contributors as well as recipients of reparations, perhaps receiving an evolving net amount based on the boldness of their climate action.

I generally prefer market-based solutions to global problems. However, markets are typically unable to evaluate risks and returns over time-frames that stretch across centuries and they can fail the principle of longitudinal fairness, which is the issue at the nub of our climate change debate. Emerging markets have not raised their voices sufficiently on this matter, preferring instead to play the tactical climate delay game.

With the US returning to the table at the COP26 meeting in Glasgow, it is time to put in a comprehensive and fair CCRF. This fund should be established for the benefit of nations in their early stages of development and should accept both funds and in-kind technologies as contributions. A CCRF would be a much better way to encourage binding targets for carbon neutrality across the world than the current approach.

P.S: “We are caught in an inescapable network of mutuality, tied in a single garment of destiny. Whatever affects one directly, affects all indirectly," said Martin Luther King, Jr.

Narayan Ramachandran is chairman, InKlude Labs. Read Narayan’s Mint columns at

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