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close this bookThe Global Greenhouse Regime. Who Pays? (UNU, 1993, 382 p.)
close this folderPart II Resource transfers
close this folder6 North-South transfer
View the document(introduction...)
View the documentObligation to pay indices
View the documentRedistribution of incremental cost
View the documentBenchmarks
View the documentUN scale of payments
View the documentFinancing mechanisms
View the documentConclusion
View the documentNotes and references


According to this approach, substantial transfers to the South may be required to fund the technological and economic costs not covered by its own obligation to pay. These fall within the range $29-34 billion per year for thirty years, depending on the underlying marginal cost assumptions. Thirty billion dollars per year is a reasonable mid-point estimate of the justified, minimal and additional financing needed by the South to achieve its required reduction targets. To this amount should be added a substantial sum to 'kickstart' the sustainable development process by training the scientists and technicians who will be needed to implement an abatement strategy in the South.

Thirty billion dollars or more per year is a lot of money. For example, current official development assistance (ODA) for all energy investment in the South currently amounts to about $10 billion per year. Total ODA ran at about $30 billion per year during the 1980s (reaching $46.9 billion in 1989 for the OECD). Total foreign direct investment to all developing countries was about $13 billion per year in the same period. Enabling the South to participate in a global climate change agreement would result in transfers on a scale that would create a new foundation for the political-economic interdependence of the North and the South, on a scale with current aid and foreign investment.

Conversely, world and national GDP growing at 3 per cent per year will increase by 240 per cent over the same period, rendering the annual transfer cost a declining portion of donor country GDP. The transfer to the South of about $30 billion per year pales into insignificance compared with agricultural production subsidies ($50 billion per year in the EC); military spending in the North or the South; or Third World debt (which resulted in a South-to-North net financial flow of $42.9 billion in 1989). There is little doubt that the North can afford to pay $30 billion per year even if it would be difficult to muster the political will needed to do so.