Rich countries shouldn’t pay poor ones for alleged climate sins

At the COP27 climate talks in Egypt, poorer countries are demanding high compensation payments from rich countries because, they claim, it is rich countries that bear the greatest responsibility for climate change. The media and “climate activists” paint a black-and-white picture of innocent poor countries (“victims”) and guilty rich countries (“perpetrators”). But it is by no means that simple.

Of course, in absolute terms, the US and other developed countries emit more CO₂ than developing countries in Africa. But Yale University’s Environmental Performance Index (EPI), which regularly rates countries on their environmental performance, awards the worst climate change ratings to poor countries. The 2020 Yale EPI Index included a separate chapter (Chapter 11) rating countries on their climate change performance: “Results in the EPI can help identify which countries are on track to decarbonise and which countries must accelerate progress toward a sustainable future.”

The result: The best climate change ratings went to countries such as Denmark, the United Kingdom, Romania, France, Switzerland, Norway, Luxembourg, Sweden and Finland. “Sub-Saharan Africa and Southern Asia exhibit the lowest average regional performance, with countries from these regions receiving 16 of the bottom 20 scores.”

The EPI’s range of indicators includes “Greenhouse gas emission intensity,” i.e., CO₂ emissions per unit of GDP, the growth rate of CO₂ emissions, and emissions per capita.

Many developed capitalist countries have long since succeeded in decoupling CO₂ emissions from GDP growth – but the same cannot be said of lots of countries in Africa, most of which are economically unfree. While environmental activists lay the blame for climate change on capitalism, Yale University’s climate protection ranking finds that countries with a high degree of economic freedom are better performers than those that are economically unfree.

The reason why emissions are lower in absolute terms in developing countries (especially in Africa) is simply their poor economic development. These countries have not managed to provide a decent standard of living for their people and their economies are not free. This is the explanation for both their poverty and their – in absolute terms – lower CO₂ emissions.

And these countries are now demanding money from developed countries to fight climate change. However, as countless development aid programmes have demonstrated, direct grants have not worked in the fight against poverty, because much of the aid ends up being funneled into the wrong channels – to the corrupt governments in these countries. The widespread view that corruption is particularly prevalent in capitalist countries is wrong, as demonstrated by a comparison of Transparency International’s Corruption Perceptions Index (CPI) and the Heritage Foundation’s Index of Economic Freedom. The countries with the lowest levels of corruption are the same countries that have among the highest levels of economic freedom. Of the 10 countries with the least corruption, all, without a single exception, are in the “free” or “mostly free” categories in the Index of Economic Freedom. Conversely, countries that rank in the bottom 10 in the corruption index are also countries that are economically unfree.

Dambisa Moyo was born in Zambia, studied at Harvard, and earned her doctorate at Oxford. In her book Dead Aid, she singles out development aid from rich countries as one of the major causes of hardship on the continent. Over the past 50 years, Moyo wrote in 2009, more than a trillion dollars in development-related aid was transferred from rich countries to Africa. “But has more than US$1 trillion in development assistance over the last several decades made African people better off? No. In fact, across the globe the recipients of this aid are worse off; much worse off. Aid has helped make the poor poorer, and growth slower… The notion that aid can alleviate systemic poverty, and has done so, is a myth. Millions in Africa are poorer today because of aid; misery and poverty have not ended but have increased.” Moyo cites a World Bank study that states that more than 85 per cent of aid was used for purposes other than originally intended, often diverted to unproductive projects.

It will be no different if billions of dollars are transferred from rich to poor countries to mitigate the impacts of climate change. In the fight against climate change, it is not development aid – and certainly not the abolition of capitalism – that will help, but more capitalism.

Rainer Zitelmann is author of  “The Power of Capitalism”

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