In the comments TGGP asks

Sounds like a Kaldor-Hicks efficiency type standard. The money outweighs the warming effects because if we transferred the money to those effected they would prefer to that outcome to one in which we restricted carbon and made no transfers. However, in all likelihood we probably won’t transfer much money. Foreign aid is a miniscule (yet very hated) part of the federal budget. According to Bruce Bueno de Mesquita, it doesn’t even go to the benefit of poor people in other countries. Rather it is how our government bribes other governments to behave to our liking.

Yes, the logic is Kaldor-Hicks. There are two points as I see them.

1) Much of the analysis suggests that Waxman-Markey will only have an effect on warming if it is a first step towards global reductions in emissions. These global reductions will have to come from developing countries as well as developed countries. Therefore, implicit in W-M is the assumption that we will push the developing world into accepting carbon reduction. Indeed, the proposed tariff tack on is about just that.

Well, if we are pushing the developing world to accept carbon restrictions and the point of carbon restrictions is that we will save the developing world from climate change then we are flirting with an global environmental nanny paradigm. Even if your point is that these are two separate groups of developing countries – China and India emit but Bangladesh is flooded – you still have to argue that it’s worth slowing India’s growth rate and prolonging rural poverty. Is this a fair trade now that you are looking at developing vs. developing?

2) Do proponents of Waxman-Markey see this as a stealth wealth transfer from the US to the developing world – aid disguised as environmental policy? If the reason Waxman-Markey makes sense is because it saves lives in the developing world but the developing world would rather have food, shelter and education then you seem to be implying that we want to help the poor but using the specter of global warming is the only way to do it.

My question is, is this true? Are we sure, because there looks to be some serious efficiency loss in pursuing this proposal and it’s not even certain the proposal will work. If Waxman-Markey proponents are truly ready in their heart-of-hearts to devote one percent of US GDP to helping the poor then we need to at least have a sit-down about converting this into real aid.

The stakes are high. Waxman-Markey might save some poor children 100 years from now. One percent of US GDP could definitely save some poor kids right now. If we are serious about really wanting a $130 Billion a year poverty relief program then the rules potentially change. The World Health Organization has a current budget of around $4.2B. UNICEF around $3.2B. The World Bank loaned at total of $24B in 2007 but if I am reading the budget right, their net “loss” was only $2B. Reading the USAID budget tables is no joke but my best estimate is that we are giving, right now, no more than $25B in anti-poverty aid. I can’t readily tell how much of this is geo-political in nature or an effort to support US agriculture.

In short, a one percent commitment, devoted solely to poverty alleviation, is a major step. There are real lives that could be saved right now. If people are serious about this – if helping the poor is the true motivation for Waxman – Markey, then it is worth the conversation. It is at least worth detailing why W-M is a better expenditure of 1%.