13.1.2.3 Distributional considerations

Policies rarely apportion environmental benefits and costs evenly across stakeholders. Even if a policy meets an environmental goal at least cost, it may face political opposition if it disproportionately impacts – or benefits – certain groups within a society, across societies or across generations. From an economic perspective, a policy is considered to be beneficial if it improves social welfare overall. However, this criterion does not require that the implementation of that policy actually improves the specific situation of any one individual. Consequently, as Keohane et al. (1998) argue, distributional considerations may be more important than aggregate cost effectiveness when policymakers evaluate an instrument.

The distributional considerations of climate change policies relate largely to equity. Equity can be defined in a number of ways within the climate context (see IPCC, 2001). Equity and fairness may be perceived differently by different people, depending on the cultural background of the observer. For example, Ringius et al. (2002) view responsibility, capacity and need as the basic principles of fairness that seem to be sufficiently widely recognized to serve as a normative basis for a climate policy regime. These three principles have been used in the evaluation of potential international climate agreements (e.g. Torvanger et al., 2004).

A regulation that is perceived as being unfair or for which the incidence is unbalanced may have a difficult time making it through the political process.^[2] However, distributional considerations are fundamentally subjective, and the most equitable policy may not be the most politically popular one. For example, a policy that focuses the regulatory burden on a low-income subpopulation or country but directs the benefits to a wealthy interest group may sail with ease through the political process. While highly inequitable in costs and benefits, such an instrument is occasionally attractive to politicians. Bulkeley (2001) describes the different interests in the Australian climate policy debate and suggests that industrial emitters managed to steer the country away from ambitious reduction target – and toward an emissions increase – at the third Conference of the Parties in Kyoto.

Due to the fact that there is little consensus as to what constitutes optimal distribution, it can be difficult to compare – let alone rank – environmental policies based on distributional criteria (Revesz and Stavins, 2006). One exception is provided by Asheim et al. (2001), who construct an axiom of equity which, they argue, can be used to evaluate sustainability.^[3] However, while sustainability may be important when evaluating environmental policies, it only captures the inter-generational dimension of distribution and is imperfectly related to political acceptability.