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The Economics of Climate Change

Climate Change and Inequality

How emissions are unequally distributed between rich and poor, and how climate impacts fall hardest on those who contributed least.

Climate change is deeply connected to inequality, both in who causes emissions and who suffers the consequences.

Unequal emissions

  • Between countries: the United States, the European Union and other rich countries have emitted most of the carbon dioxide released since the Industrial Revolution. China is now the largest annual emitter, but its emissions per person, while above the world average, remain below those of the United States. India’s emissions per person are well below the world average.
  • Between people: research by Lucas Chancel and colleagues at the World Inequality Lab found that the richest 10 percent of people worldwide account for close to half of global emissions, while the poorest half account for around a tenth. Consumption, travel and investments of the very rich generate far more emissions than those of the poor.

Unequal impacts

Those who contributed least often face the greatest harm:

  • Poorer countries in hot regions face larger damages from heat and weather extremes, and have fewer resources to adapt.
  • Poor households within countries live in more exposed places, work outdoors, and have less savings and insurance.
  • Small island states face existential threats from sea-level rise.
  • Future generations will bear consequences of today’s emissions.

Research by Marshall Burke, Solomon Hsiang and Edward Miguel suggested that warming has already widened the income gap between hot, poor countries and cooler, rich countries.

Climate justice

These patterns underlie calls for climate justice: that responsibilities for cutting emissions and paying for adaptation should reflect historical emissions, capability and need. They shape debates over climate finance, loss and damage, and how fast different countries should cut emissions.

Policy design

Climate policies themselves can affect inequality. For example, carbon taxes can hit poorer households harder because energy is a larger share of their spending. Returning carbon tax revenue as equal payments to households, as in some proposals and Canada’s former rebate system, can offset this.

Two families, one heatwave

During a heatwave, a wealthy family in an air-conditioned home works indoors and stays comfortable. A construction worker's family lives in a crowded, poorly ventilated home, and he must work outdoors. His productivity and health suffer, and he loses wages. The same heatwave hits these households very differently.

Thinking everyone contributes equally to climate change

Emissions vary enormously by country, income and lifestyle. The richest people and countries account for a far larger share of emissions than the poorest.

Key takeaways
  • Rich countries have emitted most historical carbon dioxide; India's per person emissions are below average.
  • The richest 10 percent of people account for close to half of global emissions.
  • Poorer countries, households and future generations face the greatest harm.
  • Climate justice and policy design aim to address these inequalities.
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