Basic compensation for victims of climate change.

• Author: Farber, Daniel A.

INTRODUCTION

Global climate change is the greatest environmental challenge facing the world today. The most urgent issue is how to prevent further accumulation of greenhouse gases (GHGs) that will only fuel the process. The next priority is to implement adaptive measures, limiting harm to the extent that climate change cannot be avoided. Some degree of climate change is inevitable, imposing substantial cost to society in the form of direct harm and adaptation expenses. It is not too soon to begin considering how these costs will be allocated. In particular, we should begin to consider whether some of the damages should be shifted from victims of climate change to responsible parties, such as large-scale emitters of GHGs. (1)

The reality is that, whatever mitigation measures are adopted, a significant degree of climate change seems unavoidable. (2) The best current estimate is that a doubling of CO2 from preindustrial levels would result in a temperature increase between 1.5[degrees]C and 4.5[degrees]C (2.7[degrees]F to 8.1[degrees]F) by the end of this century. (3) For this reason, even in the best-case scenario, we will be faced with a number of adverse impacts from climate change--and indeed, we are already experiencing them:

[M]any of the climate impacts identified by IPCC [Intergovernmental Panel on Climate Change] are likely to occur regardless of the nature of the international policy response In fact, the IPCC has recently concluded that regional changes in climate, particularly increases in temperature, have already affected a diverse set of physical and biological systems in many parts of the world. Examples of observed changes caused by human releases of GHG include shrinkage of glaciers, thawing of permafrost, later freezing and earlier break-up of ice on rivers and lakes, lengthening of mid-to [sic] high-latitude growing seasons, poleward and altitudinal shifts of plants and animal ranges, declines of some plant and animal populations, and earlier flowering of trees, emerging of insects, and egg-laying in birds. (4) Designing a fair and efficient system of compensation for climate change damage poses great challenges. In this Article, my goal is only to start the process of thinking through these issues. In particular, I will try to show how certain kinds of injuries could be the subject of a workable compensation system. These injuries--involving changes in basic geographic characteristics such as sea level or permafrost--are readily identifiable, do not raise the complicated causation issues that plague other potential forms of damages, and can be measured (at least roughly) in a fairly straightforward way.

In the interest of manageability, I will give only passing attention to two other important issues. The first is whether compensation of any kind is warranted in this situation. I think the answer is yes, but the question is obviously a controversial one, and I will provide only a sketch of the justification for compensation. Instead, I will be more concerned with assessing the relative attractiveness of various potential compensation claims. The objective is to identify the core claims that should be given the highest priority, assuming any claims at all are compensated. A second question is what kind of institutional process, such as litigation or an administrative compensation scheme, should be used. I will discuss the alternatives briefly in order to demonstrate that the options extend well beyond conventional litigation, but the choice between institutional forms is too complicated to address fully here. (5)

To provide a concrete context for the discussion, however, it may be helpful to sketch one possible compensation system. Consider an international compensation commission. The commission would receive claims from countries that have incurred adaptation expenses such as strengthening sea walls or providing alternative sources of ecosystem services to replace lost wetlands. The commission would determine which adaptation expenses were reasonable and would schedule them for compensation. Compensation might come directly from an international fund; however, an alternative payment system might be more appealing if an international trading system for GHGs were in place. In this alternative way of financing compensation, a set number of GHG allowances could be set aside for the commission's use. The commission would use these allowances to pay claims; in turn, the claimants could sell them to GHG emitters on the open market. The net effect would be that the sources doing the least to reduce their emission levels, and therefore having the greatest need to purchase additional emission permits, would indirectly provide compensation for the expenses of adaptation. Thus, a wealth transfer would take place from poorly controlled sources of GHGs to the victims of climate change. This is only one possible implementation; for example, it is easy to imagine a similar program being established within the United States, or to envision compensation proceeding through a grant program rather than through adjudication. No plausible system will precisely measure harm and match victims with historic GHG emitters, but some form of rough justice seems achievable.

The primary goal of this Article is to identify a manageable subset of environmental harms that could be the subject of such a compensation system. Part I reviews the expected impacts of climate change and provides background on climate change litigation. Litigation provides one possible source of compensation but is not the most promising alternative. In search of guidance for providing climate change compensation, Part II examines other compensation schemes, dealing with an array of harms ranging from oil spills to terrorist acts. These compensation schemes vary in their institutional forms, in what damages are compensable, and in their treatment of causation and fault issues. Part III attempts to identify some core, highly foreseeable harms resulting from climate change and suggests methods for measuring damages. Compensation for these harms could be provided in various institutional forms. The most likely claimants would be governments rather than individuals; funding could come from assessments against GHG sources or payments by high emission nations.

My purpose is not to offer a fully matured blueprint for compensation. It is to put some basic ideas on the table and to suggest that at least part of the compensation issue is relatively manageable. In the end, the decision of whether to compensate will be driven largely by political decision makers rather than by courts or, even less likely, by scholars. Whether a large-scale compensation plan will ever be adopted, let alone when such a step might be taken, remains unclear. Even at this early stage, however, it is useful to imagine the outlines of a compensation scheme. Doing so may help focus the debate on whether or not to compensate, and it will provide a useful head start on actual programmatic design if the decision is ultimately made to provide compensation.

In a country whose political process is only now awakening to the reality of the climate change issue, it may seem almost utopian to worry about compensation. Current litigation is likely to attract more attention to the issue, as will some current endorsements of the idea in international law. If the issue is not in the forefront today, it seems safe to predict that it will be soon.

1. CLIMATE CHANGE IMPACTS AND LITIGATION

   As background for discussing compensation, we need to begin by surveying some of the likely impacts of climate change that might support compensation claims. In addition, although no successful compensation claims yet exist, we need to consider the state of affairs in climate change litigation. Courts have at least begun to acknowledge the reality of harm from climate change--even in the United States, where the official governmental position is more skeptical. In particular, the Supreme Court recently held that injury from climate change is sufficiently tangible and direct to form a basis for standing. (6) This holding is not directly relevant to compensation claims, but seems likely to foster arguments that compensation is desirable.

   1. Adverse Impacts of Climate Change

      In designing a basic compensation scheme, we can put aside two kinds of impacts, even though these impacts are important in considering adaptation and mitigation. First, we can put aside effects that are extremely diffuse. These are less likely to be clearly identifiable as impacts of climate change or to have identifiable groups of victims who might seek compensation. Diffuse claims are also more likely to receive lower priority than compensation of more concentrated harms. For example, individuals' increased air conditioning costs do not seem like compelling candidates for compensation. (7)

      Second, we can also put aside for now the potential of climate "surprises"--unlikely (but possible) catastrophic events, such as the collapse of the Antarctic or Greenland ice caps (which would cause cataclysmic changes in sea level), (8) or the destruction of the Gulf Stream (which would massively impact European weather). (9) Whatever compensation is offered for such extraordinary events is likely to be ad hoc and dictated largely by immediate political pressures. Moreover, calculation of compensation is likely to take a back seat to more urgent expenditures for adaptation and humanitarian aid.

      At least for purposes of a first "cut" at the compensation issue, it seems better to start with mid-range impacts--impacts involving significant, but not catastrophic, costs that are likely to occur and can be clearly identified as consequences of climate change. (10) This, in itself, is a large universe and likely to grow as our knowledge of climate change improves. For purposes of exploration, we can begin by identifying three major categories of harm...