High Equity, Low Equity, and the “Equity Band”

The Climate Equity Reference Calculator estimates national fair shares of the global mitigation effort based on each country’s capacity and responsibility, according to user choices across a number of key “Equity Settings.” In both the recent National Fair Shares report and the Comparable Effort Worksheet, results are presented in terms of an “Equity Band” that spans a broad set of possible equity settings and thus gives an instructively comprehensive range of results for each country.

This Equity Band is bounded by a “Low Equity” setting on one side and a “High Equity” setting on the other. While such limits cannot be uniquely and objectively established, they are defined here in a way that captures meaningfully distinct perspectives on two hotly debated issues in climate equity. The first is the level of progressivity that is appropriate to a definition of national capacity, and the second is appropriate time frame for considering a nation’s historic responsibility. In this memo, we briefly describe how the High Equity setting and Low Equity setting (and an intermediate Medium Equity setting) are defined along these two dimensions.

Capacity and progressivity

The Calculator defines national capacity in terms of income. Income is typically considered in a progressive manner in national tax policy; analogously, it can be considered in a progressive manner for the purposes of defining capacity. In general, we consider three alternative settings:

  • In the “No Progressivity” case, all income within a nation counts toward its capacity. There is no income threshold below which individual income is exempted from national capacity. Rather, when calculating capacity, each dollar of income – even for the poorest of the world’s people – counts as much as each dollar of the world’s richest. Importantly, this setting is inconsistent with the conventional progressive approach that virtually all societies have adopted for the purpose of income taxation, and it is difficult (if not impossible) to justify in equity terms. Nonetheless we include it here as a lower bound.
  • In the “Weak Progressivity” case, there is a low income threshold below which individual income is exempted from the calculation of national capacity.[1] This weak case is used to define “Medium Progressivity” cases, in which the “development threshold” is set at $7,500 (approximately $20/day). This level is just a bit above a global poverty line that reflects empirical observations, so it too should be taken as a low estimate of “medium” progressivity.
  • In the “High Progressivity” case, a lower income threshold is set at $7,500 (as in the “Weak Progressivity” case), with income above this threshold counting toward national capacity at a steadily rising rate, until it reaches an upper income threshold of $50,000, above which all income is counted towards national capacity. These settings increase the overall progressivity of the income calculation just as a graduated tax schedule raises the progressivity of an income tax.[2]

Historical responsibility and time frame

The Calculator defines national responsibility in terms of cumulative emissions. A key setting then is the initial year from which historic emissions are included in the reckoning of a country’s responsibility. We consider three alternative settings here.

  • The low case is defined as “Responsibility since 1990.” This date corresponds roughly to the time when negotiations for an international legal agreement to limit GHGs began in earnest and the risks of rising GHGs were acknowledged by the IPCC.
  • The medium case is defined as “Responsibility since 1950.” This date marks a useful middle setting. It defines a period in which responsibility is comprehensible in terms of human lifetimes, reflects roughly the useful lifetimes of much infrastructure, and avoids some of the historical discontinuities that occur when, for example, wars remake national boundaries.
  • The high case is defined as “Responsibility since 1850.” This date defines responsibility as cumulative emissions since a date that roughly corresponds to the time at which carbon dioxide emissions from fossil fuel combustion reached significant levels. This is also the earliest date for which plausible emissions data exist.

Combining Capacity and Responsibility into High, Medium, and Low Equity Settings

There are nine possible combinations of the three capacity settings and three responsibility settings. However, we here group these into only three cases, which more simply capture the broad “equity band” spanned by the possible settings.

  • “Low Equity” settings: No Progressivity and Historical Responsibility since 1990
  • “Medium Equity” settings: Weak Progressivity and Historical Responsibility since 1950
  • “High Equity” settings: Strong Progressivity and Historical Responsibility since 1850

While we refer to these combinations as Low Equity, Medium Equity, and High Equity, we do not imply that the High Equity case is objectively “more equitable” than Low Equity, for this is ultimately a normative judgment. Rather, these references simply refer to the fact that the High Equity case is the most progressive and includes the most historical responsibility, while the Low Equity case is the least progressive and includes the least historical responsibility.

Using such a broad Equity Band leads inevitably to fair share results that can span a significant range, as is evident in the National Fair Shares report and the Comparable Effort Worksheet. By accommodating a broad range of equity perspectives, such an approach allows us to escape the debate between, on the one hand, the claim that equity is an entirely subjective matter, a mere battle of opinions, and, on the other hand, the claim that one or another equity approach is the precisely “right one.” Equity Bands offer a quantitative framework within which explicit choices between well-specified approaches – e.g. more or less progressive responsibility and capacity indexes – can be assessed and compared in a common framework without being over-specified and reified. While this approach inevitably yields ranges instead of distinct numbers, it also yields higher confidence, as a consequence of having understandable results that transparently and traceably expresses a set of explicit ethical-political choices.

[1] Correspondingly, emissions corresponding to income below the same threshold do not count toward Responsibility.

[2] The Calculator allows the user to set the lower and upper thresholds at any income level. It refers to the lower income level as the “development threshold” and the higher income level as the “luxury threshold”. These terms are used because they are suggestive of a typical and ethically compelling interpretation, where the lower threshold is chosen to reflect an income level modestly above a global poverty line, and the upper threshold is chosen to reflect an income level above which all income is discretionary, and much of it is spent for consumption well beyond basic comforts.

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