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Beyond Rio: “Insuring” Against Global Warming

Published online by Cambridge University Press:  27 February 2017

Christopher D. Stone
Christopher D. Stone*
Affiliation:
University of Southern California
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Extract

In 1989 the United Nations General Assembly voted to convene a Conference on Environment and Development (UNCED) to be held in Rio de Janeiro in June 1992, with the highest possible level of participation. One of the major items on the agenda—many maintain, the highest priority—is a treaty to cope with climate change. Toward that end, the Assembly established the Intergovernmental Negotiating Committee, which was to try to finish drafting an effective framework convention on climate change in time to be signed at the conference.

Type
Research Article
Information
American Journal of International Law , Volume 86 , Issue 3 , July 1992 , pp. 445 - 488
Copyright
Copyright © American Society of International Law 1992

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References

1 GA Res. 44/228, GAOR, 44th Sess., Supp. No. 49, at 151, UN Doc. A/44/49 (1989). GA Res. 45/211, GAOR, 45th Sess., Supp. No. 49A, at 146, UN Doc. A/45/49 (1990), urged that representation be at the level of head of state or government.

2 Protection of Global Climate for Present and Future Generations of Mankind, GA Res. 45/212, GAOR, 45th Sess., supra note 1, at 147.

3 See Climate Treaty Negotiators Hopeful of Reaching Agreement Before End of U.N. Summit, 15 Int’l Envtl. Rep. (BNA) 123 (Mar. 11, 1992).

4 Intergovernmental Panel on Climate Change, Policymakers Summary of the Potential Impacts of Climate Change: Report from Working Group II to IPCC, at 1 (June 1990) (doubling to occur between 2030 and 2050) [hereinafter IPCC Working Group II].

5 By a Swedish chemist, Svante Arrhenius, who not only discerned the dynamics, but even then foresaw the possibility that the burning of fossil fuels would warm the planet. See Wallace S. Broecker, Global Warming on Trial, Nat. History, April 1992, at 6.

6 G. Dimock, The Reinsurer’s View, in The Greenhouse Effect—Implications for Insurers 117 (Insurance and Reinsurance Research Group Ltd., 1989).

7 Paul Ehrlich & Ann Ehrlich, The End of Affluence 28–29 (1974).

8 Warren T. Brookes, The Global Warming Panic, Forbes, Dec. 20, 1990, at 96; Richard S. Lindzen, Letter, New Greenhouse. Report, 249 Science 1093 (1990).

9 World Resources Institute et al., World Resources 1988–89, at 196 (1988). A recent report of the IPCC acknowledges that earlier estimates of warming “may have been exaggerated” and now estimates that surface temperature warming has been in the range of 0.3°-0.6°C., “of the same magnitude as natural climate variability.” See Estimate of Global Warming may be Exaggerated, IPCC Says, 15 Int’l Envtl. Rep. (BNA) 35 (Jan. 29, 1992). To place even this degree of warming in perspective, 0.5°C. is a magnitude that would be temporarily offset by the estimated global cooling effects of the Mount Pinatubo volcanic eruption. See Richard A. Kerr, Huge Eruption May Cool the Globe, 252 Science 1780 (1991).

10 On the relationship between the warming influence of greenhouse gases and various natural cycles, see generally Broecker, supra note 5. Broecker concludes that, considering the potential masking effects of other cycles, we cannot conclude from the absence of marked warming thus far that greenhouse forcing will not have a significant effect; “a firm answer will not be available until the first decade of the next century.” Id. at 10.

11 On the continuing uncertainty, see James J. McCarthy, Letter, Global Change Program, 254 Science 357 (1991).

12 See text at notes 38–40 infra.

13 Brookes, supra note 8, at 100; see Richard A. Kerr, Pollutant Haze Cools the Greenhouse, 255 Science 682 (1992). See also infra text at and note 31 (CFCs, though themselves greenhouse gases that deplete the ozone layer, may on net cool the earth by impairing the stratosphere’s heat-retaining capacity).

14 See supra note 9. It is, however, sobering that concerted attention on the ozone shield is revealing a more rapid and widespread depletion than early warnings had anticipated. See NASA Expedition Findings Predict Increased Ozone Depletion Over Arctic, 15 Int’l Envtl. Rep. (BNA) 59 (Feb. 12, 1992).

15 Intergovernmental Panel on Climate Change, Policymakers Summary of the Scientific Assessment of Climate Change: Report Prepared for IPCC by Working Group I, at 1 (June 1990) [hereinafter IPCC Working Group I]. IPCC Working Group II reported slightly differently, emphasizing a doubling of GHG concentration by 2030–2050, with a “consequent” (time frame unspecified) in crease of global mean temperature of 1.5° to 4°-5°C. IPCC Working Group II, supra note 4, at 1, 8. Group II left it unclear whether it expected that increase to occur contemporaneously with the doubling, or eventually from the doubling.

16 See Thomas C. Schelling, Climatic Change: Implications for Welfare and Policy, in Changing Climate: Report of the Carbon Dioxide Assessment Committee 451 (1983); National Academy of Sciences, National Academy of Engineering, Institute of Medicine, Report of the Adaptation Panel: Policy Implications of Greenhouse Warming (forthcoming 1992) (manuscript at 15–16, on file with author) [hereinafter Adaptation Panel Report].

17 Stephen Seidel & Dale Reyes, Can We Delay a Greenhouse Warming? 1–5 (1983).

18 IPCC Working Group II, supra note 4, at 1.

19 Adaptation Panel Report, supra note 16, at 50, indicates that we should expect new pests rather than more; some pests flourish in heat, others in cold. The entire biodiversity issue is also controversial. Compare Charles C. Mann, Extinction: Are Ecologists Crying Wolf?, 253 Science 736 (1991) with Robert L. Peters & J. P. Myers, Preserving Biodiversity in a Changing Climate, 7 Issues Sci. & Tech., Winter 1991–92, at 66.

20 See Marshall Fisher & David E. Fisher, The Attack of the Killer Mosquitoes, L.A. Times Magazine, Sept. 15, 1991, at 30–35. The influence of viruses and pests on human history is well documented by William H. Mcneill, Plagues and Peoples (1976).

21 IPCC Working Group I’s estimates, viz., 6 cm. per decade (with an uncertainty range of 3–10 cm. per decade), with 65 cm. expected by 2100, are slightly lower than, but not markedly out of line with, those of Group II, which produced the estimate of 1 m. by 2100. See IPCC Working Group I, supra note 15, at 22; IPCC Working Group II, supra note 4, at 5.

22 In the United States, the Carolina coast is most frequently cited as being at risk. In Egypt, the area that stands to be inundated in a 1 m. rise is occupied by approximately 16% of the nation’s estimated 49 million population. 4 U.S. Environmental Protection Agency [hereinafter EPA], Effects of Changes in Stratospheric Ozone and Global Climate: Sea Level Rise 172 (1986). In Bangladesh, approximately 9% of the nation’s present 93 million people would be directly affected by a 1 m. rise, and 27% of the total population would be affected by a 3 m. rise. There, exposure of the population to storm surge would be an even graver concern. Id. at 175.

23 On the likelihood that increased sea surface temperatures will increase storm generation, see id. at 154 and authorities cited. The El Niño/Southern Oscillation of 1982–1983 in the eastern Pacific reportedly resulted in a doubling of the average frequency of hurricanes from ten to twenty. Lowlying coastal regions of the world, which are now subjected to U.S. $6–7 billion in damage each year, as well as twenty thousand deaths worldwide, are at risk of increased frequency and intensity of tropical cyclones. Id. On the other hand, the more recent IPCC report questions whether the 26°C. ocean surface temperature critical for storm generation today would remain critical when the ambient temperature elevated; it concludes, “although the theoretical maximum intensity is expected to increase with temperature, climate models give no consistent indication whether tropical storms will increase or decrease in frequency or intensity.” IPCC Working Group I, supra note 15, at 18.

24 See Andrew F. Dlugolecki, Natural Catastrophes Arising from the Greenhouse Effect, 78 J. Ins. Inst. London 49 (1990) (placing frost damage first in a list of greenhouse perils).

25 See text at notes 92–96 infra.

26 As explained below, the relevant costs are the long-term marginal costs when both the risk generators and their “victims” have implemented the most efficient combination of loss avoidance measures.

27 There are no academic “studies,” but it seems clear that cost-benefit thinking appears to be more attractive in the West, and in the United States in particular, than in other countries.

28 See James E. Lovelock & Lynn Margulis, Atmospheric Homeostasis by and for the Biosphere: the Gaia Hypothesis, 26 Tellus 2 (1973); and James E. Lovelock, Gaia: A New Look at Life on Earth (1987).

29 Although a recent UNEP study makes even this claim less than certain, indicating that the ozonedepleting agents have at least one virtue—of counteracting greenhouse warming by impairing the heat retention capacity of the lower stratosphere. See Stratospheric Ozone Hole Found to Occur in Mid-Hemisphere, 14 Int’l Envtl. Rep. (BNA) 590 (Nov. 6, 1991).

30 See United Nations Environment Programme [hereinafter UNEP], The Greenhouse Gases 22 (UNEP/GEMS Environment Library No. 1, 1987) (reporting that, on the basis of an approximately 4°C. temperature rise, “three of the most recent model predictions suggest that overall precipitation will increase by between 7 and 11 percent”).

31 William K. Stevens, Carbon Dioxide Rise May Alter Plant Life, Researchers Say, N.Y. Times, Sept. 18, 1990, at B5. For a formal modeling of carbon storage changes in terrestrial ecosystems, see The Greenhouse Effect: Climatic Change and Ecosystems 130–33 (Bert Bolin et al. eds., 1986).

32 Quoted in A. Barrie Pittock, The Carbon Dioxide Debate: Reports from SCOPE and DOE, 29 Environment 25, 29 (1987). The United Nations Food and Agriculture Organization predicts that global warming would remove food pressure by increasing grain production worldwide. See the disparagement the FAO thus drew in No Agreements on CO2 Reduction Targets, 20 Envtl. Pol’y & L. 197 (1990), for having “continued to defend its untenable assertions of net benefits to agriculture.”

33 Andrew Bakun, Global Climate Change and Intensification of Coastal Ocean Up Welling, 247 Science 198 (1990).

34 Adaptation Panel Report, supra note 16, at 94–99; see Peter Passell, Warmer Globe, Greener Pastures?, N.Y. Times, Sept. 18, 1991, at D2. For a thoughtful presentation of whether we can, or even should, intervene to arrest global warming, see Robert C. Balling, Jr., The Heated Debate (1992).

35 Assume all figures to express present value at constant dollars.

36 To put the conflict in these terms tracks the common-sense, but misleading, assumption that we can clearly and satisfactorily separate the harm causer from the victim. On the bilateral character of the conflict, see infra text at and notes 98–99.

37 See generally William J. Broad, Scientists Dream of Bold Remedies for Ailing Atmosphere, N.Y. Times, Aug. 16, 1988, at A19. But see Adaptation Panel Report, supra note 16, at 57 (on the difficulties of reforestation). The most recent report on the prospects of reducing atmospheric CO2 through artificial stimulation of phyloplankton growth is pessimistic. Seeding With Iron, N.Y. Times, Jan. 22, 1991, at C5 (success would be constrained by limited capacity of water to store CO2).

38 Alan S. Manne & Richard G. Richels, CO2 Emission Limits: An Economic Costs Analysis for the USA, Energy J., No. 2, 1990, at 51 [hereinafter Emission Limits]. They project a decrease of roughly 5% of total annual macroeconomic consumption, discounted to a present (1990) value at 5%. See also idem., The Costs of Reducing U.S. CO2 Emissions—Further Sensitivity Analysis, id., No. 4, 1990, at 69. Nonetheless, the authors maintain that a strong commitment to R & D could conceivably result in reducing the costs of a carbon constraint, “perhaps by several trillion dollars.” Emission Limits, supra, at 73.

39 For example, even if the industrialized countries halved their CO2 emissions (from 1800 kg. per person per year), population growth and economic development that saw the less-developed countries (LDCs) double their per capita annual usage (from 450 to 900 kg.) would increase annual emissions 2.5 times what they are today. See John H. Gibbons et al., Strategies for Energy Use, Sci. Am., Sept. 1989, at 136, 141. However, it is far from certain that many LDCs will be able to lay their hands on enough fossil fuels to double their per capita usage.

40 William D. Nordhaus, To Slow or Not to Slow: The Economics of the Greenhouse Effect, 101 Econ. J. 920, 932–33 and table 6 (1991).

41 See William K. Stevens, As Nations Meet on Global Warming, U.S. Stands Alone, N.Y. Times, Sept. 10, 1991, at B5; Rudy Abramson, U.S. Will Fund Effort to Cut Polluting Gases, L.A. Times, Feb. 28, 1992, at A22; Money, U.S. Position Remain Barriers for Accord on Climate Change Issues, 14 Int‘l Envtl. Rep. (BNA) 502 (Sept. 25, 1991) (indicating that U.S., endowed with large coal reserves, is also concerned about the effects of clean fuel mandate on energy independence). Proponents of immediate action say that by the time the uncertainties are resolved, we will be locked into irreversible harms if they are resolved negatively. However, two of the scientific contributors to the IPCC report, neither of whom is dismissive of greenhouse risks, have reported that we would pay only a small “penalty” for delaying by 10 years a 20-year transition from “business as usual” to any of the constrained emission scenarios. Michael E. Schlesinger & Xingjian Jiang, Letter, Revised Projection of Future Greenhouse Warming, 350 Nature 219 (1991). An imminent study suggests that, on certain reasonable assumptions, a policy aimed at only moderate reductions in the near term (1992–2002) will actually be less costly than instituting aggressive reductions immediately. James K. Hammitt et al., A Sequential-Decision Strategy for Abating Climate Change, 357 Nature 315 (1992).

42 The potential burdens are not only that of emissions reduction costs, but also that of wealthtransferring side payments that LDCs may demand as a condition of cooperation, or extract in a majority-rule regime. See infra text at and note 120.

43 Indeed, this factor, that a far-reaching climate accord would enhance the ideal of world order through world law, is almost certainly an independent motivating consideration for some of its supporters.

44 David Caron reminds me that the question is not one of economic worth alone. There is an independent series of questions about the moral worth of amelioration, particularly if one accounts for the disparities in costs and benefits of GHG-producing activities among different populations, e.g., those whose emissions derive from the growth of subsistence crops and those whose emissions derive from maintaining a “high” standard of living. See infra text at and note 114.

45 IPCC Working Group I, supra note 15, at 1.

46 Nordhaus, supra note 40, at 934 and table 7.

47 For less pessimistic accounts, see William Hogan & Dale W. Jorgenson, Productivity Trends and the Costs of Reducing CO2 Emissions, Energy J., No. 1, 1991, at 67; and William R. Cline, The Economics of Global Warming (forthcoming 1992). Cline’s position is summarized in Global Warming: The Long-Term Stakes, Presentation to the American Economics Association (Jan. 3, 1992) (available from Institute for International Economics).

48 See supra note 38 and infra text at notes 58–60.

49 See Darwin C. Hall, Preliminary Estimates of Cumulative Private and External Costs of Energy, 8 Contemp. Pol’y Issues 283 (1990).

50 See generally Christopher D. Stone, Earth and Other Ethics 75—83 and passim (1987).

51 Adaptation Panel Report, supra note 16, at 4.

52 Id. at 65.

53 Id. at 73.

54 See supra note 47. Cline, exploring various factors—including benchmarks other than the conventional doubling of CO2, an extended time horizon, the possibility of efficient techniques (such as carbon permit trading) and policy makers averse to the risk of catastrophes—comes out favoring a more aggressive program of international abatement. A project headed by the Union of Concerned Scientists has come up with several energy options that are claimed to be environmentally benign, conservation wise, and economically efficient: it predicts that on a $2.7 trillion investment, consumers will save $5 trillion in fuel and electricity costs over a 40-year period, using a 3% rate of discount. See Alliance to Save Energy et al., America’s Energy Choices 2 (1991).

55 See Stephen H. Schneider, The Changing Climate, Sci. Am., Sept. 1990, at 73.

56 As I shall argue later, the ability of all to enjoy the average can be advanced by mobilizing the leveling capacity of various international institutions such as trade and (broadly speaking) “insurance” mechanisms.

57 Actually, mobility was only one of several strategies by which primitive peoples coped with natural cycles, and which merit contemporary review: other tactics included diversification, physical storage and diverse processes of interactive exchange. See Bad Year Economics: Cultural Responses to Risk and Uncertainty 3–4 (Paul Halstead & John O’Shea eds., 1989).

58 Passell, supra note 34, at D2.

59 See Arnold P. Fickett et al., Efficient Use of Electricity, Sci. Am., Sept. 1990, at 64; and Rick Bevington & Arthur H. Rosenfeld, Energy for Buildings and Homes, id. at 76.

60 National Academy of Sciences, National Academy of Engineering, Institute of Medicine, Report of the Synthesis Panel: Policy Implications of Greenhouse Warming 73 (1991) (on file with author).

61 Article 2 of the sulphur dioxide Protocol to the Convention on Long Range Transboundary Air Pollution, UN Doc. CN.193.1985.TREATIES-2 (1985), signed by 21 states from East and West in Helsinki on July 9, 1985, provides for the parties to reduce their national annual sulphur emissions or their transboundary fluxes by at least 30% as soon as possible and at the latest by 1993, using 1980 levels as the basis for calculation of reductions. However, most industrialized nations had already begun SO2 reductions in the 1970s, with emissions down 20%–60% in the 1975–1984 period. See World Resources Institute et al., supra note 9, at 165. The signatories simply ratified the direction in which the industrialized nations were heading. The climate change negotiators face a considerably more complicated challenge.

62 There are of course various techniques with which to address these “equity” problems and avoid a diplomatic standoff, e.g., differential schedules for compliance, and even side payments as an inducement to sign. See generally Daniel B. Magraw, Legal Treatment of Developing Countries: Differential, Contextual, and Absolute Norms, 1 Colo. J. Int’l Envtl. L. & Pol’y 69 (1990).

63 Marginal costs of reduction efforts are presumed to increase with units eliminated, the first unit of pollution being the cheapest to eliminate.

64 Emissions trading, discussed below, might also result in an efficient outcome. Note that the thrust of the paragraph goes only to the question of efficiency: the pro rata cutback is inefficient. There are further questions of justice: if B eliminates both tons (at $40), should A (which would have been required to expend $100 on either a per nation or a pro rata basis) shoulder all or part of B‘s expenses? There are in fact several intuitively plausible approaches to the distributional questions. See Bruce A. Ackerman et al., The Uncertain Search for Environmental Quality 224–27 (1974).

65 These problems can be managed by providing a preconvention baseline date, after which any nation that made unilateral, preconvention reductions would be appropriately credited. See Richard M. Stewart & Jonathan B. Wiener, A Comprehensive Approach to Climate Change, Am. Enterprise, Nov./Dec. 1990, at 75, 77. A concise, yet admirably comprehensive, survey of strategies to resolve many such problems in international environmental negotiations is Peter H. Sand, Lessons Learned in Global Environmental Governance (1990).

66 Oddly enough, William Reilly of the U.S. EPA, seeking support for the London ozone agreement, infra note 84, imputed to China the plan to manufacture 300 million refrigerators, all cooled by CFCs, rather than the high-priced substitutes. Wang Yangzu, deputy administrator of China’s environmental protection agency and head of the Chinese delegation to London, while seeking a side payment, “dismissed as nonsense” the U.S. contention, pointing out that China produces only eight million refrigerators annually, and that it will take “several dozens of years to reach” the figure cited. See China Seriously Considers Acceding to Montreal Protocol, Xinhua News Agency, June 28, 1990, available in LEXIS, Nexis Library, Currnt file. Whatever the facts in this instance, on the philosophical complications raised by such a posture—is a threat game unjust?—see 1 Brian M. Barry, Theories of Justice 31–33, 68–76 (1989).

67 And we should remember, some nations may reject the notion of baseline altogether: for example, a pure egalitarian, and perhaps a utilitarian, might back a solution that—starting (no-agreement) point be damned—produced the most egalitarian (or, in the case of the utilitarian, welfare-maximizing) outcome.

68 Consider the recent Brazilian proposal, advanced by then President-elect Fernando Collor in January 1990, to create an international tax on carbon emissions (but apparently not on deforestation effects on COs congestion) at $100 per ton, with two-thirds of the $450 billion estimated revenues earmarked for developing countries, ostensibly to enable them to preserve and restore the environment. See International Pollution Tax Proposed to Support Conservation, Climate Research, 13 Int’l Envtl. Rep. (BNA) 61 (Feb. 14, 1990).

69 If coal burning is causing social damage of $10 per ton at present, but in the long run, with the right tax and responses, the marginal damage is $2, then the right tax is one based on the $2 externality. Adjusting the tax to $10, corresponding to the current damage, would be overrestrictive. See William J. Baumol & Wallace E. Oates, The Theory of Environmental Policy 160–61 (2d ed. 1988).

70 Michael Grubb, The Greenhouse Effect: Negotiating Changes, 66 Int’l Aff. 67, 70–71, 79–81 (1990).

71 Policy Options of Stabilizing Global Climate 771 (Daniel A. Lashof & Dennis A. Tirpak eds., 1989).

72 Joshua M. Epstein & Raj Gupta, Controlling the Greenhouse Effect: Five Global Regimes Compared 18–20 (Brookings Occasional Papers, 1990).

73 See Battle Looming over Energy Tax Commission Expected to Propose this Month, 14 Int’l Envtl. Rep. (BNA) 481 (Sept. 11, 1991). France, as the heaviest user of nuclear energy, is reportedly willing to put a heavy penalty on carbon use.

74 Seidel & Keyes, supra note 17, at 4–31.

75 See Greenhouse Gas Tax, 255 Science 154 (1992) (reporting on Office of Environmental Analysis, Department of Energy, Limiting Net Greenhouse Gas Emissions in the United States (1991)). Remember that the loss to people qua consumers might be offset by a benefit to them qua taxpayers, to the extent the Government were to offset other forms of taxation by the carbon revenues.

76 Grubb, supra note 70, at 80–81. This is a criticism of taxes in the second mode, collected and applied by an international authority.

77 For example, Baumol and Oates demonstrate that all other things being equal, the steeper the slope of the marginal benefits function, the less distortion will result from regulatory misjudgment about the cost function under a permit (quantity-fixing) system as compared to a fee (price-fixing) equivalent. Conversely, the steeper the slope of marginal control costs, the larger the opportunities for distortion under the permit system. Baumol & Oates, supra note 69, at 64–66. Is anyone really bold enough to declare which is the most likely direction of error in the GHG context?

78 The classic article is Martin L. Weitzman, Prices vs. Quantities, 51 Rev. Econ. Stud. 477 (1974).

79 Conversely, if an agreed-upon cost constraint emerges at the political level, fees dominate.

80 See generally Baumol & Oates, supra note 69, ch. 12.

81 For analysis of a whole range of legal and institutional issues, see Jonathan Green & Philippe Sands, Establishing an International System for Trading Pollution Rights, 15 Int’l Envtl. Rep. (BNA) 80 (Feb. 12, 1992).

82 Arthur H. Westing, Law of the Air, Environment, Apr. 1989, at 187, would allot nations one “CO2 release chit” per square kilometer of territory, each chit allowing 1/133,000,000 of the total permissible emissions.

83 Epstein & Gupta, supra note 72, at 18–20. I cannot argue the point adequately in this space, but population does not seem normatively superior to other bases—to grandfathering, for example, on some of the same bases that support recognizing the title of an adverse possessor, or to a need- or capabilities-regarding index, along lines discussed by Amartya Sen. See Amartya K. Sen, Resources, Values and Development 307–24 (“Rights and Capabilities”), 325–45 (“Poor, Relatively Speaking”) (1984).

84 Article II of the London Amendments to the Montreal Protocol provides that a party may transfer to another portions of the first party’s allowed share of controlled substance pollution, provided that the combined pollution of the two trading nations does not exceed proscribed limits. Adjustments and Amendments to the Montreal Protocol on Substances That Deplete the Ozone Layer, June 29, 1990, reprinted in 30 ILM 537, 542 (1991) [hereinafter London Amendments].

85 Obviously, litigation is not the only, or even the most important, engine on which international law need ride, so that one may also legitimately ask: would a threatened nation have a credible enough legal position to instigate productive diplomatic negotiations?

86 See Durwood Zaelke & James Cameron, Global Warming and Climate Change-an Overview of the International Legal Process, 5 Am. U. J. Int’l L. & Pol’y 249 (1990).

87 Trail Smelter (U.S. v. Can.), 3 R.I.A.A. 1911 (1941).

88 Corfu Channel (UK v. Alb.), 1949 ICJ Rep. 4 (Apr. 9).

89 On the other hand, it appears from the full opinion that the failure of Albania to give notice of the mines was its critical misstep (the ICJ so read Corfu Channel in Nicaragua v. United States), not the fact, alone, that it set a hazard adrift. See Military and Paramilitary Activities in and against Nicaragua (Nicar. v. U.S.), 1986 ICJ Rep. 14, 112 (June 27). This reading might suggest, unencouragingly, that a global polluter would escape liability, at least under the Corfu Channel rationale, simply by disclosing—giving notice that it intended to pollute.

90 Principle 21 of the Stockholm Declaration on the Human Environment reads: “[S]tates have … the responsibility to ensure that activities within their jurisdiction … do not cause damage to the environment … beyond the limits of national jurisdiction.” Report of the United Nations Conference on the Human Environment, UN Doc. A/CONF.48/14 and Corr.1 (1972), reprinted in 11 ILM 1416 (1972).

91 Restatement (Third) of the Foreign Relations Law of the United States §601 (1987).

92 See generally Special Review Essays: The Restatement (Third) of the Foreign Relations Law of the United States: David D. Caron, The Law of the Environment: A Symbolic Step of Modest Value, 14 Yale J. Int’l L. 528 (1989).

93 See, e.g., Allen L. Springer, The International Law of Pollution: Protecting the Global Environment in a World of Sovereign States 69 (1983) (reporting on the U.S. acceding to a Mexican note protesting odors from a stockyard, apologizing and remedying the situation).

94 See Christine Gray, Judicial Remedies in International Law 11–17 (1988). In some proceedings the parties can agree in advance to empower the tribunal to issue an injunction, as was done in Trail Smelter as part of the compromis. But see Diversion of Water from the River Meuse (Neth. v. Belg.), 1937 PCIJ (ser. A/B) No. 70, at 73, 76–77 (Hudson, J., concurring) (suggesting that some injunctive power can be derived from “general principles of law recognized by civilized nations”).

95 I am not suggesting that the displacement and relocation costs capture the entire morally right measure of damages for such a calamity to a people. There are far-ranging and subtle “diaspora” damages, as well. See infra text at note 137.

96 To say that criminal sanctions are unavailable in international law is slightly misleading; while there is no central international authority authorized to exact criminal penalties, a convention can take the form of binding the signatories either to punish the violators or to turn them over to nations that will. See, e.g., Article VI of International Convention for the Prevention of Pollution of the Sea by Oil, May 12, 1954, 12 UST 2989, TIAS No. 4900, 327 UNTS 3, making contravention of certain articles offenses “punishable under the law of the relevant territory in respect of the ship,” and providing that

the penalties imposed under the law of any of the territories of a Contracting Government in respect of the unlawful discharge from a ship of oil … outside the territorial sea of that territory shall be adequate in severity to discourage any such unlawful discharge and shall not be less than the penalties which may be imposed within the territorial sea.

97 See generally Daniel B. Magraw, Transboundary Harm: The International Law Commission’s Study of “International Liability,” 80 AJIL 305 (1986).

98 Some flavor of the complexity can be drawn from Baumol & Oates, supra note 69, at 281. The authors point out that if (1) the starting point (benchmark) is the existing levels of activity (“no agreement” equals status quo level), and (2) one is constrained to the set of pareto-improving moves, then for polluter to pay victim is the wrong solution: the victim should pay the polluter. Lawyers will respond that in some circumstances, as where polluter has acted immorally, we are not constrained by efficiency considerations in the given case. But in a whole range of “reasonable” and longstanding polluting activities, the criticisms are well taken—and even recognized by international practice. The Netherlands, which, lying at the base of the Rhine, is more sinned against than sinning in commonsense causal terms, pays upstream France to take measures to reduce salt pollution, a solution that directly contradicts the “polluter pays” principle espoused by the Organisation for Economic Co-operation and Development. World Resources Institute et al., World Resources 1987, at 188 (1987).

99 The Coase Theorem suggests that as long as the liability rule is clear and the transactions costs negligible, the parties will bargain toward the efficient solution. That is, should the law impose strict liability on the polluters, they can be expected to pay the endangered victim countries to take the efficient solution (to build the sea wall), if building the sea wall is less costly than the prospective legal damages; and conversely, if the rule is no liability on polluters, the endangered countries will pay the polluters to abate, if that is the least-cost solution. But in the global community, transactions costs are hardly negligible. If we start out with a liability rule that assured victims of full compensation for all damages the polluters “caused” in the widest sense, there would be no mechanism to induce them to exercise the optimal level of care. Ultimately, how satisfactorily a strict liability regime can overcome this problem depends on the law’s capacity to exploit doctrines such as the duty to mitigate that are sensitive to the bilateral character of the damage.

100 The burden either to pay damages ex post or compensate victims for defensive risk reduction measures ex ante.

101 David Caron, in the course of an analysis of the U.S.-Iran Claims Tribunal, emphasizes that arbitrators could make the sort of comparative fault analyses the hypothetical requires; the real question is whether “states will feel comfortable” and consent to their doing so. David Caron, Remarks, 84 ASIL Proc. 64, 71 (1990).

102 See Bob Drogin, Amid Devastation, Ormoc Buries its Dead, L.A. Times, Nov. 8, 1991, at A6.

103 Oscar Schachter, The Emergence of International Environmental Law, 44 J. Int’l Aff. 457, 474 (1991).

104 The Montreal Protocol and its London Amendments prohibit signatories from purchasing from nonsignatories products made with proscribed ozone-depleting agents. London Amendments, supra note 84, Art. 4, at 546–47.

105 S. 984, 102d Cong., 1st Sess. (International Pollution Deterrence Act of 1991); see 137 Cong. Rec. S5298 (daily ed. Apr. 25, 1991) (remarks of Sen. Boren).

106 GATT, Panel report, United States—Restrictions on Imports of Tuna, No. DS21/R, Sept. 3, 1991, reprinted in 30 ILM 1594 (1991) (upholding a complaint by Mexico that a U.S. embargo of Mexican-caught tuna, activated pursuant to the U.S. Marine Mammal Protection Act, violated GATT).

107 See Robert F. Housman & Durwood Zaelke, The Collision of Environment and Trade: the GATT Tuna/Dolphin Decision, 22 Envtl. L. Rep. 10,268 (1992).

108 UNEP, supra note 30, at 29.

109 See World Resources Institute et al., World Resources 1990–91, at 345 and tables (1990).

110 Thomas E. Graedel & Paul J. Crutzen, The Changing Atmosphere, Sci. Am., Sept. 1989, at 58, 64. More recent reports suggest that the rate of methane loading may be declining from a peak of 1% a year in the 1980s to 0.8%. See Rate of Increase Slows for One Greenhouse Gas, Wall St. J., Dec. 10, 1991, at Bl.

111 World Resources Institute et al., supra note 109, at 109. The biomass sinks are evidently no more than a “short-term” or periodic solution, inasmuch as the carbon thereby drawn out of the atmosphere will eventually be released upon the death and decay of the “storing” plant.

112 William K. Stevens, Methane From Guts of Livestock Is New Focus in Global Warming, N.Y. Times, Nov. 21, 1989, at B7.

113 See Daniel A. Lashof & Dilip R. Ajuhla, Letter, Relative Contributions of Greenhouse Gas Emissions to Global Warming, 344 Nature 529 (1990). Another, more systems-sensitive approach is to compare GHG-producing activities and technologies by reference to their entire life cycle effects. See Rex T. Ellington et al., The Total Greenhouse Warming Forcing of Technical Systems: Analysis for Decision Making, 42 J. Air & Waste Mgmt. 422 (1992).

114 See Climate Conflict, Greenpeace, July/Aug. 1991, at 8.

115 The issues that arise from efforts to reach a fair division of cooperative surplus (the increment in value that parties can realize through cooperation) are far more complex than indicated in the text; for an excellent discussion, see 1 Barry, supra note 66, at 50–142.

116 See Marlise Simons, North-South Chasm is Threatening Search for Environmental Solutions, N.Y. Times, Mar. 17, 1992, at A5.

117 Compare how the United States is often urged, in trade negotiations, to link, benefits to improvements in human rights.

118 That is, if we admit the legitimacy of interpersonal comparisons of utility, it seems credible that a transfer of $1 billion from the United States to Bangladesh would bring about a net increase in welfare, the latter population gaining more in utility than ours loses.

119 See Charles S. Pearson, International Marine Environment Policy 58–59 (1975) (indeterminate effect of injecting environmental values into law of the sea negotiations).

120 See Dennis C. Mueller, Public Choice II 58–59 (1989).

121 Of course, the history of international diplomacy suggests that even such modest first steps could come to be recognized in time as having had momentous significance.

122 See generally Richard G. Lipsey & Kelvin Lancaster, The General Theory of Second-Best, 24 Rev. Econ. Stud. 11 (1956).

123 Schelling, supra note 16, at 449–82.

124 Id. at 450.

125 See Insurance Against Climate Disasters Taken up by Climate Change Negotiators, 14 Int’l Envtl. Rep. (BNA) 675 (Dec. 18, 1991).

126 See Vanuatu, draft annex relating to Article 23 (Insurance) for inclusion in the revised single text relating to mechanisms (A/AC.237/WG.II/Misc.l3) submitted by the Co-Chairmen of Working Group II, Intergovernmental Negotiating Comm. for a Framework Convention on Climate Change, UN Doc. A/AC.237/WG.II/CRP.8 (1991), discussed in text at note 138 infra.

127 Stephen H. Schneider, Global Warming 283–84 (1989). Compare David Pearce, Blueprint 2, Greening the World Economy 22 (1991) (“The way to behave in the face of scientific and economic uncertainty about the greenhouse effect is to adopt fairly restrictive measures …”).

128 William D. Ruckelshaus, Toward a Sustainable World, Sci. Am., Sept. 1989, at 166. Ruckelshaus continues:

[A]s long as we are going to pay premiums, we might as well pay them in ways that will yield dividends in the form of greater efficiency, improved human health or more widely distributed prosperity. If we turn out to be wrong on greenhouse warming … we may still retain the dividend benefits. In any case, no one complains to the insurance company when the disaster does not strike.

Id. True; but one may well complain to oneself about wasted premiums, particularly if one discovers they were higher than the risk warranted.

129 The categories sometimes blur. To illustrate, imagine someone who is considering living in the hills above Los Angeles. The hills, while offering certain amenities, are exposed to periodic devastating fires. A person worried about the peril might avoid the risk by forgoing the opportunity to live in the hills; reduce the risk by, say, cutting back brush; control the risk (or level of loss) by installing a sprinkler system and smoke detectors; transfer (part or all of) the risk to another; or retain some remainder—that is, leave it uncovered and live with it.

130 To illustrate, imagine that the owner of a house valued at $500,000 faces a 0.1% probability of its total destruction by fire in any year. If she is at all risk averse, she will be willing to pay an annual premium of somewhat over $500 for a year’s full loss coverage. But suppose further (1) that if the owner cut back brush and installed sprinklers at an annual cost of $300, the risk of a total loss would fall to 0.2%; and (2) that the insurer’s rating system would account for those precautions by reducing her premium to $110. The sum of prevention plus insurance thereby dropping to $410, the owner would be expected to prefer that combination.

131 Once considerations of state-dependent utility are introduced, the analysis becomes consider ably more complex. Suppose (in normal times) I am considering taking out an insurance policy against the loss of my home to flood. It is not too difficult to judge what lump sum payment arranged with the insurer would make me equally well off as I am now. But suppose that the insured event will occur in a world truly savaged by climate change. As I consider insurance, I have to wonder what utility I would get from the insurance proceeds: would there be—however much money I had in hand—adequate food? water? medicine? Perhaps I would shift from true insurance to risk prevention—just as Schneider and Ruckelshaus intuit. On the other hand, some extreme postdeluge states of the world might be regarded as so ghastly, and our choice set so limited, that we would react with neither prevention nor insurance, but with increases in present consumption.

132 One might rejoin that in this case, the hypothetical homeowner simply values the house at greater than the market-measured replacement cost; but (while I cannot argue the point fully here) I think there is more to the analysis than that.

133 Or, for that matter, by writing off the future and increasing present consumption; see supra note 131.

134 See supra text at and note 127.

135 See supra text at and note 46.

136 In this sense, an authentic optimist might contend that the continued use of GHGs is not a pure risk but a speculative one, like an investment.

137 IPCC Working Group II, supra note 4, at 28. The combined present populations of these micronations (total area: 402 sq. mi.) is only 276,113, with a combined gross product of U.S. $92 million. See generally 1990 World Almanac.

138 See Small Island Nations to Seek Accord on Creating Insurance Pool to Cover Risk, 14 Int’l Envtl. Rep. (BNA) 561–62 (Oct. 23, 1991). As I will point out below, the kind of insurance nations in the island states’ position might reasonably prefer is more akin to health than to property insurance.

139 North American Reinsurance Corp., Sigma, Natural Catastrophe and Major Losses 1970–1989: Increasing Catastrophe Losses from Nature in the 1980S 4 (1990).

140 See generally Charles Weiss, Jr., Can Market Mechanisms Ameliorate the Effects of Long-Term Climate Change?, 15 Climatic Change 299 (1989).

141 For example, we should examine which device is most likely to minimize social loss through administrative error. Evidence may show that insurance categories have been easier to modify in the face of experience—although, if so, this may be more of a distinction between politics and markets, than between taxes and insurance.

142 In other words, suppose that, notwithstanding the impediments to civil liability for climatechange-driven damages, text at notes 85–96 supra, some liability claims are successfully made. Public policy permitting, those liability claims might be insurable.

143 See Michael Wilford, Insuring Against the Consequences of Sea-Level Rise (1991) (arguing for an insurance pool funded by the developed nations to cover losses from sea-level rise).

144 Id. at 4. In the 1979–1988 decade, UK catastrophe insurers took in £107 million in premiums— and paid out £228 million in claims. Jeremy Hindle, Warming Signals, Review, Mar. 1989, at 34, 37 (fig. 1). One presumes they enjoyed some offsetting earnings on their investments.

145 Hindle, supra note 144, at 35.

146 See Carolyn Aldred, Insurers Fear Global Warming to Hike Losses, Bus. Ins., Feb. 12, 1990, at 1.

147 See Wilford, supra note 143, at 5. Each of these responses, however, will only intensify the pressures for adverse selection.

148 Legislatures and insurance regulators can, and increasingly do, reject on “public policy” grounds risk classifications (consider “redlinings”) that are actuarially sound. For an illustration of judicial relief for an insured in the sort of conflict that could be expected to arise from greenhouse warming, see Harman v. American Casualty Co., 155 F.Supp. 612 (S.D. Cal. 1957) (refusing to allow the insurer to cancel an “all physical loss” property policy in the face of a gradual and continuing land movement).

149 Indeed, even publicly supplemented insurance, discussed below in the text, may well be inadequate for many of these risks—to which extent the argument for more conventional risk avoidance measures, such as targeted reductions, is strengthened.

150 See text at notes 126, 138 supra.

151 OPIC, originally created in 1969, is codified at 22 U.S.C. §2191 (1988).

152 The Price-Anderson Amendments Act of 1988, 42 U.S.C. §2011 (1988), provides that all commercial nuclear power plant operators could be assessed up to $63 million per reactor in the event of an accident (adjusted for inflation every five years). The final liability limit for an accident is set at about $7 billion—up from $700 million before 1988. See Congress approves renewal of Price-Anderson Act, Nuclear News, Sept. 1988, at 44.

153 Weiss, supra note 140, at 305.

154 Kenneth S. Abraham, Distributing Risk: Insurance, Legal Theory and Public Policy 90 (1986).

155 Property, like life, insurance provides cash payments contingent on a state of the world, and leaves the insured free to use the proceeds for whatever he or she chooses: you don’t have to rebuild your house, you may take a holiday cruise. By contrast, health insurance payments are restricted to reimbursement for approved services. See Optimal Insurance and Generalized Deductions, in Kenneth Arrow, Individual Choice Under Certainty and Uncertainty 212–16 (1984).

156 On the state-dependent utility function, see supra note 131.

157 See generally Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§9601–9675 (1988).

158 See Peter S. Mennell, The Limitations of Legal Institutions for Addressing Environmental Risks, 5 J. Econ. Persp. 93, 106–09 (1991).

159 International Convention on the Establishment of an International Fund for Compensation of Oil Pollution Damage, Dec. 18, 1971, reprinted in 11 ILM 284 (1972), with Protocol, Nov. 19, 1976, 16 ILM 617 (1977).

160 Convention Supplementary to the Paris Convention of 29 July 1960 on Third Party Liability in the Field of Nuclear Energy, opened for signature Jan. 31, 1963, modified by Additional Protocol, Jan. 28, 1964, text in International Atomic Energy Agency, International Conventions on Civil Liability for Nuclear Damage 43 (1976). See also Wilford, supra note 143, at 9–10.

161 See supra text at and note 102.

162 See Bad Year Economics, supra note 57.

163 International Union for the Conservation of Nature and Natural Resources, World Conservation Strategy, pt. 17 (1980); Donna K. H. Walters & Tamara Jones, Eastern German Seed Bank a Living Legacy for the World, L.A. Times, Sept. 24, 1991, at H3.

164 Lester Lave, Mitigating Strategies for Carbon Dioxide Problems, 72 Am. Econ. Rev. 257, 260 (Papers and Proceedings issue, 1982).

165 See Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. §§5121–5201 (1988).