A Compensation Fund for Climatic Impacts?

For instructors who include a section in their courses on loss and damage negotiations at UNFCCC COPs, an excellent reading would be a 2013 article by Detlef Sprinz and Steffen Bünau in the journal Weather, Climate, and Society (the piece is available open access on one of the author’s website). In the piece, the authors outline the potential architecture for an international Climate Compensation Fund. What’s particularly noteworthy (and admirable) is that the article includes an extensive discussion of how to make this approach politically viable.

The article initially discusses the case for climate damage compensation under the international legal principle of state responsibility. This section of the article would be an excellent way to introduce students to the “no harm rule” of international law, including the appropriate level of care. The authors contend that the difficulties of defining the appropriate standard of care, especially given the need to balance the interests of States, could be avoided by focusing on climate treaty law obligations. Concluding that the obligations under Article 4.1 of the UNFCCC are vague, and that Article 4.2 mandates are limited to Annex I countries, the authors conclude that the Kyoto Protocol may provide the most compelling case for ascribing liability given its precise obligations. However, Kyoto also suffers from the limitation that its obligations are restricted to industrialized countries. Moreover, pursuing an action for breach under treaties requires an appropriate venue to adjudicate the case, and mutual consent is usually required. Thus, the authors conclude that a more optimal approach might be establishment of a climate compensation fund.

In terms of the architecture for such a fund, the authors suggest the following:

  1. Establishment of a “neutral, politically independent judicial body” that would ascertain whether there was a sufficient nexus of anthropogenic greenhouse emissions and climatic damages. This role could be fulfilled by a permanent claims tribunal, the International Court of Justice, or national bodies operating under specific procedural rules;
  2. Endowment of the compensation fund in proportion to a State’s emissions over time, and allocation of awards in proportion to emissions covered by that State’s aggregate membership. The authors argue that this approach would provide an incentive for States to reduce emissions by establishing a dynamic adjustment of contributions over time;
  3. Identifying “Founders,” States that would take the lead in making initial contributions to the fund and establishing rules, would be an extremely important element to ensure the Fund’s success. The threat of suits in national courts and political pressure in UN forums would provide an incentive for such leadership. Moreover, there may be benefits in mitigating emissions at scales below the global level;
  4. Allocation of funds. The authors suggest tendering up to half of anticipated damages to States for adaptation purposes, with the remainder to allocated when damages become manifest.

Among the classroom discussion questions that might flow from this reading:

  • Do you agree with the authors that States would have incentives to join a compensation fund?
    • Would the establishment of an adjudicatory mechanism of the type contemplated here reduce such incentives?;
    • Do you think that recourse to national courts to pursue climate change litigation is a realistic option in most States?
  • Does the piece provide sufficient guidance on establishing causality for climate-induced damages? What standard should be utilized to ensure the viability of a compensation fund? Is such a standard politically viable?;
  • Should States liable under a compensation regime be permitted to dictate any of the terms of how such compensation is spent, or are these payments, to be considered, as some States argue, “reparations” that can be spent any way a damaged State wishes?
  • Is the proposed system for proportioning damages consistent with contemporary concepts of the principle of “common but differentiated responsibilities?”

 

 

 

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