Tackling inequality and unsustainable consumption – together

Oxfam Climate Change, Economics, Inequality

OPINION:

In many countries economic inequality is growing and the wealthiest are also those with the biggest carbon footprints. Dario Kenner, Independent Researcher, suggests that governments should act to reduce inequality and overconsumption in tandem.

If governments are serious about meeting their commitments to tackle climate change they must ensure their policies in other areas such as inequality are compatible with the objective of reducing total national emissions. Otherwise they could have unintended consequences such as increasing people’s consumption of carbon intensive goods and services.

They will need to simultaneously recognise the unequal distribution of greenhouse gas emissions by targeting the richest people who have the largest carbon footprints. Oxfam’s report Extreme Carbon Inequality calculates that the richest 10% of people in all countries have larger average carbon footprints compared to people on lower incomes. Globally “the average footprint of someone in the
richest 1% could be 175 times that of someone in the poorest 10%”.

How does reducing inequality affect a person’s carbon footprint?

Clearly, there is a lot more work and campaigning to do to force governments to step in and address extreme inequality. We also need to look ahead and think through how a government can act to reduce inequality, and at the same time have a positive impact on the environment.

For example, governments could use additional revenue from taxing the richest to invest in renewable energy, deliver resources for adaptation, provide free and green public services, and promote the circular economy.

One argument for redistributing wealth (by taxing the richest more) is to increase levels of consumption to drive economic growth. However, the equally urgent need to reduce greenhouse gas emissions means that this consumption can no longer be in carbon intensive goods and services, and must fall overall – this is particularly important in countries in the global north where there is still no evidence that absolute decoupling of economic growth from material throughput has
happened.

Would redistribution increase a person’s carbon footprint or would they now be able to afford “green” products? It is difficult to predict how people on different incomes would behave and this is why more research is needed to test assumptions in relation to individual’s carbon footprints. As the poorest often spend a larger portion of their money one scenario is that redistribution could lead to an increase in total national emissions. This would be more of a problem in countries in the global north such as the United States where the poorest 50% of the population already have a bigger carbon footprint than the richest 10% of people in countries such as China (see graph). Given current levels of extreme carbon inequality in many countries targeting the richest people who have the largest per capita carbon footprints should remain a top priority.

Below are several measures to redistribute wealth that could be designed to also reduce environmental impact:

  • Set low sales taxes on green goods: Oxfam is calling on governments to shift the tax burden away from consumption towards wealth and capital. One way to do this would be to reduce sales taxes on expensive “green” goods and services.
  • Minimum wage: Increasing the minimum wage (ideally to a living wage) has an immediate effect in reducing inequality because it increases wages. Is there a way to ensure this additional income is spent on green goods and services?
  • Green Citizen’s income: If individuals received a lump sum is there a way to ensure this income was spent on green products or invested in green businesses? If it was distributed via a complementary currency (in bank notes or digitally) this would potentially encourage people to spend it in sustainable ways e.g. In Bristol the renewable energy company Green Energy accepts payment in Bristol Pounds.
  • Green conditional cash transfers: In countries such as Brazil the Bolsa Familia system has been in place since 2003 covering millions of families whereby the poorest receive a monthly sum as long as they meet certain conditions such as children attending school or expectant mothers attending free check-ups Although one of the reasons
    for its success     has been that people can spend their monthly sum on whatever they want could there be a way to encourage spending on green goods and services? Other initiatives also exist such as Bolsa Floresta and Bolsa Verde where residents in rural areas (mainly the Amazon region) receive a regular income on the condition they protect the environment. More research is needed to
    quantify how these initiatives have affected the content of people’s consumption.

Economic inequality is one of the defining issues of our times. At some point increasing public pressure will force governments to reduce inequality. When they do act they should do so in a way that also encourages people across society to consume sustainably.

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Author: Dario Kenner
Archive blog. Originally posted on Oxfam Policy & Practice.