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Opinion How this climate change fund could fuel populism in richer nations

An activist outside the COP27 U.N. Climate Summit in Sharm el-Sheikh, Egypt, on Friday calls for reparations to poorer nations for losses and damages because of climate change. (Peter Dejong/AP)

The announcement that climate negotiators at COP27 have agreed to establish a global fund to compensate poorer nations for damage wrought by climate change was hailed as a major accomplishment by climate activists. It might instead prove a major boost to anti-green populist parties worldwide.

The rationale for a “loss and damage” fund is straightforward. Developed nations caused planetary warming by emitting greenhouse gasses into the atmosphere for more than a century. Those emissions, aided by the continuing rise in global carbon emissions, are causing sea level rise and worsening floods and intensifying other natural disasters in countries that do not have the resources to repair the damage. The parties primarily responsible for the losses, therefore, will bond together to pay for their repair.

Sounds great. But consider the potential cost: John F. Kerry, President Biden’s chief climate negotiator, said earlier this year that such payments would run into the trillions of dollars. That’s “trillions” with a T.

It is simply incomprehensible that voters in the world’s developed countries will be willing to transfer that amount of money from themselves to the world’s poorest countries. Such generosity flies in the face of everything that democratic elections over the past century have taught us about voter behavior.

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Voters everywhere prioritize their own economic well-being first. That’s true whether we are talking about who taxes whom or about large macroeconomic questions such as tariffs or interest rate hikes to fight inflation. Citizens typically prefer to see someone else pay for programs they value; that’s the appeal of “tax the rich” messaging. They are also more likely willing to tax themselves for spending directly tied to the tax, such as the United States’ Social Security tax or other nations’ social welfare payroll taxes.

The proposed climate compensation fund violates both imperatives. It would tax everyone in the developed world to pay for spending in other countries, often thousands of miles away. Try running on that as your platform in an election.

This also comes at a time when developed nations and their citizens are consumed with addressing their own economic challenges. Americans were furious this year when gas prices topped $5 a gallon and inflation wreaked havoc on their savings. Wealthy countries are also in hock up to their eyeballs having run up multitrillion-dollar deficits in the past 15 years to fight the global financial crisis and then the covid-19 pandemic. Voters are not likely to support trillions more in debt to pay for the climate fund; they will want their leaders focused on solving their own immediate problems.

That means global leaders are faced with a political dilemma. Failing to contribute to the “loss and damage” fund could doom further progress on global climate policy. But doubling down on climate policy means risking a voter backlash at home they might not survive politically.

This year’s Dutch political crisis is instructive. The government, led by four parties whose political bases include educated urbanites, enacted climate policies designed to reduce agricultural greenhouse gas emissions. This gave rise to massive protests among Dutch farmers, who rightly understood that the policies would cause many of them to go out of business. Support for the government has plunged, with a recent poll showing the four parties in the governing coalition would win only 43 seats in the 150-member parliament. Now imagine the type of protest that would erupt if everyone in the country were taxed to compensate the rest of the world.

Any political rebellion would likely benefit populist parties. Most conventional conservative parties support green policies. Indeed, the Dutch government that passed the controversial laws contains two centrist and two center-right parties. Support for strong climate policy, with few exceptions, therefore encompasses the entire traditional left-right divide. That leaves only populist parties to exploit the discontent.

That’s what’s happening in the Netherlands. Polls show that a new party that obtained only one seat in the 2021 elections, the Farmer-Citizen Movement (known as BBB for its Dutch initials), would win 13 seats if an election were held today. Three older right-wing populist parties also suspicious of climate policies have also seen their support rise this year. Those four parties would now receive 54 seats combined, an increase of 25 seats since 2021.

Climate change is a serious challenge. But activists and their political allies have failed to make the case that citizens should make significant sacrifices in their living standards to meet the threat. Pushing such policies forward without ensuring the public is on board would make the populist movements of the past decade look mild in comparison.