Rich countries owe $500 billion a year in “moral debt” to poor countries, estimates Nobel laureate economist Esther Duflo, who is proposing that developed countries take responsibility for global warming through two taxes.

“This is what I call moral debt. That’s not the cost of adaptation, that’s not what it would cost to mitigate. That’s what we owe,” the economist said in an interview with the Financial Times yesterday, citing the effects of global warming on mortality in poor countries.

“There will be enormous damage,” continued Diflo, who cited a 2020 study by the Global Impact Lab showing that the number of heat-related deaths is at risk of soaring in poor countries by the end of the century.

“The damage will be concentrated in poor countries outside the Organization for Economic Co-operation and Development,” she added, pointing out the responsibility of rich countries in climate change.

The G7 countries (Germany, Canada, USA, France, Italy, Japan, Britain), i.e. 10% of the world’s population, emit about 25% of the carbon dioxide associated with the global energy system, according to the International Energy Agency.

Esther Diflo relies on the work of the American economist Michael Greenstone who, based on a given monetary value for a year of life and the effect of global warming on the increase in mortality, calculates the cost of a ton of coal at $37. Multiplying this by the amount of annual emissions attributed to Europe and the US, equivalent to 14 billion tonnes of CO2, the price of the “moral debt” comes to 518 billion, Diflo argues.

In order to finance it, she proposes to increase the minimum tax rate on multinationals and to tax large assets, two mechanisms that would allow, according to her, to cover the annual budget.

Climate finance owed by rich countries to developing countries is currently set at $100 billion a year. COP29, in November in Baku, is expected to set the new amount beyond 2025.

The future target, critical to renewing trust between North and South, will fall far short of needs: developing countries (excluding China) need $2.4 trillion a year by 2030 to finance the transition them and adapt to climate change, according to calculations by UN experts.

At the same time, numerous scenarios are at the center of international negotiations to find how to fill the gap, including debt relief for poor countries or financial innovations through new international taxes.