Thomas Schelling: A Marshall Plan for Climate Change?

marshal-planBy: Scott Shuffield

The global warming debate is over.  Now the argument moves to solving the crisis of climate change.  Though often referred to in the context of “global warming,” the issues of climate change don’t just involve “warming” around the world but rather a general instability that could lead to innumerable negative externalities.  

During the Leadership for a Better World forum hosted by the Center for Social Value Creation, Thomas Schelling, Nobel Laureate and economist who helped shape the Marshall Plan, spoke on the institutions needed to cope with climate change.

First off, a little background information from his talk:

1.    “Developing” countries will be hurt the most by climate change.
2.    The cost of food will go up and the poorer countries will suffer more than richer countries.
3.    Agriculture makes up a large part of many developing countries’ economies.
4.    Developed countries cannot solve the problem of climate change without the help of developing countries.

After outlining these few points, Schelling presented his ideas on bringing a “Marshall Plan” to climate change.  He insisted that the developing and the developed countries (like China and the U.S.) should not communicate directly, but through an intermediary.  Affairs between the two countries are already so muddy that a mediator is a necessity.  The mediator could be an existing institution like the World Bank, but the issue is so large, that a new group may need to be created to serve as the climate change negotiator.

Next, he suggested that the developed countries meet together and accumulate a large sum of capital.  He equated it to the Marshall Plan, where the U.S. pledged 2% of its GDP to the Organization for European Economic Cooperation (OEEC).  After the funds are pledged, then the 6-12 developing countries thought to be playing the largest role in the climate change discussion, will sit down with the mediator and distribute the money themselves.  This same thing happened with the Marshall Plan when Western European nations met and distributed funds amongst themselves.

That’s it, the whole plan.  The only real stipulation is that the money would have to have allocation for spending on certain technologies like carbon sequestration and capture (taking the carbon out of pollution and pumping it into the ground).

Is this a viable solution?  Could the solution work for developing countries?  Is there willingness on the part of developed countries to simply give away money?  Are the consequences of climate change enough to justify huge “donations” to developing countries?  And the biggest question of all, how do we know that this will even help the problem at all?

What do you think?

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Scott Shuffield is an undergraduate international business student at the Robert H. Smith Business School at the University of Maryland.  He has worked with Prisma Microfinance Honduras and Kiva.org and is Co-President of the Global Business Society at the University of Maryland.

The posts on this page are contributed by students from the University of Maryland's Robert H. Smith School of Business in conjunction with the newly launched Center for Social Value Creation. The center's mission is to develop leaders with a deep sense of individual responsibility and the knowledge to use business as a vehicle for social change. These posts are a way to continue the dialogue outside of the classroom and share the viewpoints of Smith students on the challenges and opportunities of triple bottom line thinking.