Compensation or retaliation: Developed and developing countries and the growing conflict over global environmental conservation

Abstract

This paper joins the growing debate over whether developing countries should be compensated for achieving higher environmental management standards for global resources on their territory, but at a cost to their growth and development; or whether sanctions, including retaliatory trade measures, should be used against them if such improvements are not made. The approach used is to pull together fragments of studies that can be used in beginning to answer such questions and extrapolate from them so as to provide initial calculations of what orders of magnitude might be involved, even if in a somewhat rudimentary manner. The picture that emerges is of a bargaining set between the developed and developing countries over these issues that is large, and of instruments and sanctions which may provide to be surprisingly ineffective and even counter productive in application. Claims for compensation will thus likely be large, and the possibilities for effective retaliation somewhat more constrained. The range of uncertainty involved as to the outcome is thus substantial.