Rich countries should pay people in developing countries for the climate damage their emissions cause, on the condition that those countries put a price on carbon. That is the central proposal of a forthcoming book, Just Economics, by University of Chicago economist Michael Greenstone, with Nobel Prize-winning economists Abhijit Banerjee and Esther Duflo. “We’re proposing Indians receive money unencumbered. Spend it on whatever you want. That is based on the amount of damage the OECD countries’ emissions are doing,” Mr. Greenstone said in an interview. The payment, he said, “would go directly to the people, not to the government.”

The Organisation for Economic Co-operation and Development (OECD), a grouping of mostly wealthy, industrialised countries that has contributed to most of the accumulated carbon in the atmosphere driving global warming, contrasts with the “Global South”, meaning low- and middle-income countries whose emissions are fast rising. “Eighty two per cent of the emissions going forward are projected to be outside the OECD and moral appeals have failed,” he reckoned. “The better angels argument ain’t working.” However, the transfer would be “contingent on the Global South adopting carbon pricing. It’s not for free. It’s a deal. You have to give something to get something.”

Mr. Greenstone said it was possible to calculate the damage from carbon emissions to India. “However, the exact parameters of that will have to be negotiated. Such a deal did not require the whole world and could be struck between, say, the European Union and India,” he argued.

Much of Mr. Greenstone’s work is around designing market-based solutions to address pollution. Most prominent is the Surat Emissions Trading Scheme for controlling particulate matter, first mooted with the Gujarat Pollution Control Board in 2010. In a randomised trial, 150 textile plants were assigned to a market and 150 stayed under conventional regulation. Compliance in the market was “99%”, against about a third of industries out of compliance at any time under the status quo. This happened because researchers could see what firms bid to buy and sell pollution permits. “The price I want for that has got to be at least what it cost me to do it. From those bids, we were able to infer how expensive it was to achieve different levels of total emissions. Cutting emissions proved cheap, because the guys had all the equipment and just had to start operating it or maintaining it,” he explained.