Each year, the United Nation’s Development Program (UNDP) publishes the Human Development Index (HDI), which is a composite index that offers a method of evaluating international human development not only by economic advances but also in terms of the capabilities of individuals within a country. This study investigates the origin of the diminishing returns to HDI, given its important implications for climate policy and development. Specifically, we examine the current HDI calculation procedure to determine if the observed relationship is a factor of dimension normalization and/or aggregation within the HDI calculation.

Climate Change policy proposals are complicated by the dilemma of fossil fuels, which are both the primary cause of global warming and a necessity for human development. An empirical comparison of the United Nation’s Human Development Index (HDI) and per capita CO2 emissions by country confirms that nations with higher HDI values produce more CO2 as a result of greater energy consumption. The comparison also exposes the diminishing returns in human development that accrue as greenhouse gas emissions increase. Taking this relationship into consideration begs the moral question of what responsibility developed countries have to improve conditions in underdeveloped nations. That is, given that climate policy demands management of global CO2 emissions, cuts in the emissions of developed countries could enable emissions increases in underdeveloped countries that result in major improvements in human development.

Nevertheless, the dominant cap and trade climate policy proposals are myopic at addressing these development inequities. While the cap is necessary to curb global CO2 emissions, a market-based approach to trade will result in allocating CO2 emissions to the most profitable countries. Consequently, the relatively inefficient and underdeveloped countries will use the revenue from permit sales to purchase goods from more technologically sophisticated countries, rather than foster domestic production. The capabilities approach stresses that gains in financial resources alone are insufficient to improve the human condition without the supportive services that channel investment toward effective development.

We assert that for developing nations CO2 is a fundamental necessity, given that current technology constraints make CO2 emissions at least a co-requisite to achieving minimally acceptable levels of human development. To this end, we advocate prohibiting CO2 emissions trading between countries of different development stages. Without permit sales, developed countries will have incentives to locate production in underdeveloped countries to comply with carbon caps. Local production in the underdeveloped countries will lead to improvements in the human condition rather than merely fueling consumption from carbon sales revenue.

While sustainability is increasingly recognized as an important ethical principle, teaching ethical reasoning skills appropriate for sustainability is problematic. Using non-cooperative game theory, we simulate problems of collective action where tension exists between individual interests and group benefit using grade points. Each of our ethics games brings students completely around the Kolb Learning cycle, which includes four stages:
       1. Abstract conceptualization.
       2. Active experimentation.
       3. Concrete experience.
       4. Reflective observation.
Our pedagogy is organized into game modules that start with a review of theory and relevant concepts in the form of assigned readings and lectures.