1. european capacity building initiativeecbi The Oxford Measure − of Capability to Pay 2012 ecbi Fellowships Benito Müller european capacity building initiative initiative européenne de renforcement des capacités ecbi for sustained capacity building in support of international climate change negotiations pour un renforcement durable des capacités en appui aux négociations internationales sur les changements climatiques

2. european capacity building initiativeecbi Capability as Ability to Pay − A Taxation Model Capability = Gross Capability minus Capability Adjustment C k = GC k − Ca k [cu : capacity unit] taxable income = gross income minus tax allowances Tax Liability vs Charity Gross Capability Axioms (gdp = GDP/cap) If gdp k = gdp m then GC k : GC m = GDP k : GDP m If GDP k = GDP m then GC k : GC m = GDP k : GDP m

3. european capacity building initiativeecbi Capability as Ability to Pay − A Taxation Model Homogeneous World Solution (gdp k ≡ gdp m ) Gross Capability = National Income GC k ≈ GDP k Oxford Gross Capability Gross Capability = Progressively weighted National Income: OGC k = γ k × GDP k, with γ k = gdp k / gdp world [cu/$]

4. european capacity building initiativeecbi World per capita GDP (2009): $10’643 Gross Capability Examples

5. european capacity building initiativeecbi World per capita GDP (2009): $10’643 Gross Capability Examples OGC k = γ k × GDP k, [γ k = gdp k / gdp world ]

6. european capacity building initiativeecbi Gross Capability Examples OGC k = (γ k ) δ × GDP k, δ ≥ 0

7. european capacity building initiativeecbi Gross Capability Examples OGC k = (γ k ) δ × GDP k, δ ≥ 0 Reference level

8. european capacity building initiativeecbi Oxford Measure − Capability Adjustment Capability = Gross Capability minus Capability Adjustment Adjustment for what? The size of the domestic poverty problem Poverty Capability Adjustment PCA k Measuring the size of the poverty problem − two dimensions: Poverty Headcount PH k [number of poor people] Poverty Intensity Index: PI k [scalar] Global Poverty Capability Allowance Π [cu/person] Differentiated Poverty Capability Allowance Π k = Π × PI k [cu/person] PCA k = Π k × PH k [cu] Multidimensional Poverty Index: MPI k [scalar] PCA k = Π × P k × MPI k, with P k = population

9. european capacity building initiativeecbi Oxford Measure − Global Capability Allowance Π Poverty Capability Adjustment = Global Capability Poverty Allowance (Π) × Population × Multidimensional Poverty Index PCA k = Π × P k × MPI k, Zero Capability Allowances (ZCA k ) OCM k = OGC k − Π × P k × MPI k 0 = OGC k − ZCA k × P k × MPI k Π = def 3 × ZCA LDC Africa(-) = Sub-Saharan w/o South Africa Zero Capability Allowances

10. european capacity building initiativeecbi Gross and Net Capability Examples Reference level

11. european capacity building initiativeecbi Net Capability: Sensitivity to Choice of Poverty Allowance Π Capability Intensity (OCM k /GDP k ) Poverty Allowance Π = ZCA LDC × LDC Slope = ̶ Poverty Intensity −(Poverty Headcount × Poverty Intensity)/GDP −(PH k × PI k )/ × GDP k

12. european capacity building initiativeecbi Oxford Measure: Capability Headroom δ = 1, Π = 3 × ZCA LDC Capability Headroom = − Capability/GDP [%] (for countries with negative capability) Burundi 666%

13. european capacity building initiativeecbi Oxford Measure − Sample Capabilities I Non-zero Capability Zero Capability δ = 1, Π = 3 × ZCA LDC

14. european capacity building initiativeecbi Oxford Measure − Sample Capabilities II Non-zero Capability Zero Capability δ = 1, Π = 3 × ZCA LDC

15. european capacity building initiativeecbi Thank you!