Download Environment and Development

Aid, Environment, and
Climate Change
ReCom Position Paper
Finn Tarp
UNU-WIDER
Channing Arndt
Copenhagen University
The Anthropocene
Example 1: Global Mean Surface Temperature Anomaly
Environment and Development:
Defining Challenges of the 21st Century
Environment:
Development:
• Global warming,
• Fish stock declines,
• Biodiversity and mass
extinctions,
• Deforestation, and
• Land degradation.
• 1.3 billion absolutely
poor people on the
globe.
• 36 low income
countries
• 47 fragile states
Climate change is of potentially transcendent importance.
The Dawn of Foreign Assistance
(living conditions in the 1960s)
• Per capita income in Asia of about $150
(2000 prices).
• Likely a majority of the world’s population
absolutely poor.
• Life expectancy in Africa and Asia of about 45 years.
• Infant mortality rates in Africa and Asia of about
140 deaths per 1000 births.
• Primary school enrollment rate in sub-Saharan
Africa of about 33%.
Growth in Per Capita GDP
Poverty Headcount
(USD 1.25 per day)
Infant Mortality Rate
Other Observations
• Substantial improvements in life expectancy and
educational attainment.
• Population growth in developing countries dropping
from 2.4% to about 1.3% today.
• Malthusian calculus on track to being defused.
• ReCom research shows aid materially contributed to
these gains.
• The aid system confronts the issues of today with a
substantial wealth of experience and a track record
of working towards the resolution of complex
problems.
The New Faces of the
Development Challenge
• To the extent the aid system was designed at all,
it was designed to improve the livelihoods of
poor people in poor countries.
• But,
– The number of countries categorized as low income
has fallen from 63 in 2000 to 36 today.
– Three out of four absolutely poor people now live in
middle income countries.
– More people live in states characterized as fragile
than in states characterized as low income.
Environmental Challenges Overlay
These Development Challenges
Environmental Challenges Overlay
These Development Challenges
Greenhouse gas emissions in CO2 equivalent per year by region
Environment and Development
• Inter-locking issues (focus on climate change)
– Developing countries (mostly middle income
countries) are home to most poor people.
– Developing countries (mostly middle income
countries) currently account for the majority of
emissions and the very large majority of emissions
growth.
– Developing countries most vulnerable to warming.
• Natural for development funds and institutions to
engage.
Responses of the Aid System
1. Shift the composition aid
2. Launch new institutional initiatives
3. Reform existing institutions
At the same time, much emphasis has been placed
on appropriate modalities.
We consider each of these four in turn.
Response of the Aid System (1)
Ratio of dirty to environmental aid flows
Adaptation to Climate Change
UNU-WIDER Results
• Climate change is unlikely to preclude growth and
development prospects prior to 2040.
• Uncertainties bedevil adaptation and associated aid
policies (drier or wetter future?).
• General emphasis on flexibility and robust policies that
provide benefits across a broad array of outcomes
– Human capital
– Functional institutions.
• Specific emphasis on agricultural research, regional river
basin management, and vulnerability of infrastructure to
extreme events.
• Notable confluence between the adaptation agenda and
the development agenda.
Response of the Aid System (2)
• New Institutional Initiatives:
– Reducing Emissions from Deforestation and Forest
Degradation (REDD),
– Clean Development Mechanism (CDM),
– Global Environment Facility (GEF), and
– Green Climate Fund (GCF).
• These initiatives currently constitute a substantial
share of the global response to climate change,
particularly with respect to mitigation
Assessment of Initiatives
• To a large degree, all four of the initiatives are predicated on
the existence of active carbon markets (GHG pricing).
• This public policy basis for emissions reductions is largely
absent. Consequently,
– International efforts to meet the mitigation challenge have fallen
short by a considerable margin.
– It is difficult to evaluate whether these initiatives could help
catalyse a process of transformation at the scale required while
leaving space for achievement of development goals.
• With appropriate public policies in place, the fundamentals
behind these four initiatives appear to be sound.
Greenhouse gas emissions in CO2 equivalent
per year by region.
Response of the Aid System (3)
Reforms of existing institutions
• Focus here on agriculture. Agriculture is:
– critical for growth and poverty reduction;
– impacted by climate change;
– potentially a source of low emissions energy via biofuels;
– a significant source of emissions through inputs, production
practices and land use change; and
– a potential emissions sink through reforestation and sustainable
land management.
• Developing country agriculture is critical globally
– Much greater underlying capacity to expand production.
– Growth in population and diet upgrading, and hence growth in
demand, centred almost exclusively in developing countries.
Reforming Agricultural Institutions
• Important contributions, such as the Green
Revolution in Asia, have been made.
• Nevertheless, there are strong needs for reform. For
example, an independent evaluation of FAO stated:
The Organization is today in a financial and programme
crisis that imperils the Organization’s future in delivering
essential services to the world.
• There is need for institutional re-think and
reconfiguration in agriculture.
Aid Modalities
• In low income countries, aid is often relatively large and
local capacity weak.
– Aid ideally promotes integration via, for example,
programme and budget support.
• In middle income countries, aid is relatively small and
local capacity is better.
– Aid roles in “soft assistance” such as technology
development and dissemination and in leveraging private
and domestic public investment should be more
pronounced.
– The potential returns to these forms of assistance may be
very high.
– The political will to supply aid to middle income countries
may be low.
Lessons
1. Continued assistance to poor countries is
necessary, recognizing that these countries are
likely to be more difficult cases.
2. The attention the aid system devotes to middleincome countries should increase due to:
• the concentration of absolutely poor people in middleincome countries and
• the key role that middle-income countries must play in
combating global environmental problems
This assistance should mainly take the form of
demand driven “soft assistance” that enhances
local capacities.
Lessons (continued)
3.
The role of aid and aid institutions in the provision of
global/regional public goods should be maintained or
enhanced.
•
•
•
•
•
4.
Information
Agriculture
Water and transboundary river basins
Technology
Research
Prepare to assist with the transformations required to
confront global environmental issues while providing
inputs for the development of appropriate public
policies at global and national levels
• The fundamental ideas behind REDD, CDM, GEF, and GCM
remain valid and appealing.
Lessons (continued)
5. Independent tracking of emissions at the
country level.
• Global greenhouse gas emissions should peak at or
before 2030 and then decline thereafter.
• Difficult to achieve without adequate monitoring.
• This is an auditing function best placed in a newly
created, specialized, independent and technically
competent institution.
Getting the Level of Ambition Right
• Aid has helped to improve living conditions of billions of
people, but, looking forward: Can aid save the planet?
• NO. However, past and present experience indicates that
aid can do a lot to continue to improve living conditions
and to confront environmental challenges.
• This is especially true with:
• Continued reconfiguration of the aid system to meet 21st
century challenges
• Appropriate global public policies
• Supportive national public policies