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Economics of Climate Adaptation: An Expert Examination

Tom Grubisich's picture

Adaptation to climate change presents a cluster of question marks for developing countries:  What works, and where? How can different cost estimates be reconciled?  How should adaptation be integrated with agriculture and other development that are increasingly threatened  by flooding, drought, and rising sea levels?

Answers will be offered by top experts from the World Bank Environment Department's Climate Change Team in the special program "The Economics of Adaptation to Climate Change: The Global Report" on Tuesday, Jan. 12.  The place is the World Bank "J" Building on 18th Street NW between G and H Streets, Room B1-080. This blog will do a followup on the program.

Presenters will be World Bank environmental economists Sergio Margulis and Urvashi Narain, who were lead authors of the widely quoted report "The Costs to Developing Countries of Adaptating to Climate Change: New Methods and Estimates." The report says the cost of adapting to an approximately 2° C warmer world by 2050 is in the range of US$75 billion to $100 billion a year between 2010 and 2050.  The authors note the cost is about the same amount that developed countries now give in aid to developing countries.

Fragile States Are Hard to Lump Together

Tom Grubisich's picture

"Fragile states" -- the subject of the next Global Development Marketplace competition -- can't be put in one box.  Or two or even three boxes (i.e. in conflict, post-conflict, or threatened by conflict or political unrest).  The World Bank chart below shows how fragile states that aren't "Heavily Indebted Poor Countries" (HIPCs) can compare favorably to non-fragile HIPCs based on key indicators such as poverty, school enrollment, and mortality rates for children under five years of age.  The exception is in the poverty category in the "last available year" section of the chart where non-fragile HIPCs reverse the 1990-2006 average and perform better. (Some HIPCs have had their debt forgiven wholly or partially, while others have not yet advanced to either stage.)

The World Bank Data Visualization chart (below) in general mirrors the first chart's findings.  It ranks a mix of fragile and non-fragile states by per-capita gross national income (horizontal axis) and per-capita gross domestic product (vertical axis).  The highest-performing countries (green balls) are, right to left, upper-middle-income Gabon, South Africa, Mauritius, and Botswana, all of which are non-fragile and not heavily indebted.  The next highest-performing countries (the cluster of blue [poorest countries] and red balls [lower-middle income countries]) include Côte d'Ivoire, Republic of Congo, Nigeria (biggest blue ball), and Liberia, all of which have been designated fragile but are not heavily indebted.  (Nigeria is a special case.  It was on the World Bank's and other fragile lists as recently as 2008, but off the World Bank's new "interim" "Harmonized List of Fragile Situations" published Nov. 17, 2009.  But the World Bank's 2009 Worldwide Governance Indicators rank Nigeria as the third worst state for "political stability and lack of violence/terrorism," just below Afghanistan and Democratic Republic of the Congo.) Many of the blue balls at the lower ends of the two scales represent non-fragile but heavily indebted states.


 

DM2009 Finalists Rank Far Down as CO2 Emitters

Tom Grubisich's picture

The 44 developing countries represented among the hundred DM2009 finalists produce very modest amounts of carbon dioxide (the major man-made source of global warming) on a per-capita basis.  The World Bank data visualization (above) divides the 44 countries into low income (green balls), lower-middle income (orange), and upper-middle income (blue).  For comparison, the high-income U.S. is represented by the purple ball in the upper-right-hand corner.

The vertical axis shows emissions per capita in metric tons among finalist countries.  A group of Sub-Saharan African nations -- represented by the green balls at the far left -- produce the lowest per-capita emissions -- as low as a fractional .10 metric tons.  Russia --  the highest blue ball -- has the highest CO2 emission rate among finalist countries -- 10.5 tons.  The U.S. rate is 19.5 tons.  Per-capita emissions by India -- the largest orange ball -- are among the finalists' lowest rates, although the South Asian county is a major emitter overall because it is so populous.

Climate change's adverse affects, including drought, flooding, and rising sea levels, will hit developing countries the hardest, and that includes their economies as well as people (particularly the poor and other vulnerable) and natural resources.  The effects are already being felt.  The horizontal axis of the chart shows gross domestic product per capita in finalist countries.  Many countries' per-capita GDP is already precariously low -- below $500 -- and some others, including India's, aren't much higher.

The DM2009 finalist projects' triple objectives are to protect people at the community level -- particularly the most vulnerable -- and the natural resources on which they depend, and energize generally faltering rural economies.

A Graphic View of the Wide Split in Copenhagen

Tom Grubisich's picture

This World Bank data visualization shows how the lowest-income countries compare with the highest-income ones on carbon-dioxide emissions (the main man-made contributor to global warming) and energy use.   The lowest-income countries -- blue, purple, and pink balls -- are clustered at the low end of both axes.  CO2 emissions per capita are visualised horizontally and energy use, vertically.  The highest-income countries -- orange -- are at the higher end of both axes. 

The big purple ball in the lower-left-hand corner is Bangladesh, the most populous of the 49 Least Developed Countries.  It's per-capita CO2 emissions are .030 metric tons and its energy use per capita is the equivalent of 160.5 kilograms of oil.  By comparison, the U.S. -- the biggest orange ball toward the upper-right-hand corner -- produces 19.50 tons of CO2 per capita --- 65 times Bangladesh's - and its energy use is the equivalent of 7,760 kilograms of oil -- 48 times Bangladesh's.

The size of each ball reflects the population of the country it represents.

The visualization also includes the fast-growing middle-ncome countries of China (the biggest pink ball),  India (the biggest purple ball southwest of China), Brazil (the green ball to the left of China), and the Russian Federation (the blue ball in the middle of all the smaller orange balls).  All those countries are becoming major emitters of CO2.

More and Better Jobs

Eliana Cardoso's picture

Forget the Homo Sapiens and the Homo Economicus. The guy who traces our destiny is the Homo Ludens, the man who plays. Johan Huizinga, a professor of history and linguistics, in his 1938 book, says that art and culture originate from our propensity to dance and have fun. But to enjoy life, play and build a peaceful world, you need a productive job that removes you from the daily struggle of making ends meet.

South Asia is unique in the multiplicity of its challenges and opportunities to generate productive employment. Start counting: many workers are stuck in low productivity agriculture and informal employment; there is low female labor force participation; the skill base is low; the countries in the region struggle with pervasive vulnerability and uncertainty, large economic and social disparities, and persistent conflict and violence.

Yet, there is no work that looks at all these factors in an integrated manner for the region. This is the reason why the World Bank’s first South Asia Region flagship report will focus on More and Better Jobs. This blog will keep readers informed on the progress of the report during next year.

How Can South Asia Overcome its Infrastructure Deficit?

Ejaz Ghani's picture

Last week, I discussed the two very different South Asias and the need for regional cooperation to bring the lagging regions up to the standards of thriving regions. However, increased market integration by itself will not be sufficient to accelerate growth and benefit the lagging regions. South Asia suffers from a massive infrastructure deficit. Infrastructure is like second-nature geography, which can reduce the time and monetary costs to reach markets and thus overcome the limitations of physical geography.

Improved infrastructure that enhances connectivity and contributes to market integration is the best solution to promoting growth as well addressing rising inequality between regions. The Ganga Bridge in Bihar in India is a good example of second-nature geography. The bridge has reduced the time and monetary costs of farmers in the rural areas in north Bihar to reach markets in Patna, the largest city in Bihar. The Jamuna Bridge in Bangladesh is another good example of spatially connective infrastructure. The bridge has opened market access for producers in the lagging Northwest areas around the Rajshahi division. Better market access has helped farmers diversify into high value crops and reduced input prices.

South Asia suffers from three infrastructure deficits. First, there is a service deficit, as the region’s infrastructure has not been able to keep pace with a growing economy and population.

DM2009 Winners Face More Funding Hurdles

Tom Grubisich's picture

Development Marketplace awards to winners range up to $200,000 -- to cover what is called "early-stage" or seed development of projects.  But after that period -- usually one or two years -- any project, no matter how promising it looks, has to find new funding.

DM2009 juror Tran Triet of Vietnam, a DM2003 winner, talked about projects that seek to transform a community both environmentally and economically -- the ambitious aim of many of the DM proposals, winners and non-winners alike.  At the panel on "Taking an Idea to Scale," Dr. Tran said: "A long-term commitment is needed.  The social agenda takes time to happen.  The normal [Development Marketplace] funding cycle of one or two years would be too short to bring about changes."

Juror Fred Onduri, who is chair of the Least Developed Countries Expert Group with the U.N. Framework Convention on Climate Change as well as head of the Policy and Planning Department of the Ugandan Ministry of Foreign Affairs, says two years "is not enough."  He thinks the national governments of the countries where the winning projects would be developed should fund them in the out years.

Ideas, anyone?

Adaptation and Mitigation – The Difference

Tom Grubisich's picture

There are two ways to respond to climate change – adaptation and mitigation.  The responses are not an either/or.  Both are necessary.  Adaptation, as early as the short term, can cushion people and places against the impacts of extreme weather, including drought, heat waves, flooding, and rising sea levels.  Mitigation, over time, can slow down manmade global warming, which has been identified by many scientific studies as a major cause of extreme weather.

Full Speed Ahead: Internet Traffic Growth Unaffected by Financial Crisis

Joe Qian's picture

Reading about the financial crisis and the effects that have rippled around the world, it’s always heartening to find something positive in the midst of piles of red ink and pessimistic expectations.

Although the majority of industries and economies around the world have suffered due to the downturn, Internet traffic growth accelerated at an increasing rate in 2009 compared to 2008 with no discernible slowdown due to the crisis. According to data released by Telegeography, every single region around the globe registered growth in internet traffic, or flow of data. South Asia has registered over a 100% increase, higher than the 79% posted worldwide, although it must be noted that South Asia had a lower baseline capacity.

African Successes

Shanta Devarajan's picture

In recent years, a broad swath of African countries has begun to show a remarkable dynamism.  From Mozambique’s impressive growth rate (averaging 8% p.a. for more than a decade) to Kenya’s emergence as a major global supplier of cut flowers, from M-pesa’s mobile phone-based cash transfers to KickStart’s low-cost irrigation technology for small-holder farmers, and from Rwanda’s gorilla tourism to Lagos City’s Bus Rapid Transit system, Africa is seeing a dramatic transformation.  This favorable trend is spurred by, among other things, stronger leadership, better governance, an improving business climate, innovation, market-based solutions, a more involved citizenry, and an increasing reliance on home-grown solutions.  More and more, Africans are driving African development. 

The global economic crisis of 2008-09 threatens to undermine the optimism that Africa can harness this dynamism for long-lasting development.  In light of this, it might be useful to re-visit recent achievements.  The African Successes study aims to do just that.

The study will identify a wide range of development successes (see list), from which around 20 cases will be selected for in-depth study.  The analysis of each successful experience will evaluate the following: (1) the drivers of success—what has worked and why; (2) the sustainability of the successful outcome(s); and (3) the potential for scaling up successful experiences.  African success stories offer valuable insights and practical lessons to other countries in the region. 

I welcome your comments and suggestions for success stories. Click here to see the list of what we have come up with so far.


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