At the crossroad of development and climate change: What we learned about low-carbon growth scenarios and the economics of adaptation

This blog is the first in a series that highlights insights from research for development policies and practice, supported by the Knowledge for Change Program (KCP). 

Global issues such as climate change and pandemics have been the focus of research supported by the Knowledge for Change program since its early days, going back two decades. These two topics are at the forefront of the most urgent development challenges that we face. 

This blog highlights three research endeavors on climate change, offering insights on both mitigation and adaptation measures, covering a wide range of countries including Bangladesh, Brazil, Ethiopia, Ghana, and Kenya. These research projects provide evidence-based advice on the costs, trade-offs, and the cross-sectoral nature of various policy options related to climate change that are highly relevant today. 

1. The economics of adaptation for climate-vulnerable coastal countries 

Sea-level rises and the ensuing salinity intrusion are silent but alarming threats to many coastal countries. One KCP research project, conducted in 2012–2014, looked closely at this issue in Bangladesh and assessed the multiple challenges that people living in the country’s southwest region are facing. This research highlights the importance of increasing the coordination of climate actions across sectors, because climate change threatens economic productivity and welfare in a multifaceted way. Elevated health risks, reduced land and labor productivity, degradation of natural ecosystems, greater exposure to extreme events, and higher infrastructure investment costs have all been cited as major negative impacts of climate change. But the key is to assess these impacts in a coordinated manner. These insights have  informed the World Bank’s work for the entire South Asia region.

Here are several findings from the research that are worth noting: 

• Health risks: A changing climate increases river and groundwater salinity which entails major health risks for local inhabitants. Climate change can result in a serious shortage of drinking water from river sources. People are drinking more saline water, so dehydration, hypertension, prenatal complications, and, as a result, infant mortality will rise. 
• Agriculture and food security: Higher-levels of river salinity limits the availability of water for dry-season agriculture. Soil salinity will also rise. This will have significant negative impacts on coastal agriculture, especially the high-yielding-variety rice crop, and threaten food security.  
• Infrastructure costs: Saline penetration of road surfaces lead to road erosion and increases costs for road maintenance. Saline penetration would engender progressive blistering, cracking, and pulverization of roads. This would lead to a serious drain on municipal expenditures for road maintenance. The study shows that, if salinity levels increased from minimum values to the maximum values indicated in the sample data, the predicted road maintenance expenditure share would increase by 252 percent! 
• Migration: Rising water and soil salinity levels lead to outmigration. The households subject to high inundation and salinization threats have significantly higher out-migration rates for working-age adults (particularly males). Outmigration from the coastal region increases poverty among vulnerable family members left behind. 

2. Economic Impacts of Low-Carbon Growth Scenarios 

Imagine if controlling deforestation alone could help a country meet its CO2 emission reduction target? This may be the case for Brazil! In 2010, our researchers launched a series of studies in six developing countries, exploring pathways for low-carbon growth. A key take-away of the research is that although there are many emission mitigation approaches that countries can adopt, sometimes implementing one single measure fully can yield surprisingly efficient results. A study by Chen and Timilsina (2012) shows that by 2040 in Brazil, CO2 emissions from energy use and industrial processes under a business-as-usual approach would be almost three times as high as those in 2010 and would account for more than half of the national total of CO2 emissions. However, if the current policy aiming to reduce deforestation by 70 percent is fully implemented, there would be no need to cut CO2 emissions from other measures, such as energy use and industrial processes until 2035, as emissions reduction through controlling deforestation alone would be enough to meet Brazil’s voluntary carbon mitigation target. If implemented, this would provide valuable time for Brazil to adjust its energy system to reduce emissions from businesss-as-usual levels.  

3. Clean electricity options in Africa 

There has been considerable energy transformation across Africa, but how can countries balance the need for essential economic development and the aspirations to keep carbon emissions in check? Across several countries in Sub-Saharan Africa, our researchers in 2010 estimated the costs of production and transmission for both renewable and conventional grid electricity from a fossil source. Deichmann et al. (2010) show that stand-alone or minigrid renewable energy plays an important role in expanding rural energy access. In the case of Ethiopia, minigrid wind power is already more cost competitive than central grid electricity in most areas of the country (Figure 1). Estimates for Ghana and Kenya reveal similar patterns. The research also demonstrates that solar photovoltaic power will become competitive in large parts of the country, when likely technological changes and cost reduction over the next 20 years are considered. 

Figure 1: Geographic distribution of levelized energy costs in Ethiopia 

_{Source: Deichmann et al. (2010)} 

Climate change is an acute threat to global development and affects millions of people, particularly the poorest and most vulnerable. The World Bank Group is committed to helping client countries achieve ambitious climate goals. The Climate Change Action Plan 2016–2020 increased the share of financing for climate action. And the 2025 Targets to Step up Climate Action further deepens this commitment, with enhanced support for adaptation. In our next blog, we’ll highlight another set of research that studied carbon pricing, the Amazon forest, biodiversity and biofuels. Stay tuned!

The authors would like to acknowledge contributions from the following projects under the guidance of task team leads (TTLs) and researchers: The Economics of Adaptation to Salinity Intrusion: The Case of Coastal Bangladesh (TTL: Susmita Dasgupta); Options for Cleaner Energy in Developing Countries and Overcoming Barriers to Their Adoption and Sustainability (TTL: Michael Toman ) and an African electrification study by Uwe Deichmann; Economic Impacts of Low Carbon Growth Scenarios in Selected Developing Countries (TTL: Michael Toman ) and a Brazil case study by Govinda Timilsina.

About the blog series: The Knowledge for Change Program (KCP) has launched a blog series to retrospectively highlight a selection of research projects conducted over the past 20 years, many of which still remain highlgy relevant and have great lessons for development policies and practices today. Managed by the Development Economics Vice Presidency of the World Bank (DEC), the KCP aims at promoting evidence-based policy making through research, data and analytics. To celebrate the launch of the KCP’s fourth phase, this blog series will look into the wealth of knowledge researchers have generated in KCP’s previous phases, distill lessons learned, and inspire discussions on future research directions.