This is the fourth blog in a series about how countries can make progress on the interlinked objectives of poverty, shared prosperity and the livable planet. For more information on the topic, read the 2024 Poverty, Prosperity, and Planet Report.
The World Bank’s new vision to create a world free of poverty on a livable planet recognizes that the concepts of poverty and a livable planet are deeply intertwined. For example, two-thirds of people globally living in extreme poverty—that is, those living below the International Poverty Line of $2.15 a day in 2017 PPPs—work in the agricultural sector and are more likely to rely on other forms of natural capital for income generation and food security. As such they are more vulnerable to extreme weather events, rising temperatures, and environmental degradation.
Eradicating poverty and limiting temperature rises cannot be achieved with business-as-usual policies
The UN’s Sustainable Development Goal 1.1 calls for eradicating poverty for all people everywhere. Similarly, the World Bank has a goal to reduce extreme poverty to less than 3% of the global population by 2030. The Poverty, Prosperity, and Planet Report 2024 highlights that, at current rates of progress, the world is far from meeting these goals (see also this blog). In fact, Figure 1a shows that, under current growth forecasts and using historical growth patterns across countries, extreme poverty is expected to remain well above 3% even by 2050.
At the same time, if growth rates remain as they are today, greenhouse gas (GHG) emissions will continue to increase global temperatures to levels with devastating and irreversible consequences (see Figures 1b and 1c).
Therefore, business-as-usual policies will not bring us closer to achieving the goals of eradicating poverty and addressing climate change. This becomes even more serious when we consider that the poverty projections in Figure 1a do not account for the potential negative impacts that rising temperatures, and more frequent and harmful extreme weather events, will have on poverty. Without action, unmitigated climate change will undoubtedly push more people into poverty.
Reducing trade-offs between raising incomes and lowering emissions
Historically, economic growth has been critical for reducing poverty. At the same time, economic growth has also typically been associated with increasing GHG emissions. However, this does not mean that eradicating extreme poverty will significantly impact climate change. Recent research, replicated in Figure 2, shows that raising incomes of those living below $2.15-a-day will have a negligible contribution to global GHG emissions. However, GHG emission trade-offs are greater for poverty lines associated with upper-middle-income countries—that is, $6.85-a-day in 2017 PPPs (see this blog for a description of the rationale behind this higher poverty line).
Growth that is more inclusive will reduce the trade-off between poverty reduction and emissions that we see at these higher poverty lines: Reducing high inequality brings the world closer to ending extreme poverty, while also decreasing the emissions needed to get there. Figure 3 shows that, even if everyone in the world has an income growth of 2 percent annually, it will take decades to eradicate extreme poverty. Higher growth rates, or lowering inequality, could bring that goal within reach. Reducing within-country inequality has the additional benefit that poverty is lowered without large changes to GHG emissions.
At the time the Paris Agreement was adopted in 2015, GHG emissions were expected to rise by 16 percent until 2030 on the basis of existing policies. Today, the expected increase is 3 percent, showcasing that transformations have already occurred over the past decade. However, even if currently pledged Nationally Determined Contributions (NDCs) were to be enacted, emissions would not fall enough to limit global warming to around 1.5°C—a warming of 2°C would already entail significantly more devastating impacts. Only stringent climate policies and technological innovations that emit far less for the same level of output (referred to as the Net Zero 2050 scenario in the figure), would have the chance to limit warming to around 1.5°C.
The good news is that there are many synergistic policies that help on both the poverty and climate goals (see this blog). Investments in renewable energy and energy efficiency offer multiple benefits, from reducing emissions to meeting growing energy demands and improving energy security. For many countries with low rates of energy access in particular, it can be most cost-effective to develop renewable energy infrastructure.
Another synergy is clear: stepping up actions to curb GHG emissions, especially in middle- and high-income countries, can substantially reduce the risks of trapping people in and pushing people into poverty. Not acting now will only make efforts to raise the welfare of people living in poverty more challenging going forward.
The authors gratefully acknowledge financial support from the UK Government through the Data and Evidence for Tackling Extreme Poverty (DEEP) Research Program.
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