The Moral Imperative for Climate Finance

There is some good news on global climate change. The International Energy Agency suggests we are “at the beginning of the end” of the fossil fuel era, with ‘peak fossil’ likely this decade. And the consensus amongst climate modelers appears to be that the worse scenarios historically used by the IPCC for the potential extent of climate change—called SSP5-8.5 and SSP3-7.0—are now likely to be avoided. The ‘reference scenario’ of what will happen absent further policy change on current trends is closer to the RCP 4.5 scenario outcome, or about 2-3 degrees centigrade of warming by century’s end.

That is still no reason for complacency. Philip Adom’s literature survey, just published as a CGD working paper, suggest that with 2 to 3 degrees of warming the most pessimistic estimates, projected global output per capita in 2100 would be 15 to 25 percent lower than absent climate change (if still multiples higher than today). But more immediately and more problematically, the long-term average impact of climate change isn’t what we should be most worried about.

A two degree rise in the average global temperature is about the same as going from the average annual temperature in Wichita, Kansas to the average in Charlotte, North Carolina. The problem is (mostly) not that average, but the extremes, and about the people who will be affected by those extremes. And Philip’s paper points clearly in the direction of where those extremes are already having an impact.

Studies reported in the paper suggest that that the current and future impact of climate change is likely to be larger in Africa than elsewhere, larger near the equator, and larger in particular for rainfed agriculture. One estimate suggests existing climate change may have already reduced agricultural total factor productivity by 40 percent or more compared to a no-climate-change scenario in these countries (see the figure below). That will be one reason why Niger’s cereal yields per acre are below where they were in the early 1960s. Looking forward, climate change might reduce Ethiopia’s agricultural output by one third compared to a no-climate-change scenario.

Agriculture-reliant countries near the equator are already home to most of the world’s poorest people. The figure below shows the global distribution of countries according to World Bank income classifications. The poorest countries, with an income below $1,135 per capita in Atlas GNI, are colored dark purple—you can see a band across the equatorial region of Africa.

Take Niger again: a country where about 40 percent of the population live on less than $2.15 a day. Agriculture accounts for more than a third of GDP and two thirds of employment, but only about 0.6 percent of agricultural land is irrigated.

So, if you had to generalize who is suffering already and who will suffer most from climate change, it would be farmers near the equator on marginal rain-fed land. Meanwhile, if you were to try to predict who were the poorest people on the planet, you’d probably start with farmers near the equator on marginal rain-fed land. Add to that, if you had to generalize about who was least responsible for climate change, the answer would be farmers near the equator on marginal rain-fed land. Niger’s carbon dioxide emissions per capita are 90 kilograms a year. That compares to 13,000 kilograms a year in the US.

Under the circumstances, the very last thing you’d want to do is try to get subsistence farmers near the equator on marginal land to pay to fix the problem of rising average global temperatures a little faster. But that is what we are doing—by taking already inadequate ODA (or official development assistance) resources meant for the world’s poorest countries and redirecting them toward inefficient subsidies for low-carbon projects in far richer countries. Philip’s paper makes very clear that supporting climate adaptation for the most affected and least responsible is the single most urgent priority for climate finance.