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“A mandate for change”
– by Saleemul Huq
Is it possible to assess accurately how much money will be needed to allow developing countries to adapt to climate change?
Well, there certainly are still many things that we do not know precisely, but the sorts of figures that are being discussed point in one direction: a lot of money will be needed. The World Bank is speaking of $ 10 to 40 billion per year; according to Oxfam, $ 80 billion will be more likely. The UNFCCC argues that, by 2030, humanity as a whole will need $ 100 billion per year. These figures illustrate the scale of what we are looking at, though the money is not needed immediately.
What funds are available today?
In total, about $ 1 billion is budgeted for adaptation purposes, and the need will escalate over the years. At the Conference of Parties – COP for short – in Copenhagen at the end of next year, we will need five to ten times as much. The figures will keep rising, just as the impacts of climate change will become ever more evident.
How should that money be handled? The World Bank has shown an interest in becoming the major channel of disbursement.
Yes, it has, and so have various other multilateral agencies like the UNDP or the Global Environmental Facility. My personal preference would be for the Adaptation Fund to be in charge of the matter. The Adaptation Fund was established by the COP in Bali last year, and it has the best democratic legitimacy in the sense of not being controlled by donor governments. The Adaptation Fund’s governance is based on regional representation, so the countries that are most affected by Climate Change – the small island states, for instance – really have a say.
But don’t the big industrial nations call the shots in multilateral affairs? I always felt that poor developing countries did not have the capacities to meaningful interfere in international negotiations.
There certainly is no level playing field. Individual governments do struggle to send a competent delegation to a COP every three months, and that is how often they meet these days to cope with the negotiation agenda adopted in Bali. On the other hand, there are groups of countries that are strong enough to make a difference. Three groups matter in particular:
– the small island states,
– the African countries, and
– the least developed countries.
These groups have become quite effective. As a result, the Adaptation Fund meets governance criteria. Whether it meets efficiency criteria too remains to be seen. It will become operational next year.
If individual governments find it difficult to cope with the fast pace of COPs, are they doing enough domestically to prepare their poor nations for climate change?
There is quite a lot going on, and the governments are getting better at doing that kind of work. Most have prepared National Adaptations Plans of Action, NAPAs for short. So they know what needs to be done, once they get the money.
What are the first measures that must be taken? I imagine that must differ from country to country.
Initially it does not differ that much. First of all, it is necessary to build capacities and to raise awareness. People must understand the issues at stake, and so must the leaders. On that base, they can integrate climate-related measures into existing policies on agriculture, forestry, water provision, industrial development and so on. And on that base, there will be a need to invest in physical infrastructures, and the specifics will indeed differ from country to country, depending on whether they are exposed to rising sea levels, or the risk of landslides, or cyclones or whatever other challenges.
As you said before, we are discussing enormous amounts of money. So far, donors have never met their decades-old pledge of spending 0.7 % of GDP on official development assistance (ODA). Lately, donor countries combined have spent around $ 100 billion on ODA per year. Do you really believe they will come up with similar amounts to help countries cope with climate change?
They have been miserly in the past, yes. But as a matter of principle, we are not discussing ODA when we are speaking of adaptation. Climate change is something that the rich nations have caused, and they must compensate the victims. Moreover, they will not avoid the impacts themselves. The Dutch will need some € 10 billion per year to reinforce the dykes that protect them from the North Sea. It will be expensive to protect cities like London or Hamburg. And if rich nations spend money on their own adaptation, it will be impossible for them not to support other countries too, particularly as those countries are obviously the victims of Northern misbehaviour. Of course, they will focus on their own needs, but they won’t be able to shirk from those of others either.
Where will all the money come from? Most national budgets are stretched already.
So far, we have been discussing ODA that is allocated from national budgets. The funds needed for adaptation, however, will not be raised that way. Humanity will need new taxes, and they will be levied on polluters. There are proposals to impose a levy of five percent on cap-and-trade proceeds, so money could be generated when emission rights are auctioned. Such mechanisms can convincingly be presented to the public, much more convincingly than income taxes, for instance. A levy on air-travel tickets has also been mooted. It would generate around $ 10 billion per year – and that is what will be needed after the Copenhagen COP.
How do the global financial crisis and the global climate crisis interrelate?
There are two trends. On the one hand, businesses – and in particular the fossil-fuel industries – will want to postpone action, arguing that they cannot afford major investments in a time of turmoil. On the other hand, there is evidently a need for large-scale investment to stablise the demand-side of the world economy. Investing in new energy infrastructure makes sense in environmental terms, and so does investing in adaptation. Thanks to the current financial crisis, both also make perfect sense in global-economy terms too. Forward looking politicians will understand this.
How do you assess the role of the major industrial powers in climate negotiations so far?
The EU has been the most progressive, no doubt. European leaders have been arguing for a long time that action must be taken to mitigate climate change and prevent long-term catastrophes, and they have also spoken out in favour of assisting vulnerable countries. The USA under George Bush, however, has been very reluctant to do anything at all. Even to admit that there is a problem at all took this president years. Japan, Canada and Australia are somewhere in between the EU and the US.
But the USA will have a new president soon.
Yes, the election of Barack Obama is most encouraging. John McCain, of course, has also been ahead of his party on climate issues for a long time. But Obama’s campaign rhetoric on energy matters was much more stringent. He will not be under the pressure of the fossil-fuels lobby in the same way McCain would have been. And he surely has a mandate for change.
Questions by Hans Dembowski