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world development report
Development and
Climate Change
2010
world development report
Development and
Climate Change
© 2010 The International Bank for Reconstruction and Development / The World Bank
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Washington DC 20433
Telephone: 202-473-1000
Internet: www.worldbank.org
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This volume is a product of the staff of the International Bank for Reconstruction and
Development / The World Bank. The findings, interpretations, and conclusions expressed
in this volume do not necessarily reflect the views of the Executive Directors of The World
Bank or the governments they represent.
The World Bank does not guarantee the accuracy of the data included in this work. The
boundaries, colors, denominations, and other information shown on any map in this work
do not imply any judgement on the part of The World Bank concerning the legal status of
any territory or the endorsement or acceptance of such boundaries.
Softcover
ISBN: 978-0-8213-7987-5
ISSN: 0163-5085
eISBN: 978-0-8213-7988-2
DOI: 10.1596/978-0-8213-7987-5
Hardcover
ISSN: 0163-5085
ISBN: 978-0-8213-7989-5
DOI: 10.1596/978-0-8213-7989-5
For more information about the World Development Report 2010, please visit
http://www.worldbank.org/wdr.
Contents
Foreword xiii
Acknowledgments xv
Abbreviations and Data Notes xvii
Main Messages xx
Part One
v
vi CONTENTS
Part Two
Glossary 353
Index 399
Boxes
1 All developing regions are vulnerable to the impacts of 2.10 The Caribbean Catastrophe Risk Insurance Facility: Insurance
climate change—for different reasons 6 against service interruption after disasters 105
2 Economic growth: Necessary, but not sufficient 7 2.11 Workfare in India under the Indian National Rural
3 The cost of “climate insurance” 8 Employment Guarantee Act 109
4 Safety nets: From supporting incomes to reducing 2.12 Migration today 110
vulnerability to climate change 13 FB.1 What is biodiversity? What are ecosystem services? 124
5 Promising approaches that are good for farmers and good FB.2 Payment for ecosystem and mitigation services 128
for the environment 17 FB.3 Excerpts from the Declaration of Indigenous Peoples on
6 Ingenuity needed: Adaptation requires new tools and new Climate Change 128
knowledge 19 3.1 Robust decision making: Changing how water managers
7 Cities reducing their carbon footprints 21 do business 140
8 The role of land use, agriculture, and forestry in managing 3.2 The dangers of establishing a market for water rights
climate change 25 before the institutional structures are in place 142
1.1 Empowered women improve adaptation and mitigation 3.3 Managing water resources within the margin of error:
outcomes 43 Tunisia 143
1.2 The basics of discounting the costs and benefits of climate 3.4 Palm oil, emission reductions, and avoided
change mitigation 49 deforestation 148
1.3 Positive feedbacks, tipping points, thresholds, and 3.5 Product and market diversification: An economic
nonlinearities in natural and socioeconomic systems 50 and ecological alternative for marginal farmers in the
1.4 Ethics and climate change 53 tropics 152
FA.1 The carbon cycle 71 3.6 Biotech crops could help farmers adapt to climate
change 155
FA.2 Ocean health: Coral reefs and ocean acidification 78
3.7 Biochar could sequester carbon and increase yields
2.1 Characteristics of adaptive management 90
on a vast scale 156
2.2 Planning for greener and safer cities: The case
3.8 Policy makers in Morocco face stark tradeoffs on cereal
of Curitiba 93
imports 160
2.3 Adapting to climate change: Alexandria, Casablanca,
3.9 Pilot projects for agricultural carbon finance
and Tunis 93
in Kenya 172
2.4 Fostering synergies between mitigation and
4.1 The financial crisis offers an opportunity for efficient and
adaptation 95
clean energy 190
2.5 Preparing for heat waves 96
4.2 Efficient and clean energy can be good for
2.6 Beating the odds and getting ahead of impacts: Managing development 192
risk of extreme events before they become disasters 99
4.3 A 450 ppm CO2e (2°C warmer) world requires a
2.7 Satellite data and geo-information are instrumental in fundamental change in the global energy system 200
managing risk—and inexpensive 100
4.4 Regional energy mix for 450 ppm CO2e (to limit warming
2.8 Creating jobs to reduce flood risk 101 to 2°C) 202
2.9 Public-private partnerships for sharing climate risks: 4.5 Renewable energy technologies have huge potential but face
Mongolia livestock insurance 102 constraints 205
Contents ix
4.6 Advanced technologies 209 7.2 Innovation is a messy process and can be promoted
4.7 The role for urban policy in achieving mitigation and only by policies that address multiple parts of a complex
development co-benefits 210 system 295
4.8 Energy efficiency faces many market and nonmarket 7.3 Innovative monitoring: Creating a global climate service
barriers and failures 212 and a “system of systems” 296
4.9 Carbon pricing alone is not enough 213 7.4 ITER: A protracted start for energy R&D cost sharing 298
4.10 California’s energy-efficiency and renewable energy 7.5 Technologies on the scale of carbon capture and storage
programs 215 require international efforts 299
4.11 World Bank Group experience with financing energy 7.6 The Super-Efficient Refrigerator: A pioneer advanced
efficiency 216 market commitment program? 300
4.12 Difficulties in comparing energy technology costs: A matter 7.7 A promising innovation for coastal adaptation 302
of assumptions 217 7.8 Universities need to be innovative: The case
4.13 Denmark sustains economic growth while cutting of Africa 305
emissions 218 7.9 CGIAR: A model for climate change? 306
4.14 Feed-in laws, concessions, tax credits, and renewable 7.10 Improved cook stoves designs can reduce soot,
portfolio standards in Germany, China, and the United producing important benefits for human health and for
States 219 mitigation 312
4.15 Concentrated solar power in Middle East and 8.1 Miscommunicating the need for climate action 323
North Africa 221 8.2 Misunderstandings about the dynamics of climate change
5.1 The climate regime today 234 encourage complacency 325
5.2 Some proposals for burden sharing 238 8.3 How risk perceptions can sink policies: Flood risk
5.3 Multitrack approaches score well on effectiveness management 325
and equity 242 8.4 End-to-end community engagement for landslide risk
FC.1 Taxing virtual carbon 252 reduction in the Caribbean 327
6.1 Costing adaptation to climate change in developing 8.5 Communicating climate change 328
countries 261 8.6 Inserting climate education in school curricula 329
6.2 Assessing the co-benefits of the CDM 266 8.7 China’s and India’s path to institutional reform for climate
6.3 Carbon taxes versus cap-and-trade 268 action 333
6.4 Indonesian Ministry of Finance engagement on climate 8.8 National adaptation programs of action 334
change issues 269 8.9 Enhancing government accountability for climate change in
6.5 Conserving agricultural soil carbon 274 the United Kingdom 335
6.6 Allocating concessional development finance 277 8.10 Green federalism and climate change policy 336
6.7 Climate vulnerability versus social capacity 279 8.11 Garnering support for cap-and-trade 339
6.8 Climate vulnerability versus capacity to adapt 280 8.12 The private sector is changing practices even without
national legislation 341
7.1 Geoengineering the world out of climate change 290
Figures
1 Unequal footprints: Emissions per capita in low-, middle-, 5 What does the way forward look like? Two options among
and high-income countries, 2005 2 many: Business as usual or aggressive mitigation 10
2 Rebalancing act: Switching from SUVs to fuel-efficient 6 Climate impacts are long-lived: Rising temperatures and sea
passenger cars in the U.S. alone would nearly offset the levels associated with higher concentrations of CO2 11
emissions generated in providing electricity to 1.6 billion 7 Global CO2e emissions by sector: Energy, but also
more people 3 agriculture and forestry, are major sources 14
3 High-income countries have historically contributed 8 The full portfolio of existing measures and advanced
a disproportionate share of global emissions and still technologies, not a silver bullet, will be needed to get the
do 3 world onto a 2°C path 15
4 Off the charts with CO2 4
x CONTENTS
9 High expected demand drove cost reductions in solar 3.10 In Andhra Pradesh, India, farmers generate their own
photovoltaics by allowing for larger-scale production 16 hydrological data, using very simple devices and tools, to
10 The gap is large: Estimated annual incremental climate regulate withdrawals from aquifers 165
costs required for a 2°C trajectory compared with current 3.11 An ideal climate-smart agricultural landscape of the
resources 23 future would enable farmers to use new technologies and
1.1 Individuals’ emissions in high-income countries overwhelm techniques to maximize yields and allow land managers to
those in developing countries 39 protect natural systems, with natural habitats integrated
into agriculturally productive landscapes 166
1.2 Corn-based biofuels in the United States increase CO2
emissions and health costs relative to gasoline 47 3.12 An ideal climate-smart landscape of the future would use
flexible technology to buffer against climate shocks through
1.3 Assessing deadweight losses from partial participation in a
natural infrastructure, built infrastructure, and market
climate deal 57
mechanisms 167
1.4 Global green stimulus spending is rising 59
3.13 Global cereal prices are expected to increase 50 to 100
FA.1 Global emissions of greenhouse gases have been percent by 2050 168
increasing 72
3.14 A carbon tax applied to emissions from agriculture and
FA.2 Major factors affecting the climate since the Industrial land-use change would encourage protection of natural
Revolution 73 resources 170
FA.3 Global annual average temperature and CO2 concentration 4.1 The story behind doubling emissions: improvements in
continue to climb, 1880–2007 73 energy and carbon intensity have not been enough to offset
FA.4 Greenland’s melting ice sheet 74 rising energy demand boosted by rising incomes 193
FA.5 Embers burning hotter: Assessment of risks and damages 4.2 Primary energy mix 1850–2006. From 1850 to 1950 energy
has increased from 2001 to 2007 76 consumption grew 1.5 percent a year, driven mainly by coal.
FA.6 Projected impacts of climate change by region 77 From 1950 to 2006 it grew 2.7 percent a year, driven mainly
by oil and natural gas 193
FA.7 Ways to limit warming to 2°C above preindustrial
levels 80 4.3 Despite low energy consumption and emissions per
capita, developing countries will dominate much of the
2.1 The number of people affected by climate-related disasters future growth in total energy consumption and CO2
is increasing 98 emissions 194
2.2 Floods are increasing, even in drought-prone Africa 100 4.4 Greenhouse gas emissions by sector: world and high-,
2.3 Insurance is limited in the developing world 103 middle-, and low-income countries 195
2.4 Turning back the desert with indigenous knowledge, farmer 4.5 Car ownership increases with income, but pricing, public
action, and social learning 106 transport, urban planning, and urban density can contain
3.1 Climate change in a typical river basin will be felt across the car use 196
hydrological cycle 136 4.6 Where the world needs to go: Energy-related CO2 emissions
3.2 Freshwater in rivers makes up a very small share of the per capita 197
water available on the planet—and agriculture dominates 4.7 Only half the energy models find it possible to achieve the
water use 139 emission reductions necessary to stay close to 450 ppm
3.3 Meat is much more water intensive than major CO2e (2°C) 197
crops 149 4.8 Estimates of global mitigation costs and carbon prices for
3.4 Intensive beef production is a heavy producer of 450 and 550 ppm CO2e (2°C and 3°C) in 2030 from five
greenhouse gas emissions 149 models 199
3.5 Agricultural productivity will have to increase even more 4.9 Global actions are essential to limit warming to 2°C
rapidly because of climate change 150 (450 ppm) or 3°C (550 ppm). Developed countries alone
could not put the world onto a 2°C or 3°C trajectory, even if
3.6 Ecosystems have already been extensively converted for
they were to reduce emissions to zero by 2050 204
agriculture 151
4.10 The emissions gap between where the world is headed and
3.7 Computer simulation of integrated land use in
where it needs to go is huge, but a portfolio of clean energy
Colombia 153
technologies can help the world stay at 450 ppm CO2e
3.8 Demand for fish from aquaculture will increase, particularly (2°C) 206
in Asia and Africa 158
4.11 The goal is to push low-carbon technologies from unproven
3.9 Remote-sensing techniques are used in the vineyards concept to widespread deployment and to higher emission
of Worcester (West Cape, South Africa) to gauge water reductions 207
productivity 164
Contents xi
4.12 Solar photovoltaic power is getting cheaper over time, 7.8 E-bikes are now among the cheapest and cleanest travel
thanks to R&D and higher expected demand from larger mode options in China 307
scale of production 220 7.9 Middle-income countries are attracting investments from
FC.1 Import-export ratio of energy-intensive products in the top five wind equipment firms, but weak intellectual
high-income countries and low- and middle-income property rights constrain technology transfers and R&D
countries 253 capacity 309
6.1 Annual mitigation costs rise with the stringency and 8.1 The direct actions of U.S. consumers produce up to one-
certainty of the temperature target 259 third of total U.S. CO2 emissions 322
6.2 The gap is large: Estimated annual climate funding 8.2 Small local adjustments for big global benefits: Switching
required for a 2°C trajectory compared with current from SUVs to fuel-efficient passenger cars in the United
resources 263 States alone would nearly offset the emissions generated by
7.1 Global cumulative installed wind capacity has soared in the providing energy to 1.6 billion more people 323
past decade 287 8.3 Individuals’ willingness to respond to climate change differs
7.2 Government budgets for energy RD&D are near their lows, across countries and does not always translate into concrete
and nuclear dominates 292 actions 324
7.3 Annual spending for energy and climate change R&D pales 8.4 Climate change is not a priority yet 326
against subsidies 293 8.5 Concern about climate change decreases as wealth goes
7.4 The pace of invention is uneven across low-carbon up 327
technologies 293 8.6 Effective governance goes hand in hand with good
7.5 Policy affects every link of the innovation chain 295 environmental performance 332
7.6 The “valley of death” between research and the 8.7 Democracies do better in climate policy outputs than policy
market 300 outcomes 338
7.7 Enrollment in engineering remains low in many developing
countries 304
Maps
1 Climate change will depress agricultural yields in most 2.2 A complex challenge: managing urban growth and
countries in 2050, given current agricultural practices and flood risk in a changing climate in South and Southeast
crop varieties 5 Asia 94
1.1 More than a billion people depend on water from 2.3 Northern cities need to prepare for Mediterranean
diminishing Himalayan glaciers 38 climate—now 96
1.2 Rich countries are also affected by anomalous climate: 2.4 Climate change accelerates the comeback of dengue in the
The 2003 heat wave killed more than 70,000 people in Americas 97
Europe 41 2.5 Small and poor countries are financially vulnerable to
1.3 Climate change is likely to increase poverty in most of extreme weather events 104
Brazil, especially its poorest regions 42 2.6 Senegalese migrants settle in flood-prone areas around
1.4 The January 2008 storm in China severely disrupted urban Dakar 111
mobility, a pillar of its economic growth 45 FB.1 While many of the projected ecosystem changes are
1.5 Africa has enormous untapped hydropower potential, in boreal or desert areas that are not biodiversity
compared to lower potential but more exploitation of hydro hotspots, there are still substantial areas of overlap and
resources in the United States 46 concern 126
FA.1 Regional variation in global climate trends over the last FB.2 Unprotected areas at high risk of deforestation and with
30 years 75 high carbon stocks should be priority areas to benefit from
FA.2 Potential tipping elements in the climate system: Global a REDD mechanism 129
distribution 79 3.1 Water availability is projected to change dramatically
2.1 At risk: Population and megacities concentrate in low- by the middle of the 21st century in many parts of the
elevation coastal zones threatened by sea level rise and world 137
storm surges 91 3.2 The world will experience both longer dry spells and more
intense rainfall events 138
xii CONTENTS
3.3 Climate change will depress agricultural yields in most 3.6 Developed countries have more data collection points and
countries by 2050 given current agricultural practices and longer time series of water monitoring data 163
crop varieties 145 7.1 Advances in wind mapping open up new
3.4 Intensive agriculture in the developed world has opportunities 288
contributed to the proliferation of dead zones 150
3.5 World grain trade depends on exports from a few
countries 161
Tables
1 Incremental mitigation costs and associated financing 4.5 Policy interventions for energy efficiency, renewable energy,
requirements for a 2°C trajectory: What will be needed in and transport 214
developing countries by 2030? 9 6.1 Existing instruments of climate finance 258
2 In the long term, what will it cost? Present value of 6.2 Estimated annual climate funding needed in developing
mitigation costs to 2100 9 countries 260
FA.1 Potential tipping elements in the climate system: 6.3 Potential regional CDM delivery and carbon revenues
Triggers, time-scale, and impacts 80 (by 2012) 262
FB.1 Assessment of the current trend in the global state 6.4 New bilateral and multilateral climate funds 263
of major services provided by ecosystems 125
6.5 The tax incidence of an adaptation levy on the Clean
4.1 What it would take to achieve the 450 ppm CO2e Development Mechanism (2020) 267
concentration needed to keep warming close
6.6 Potential sources of mitigation and adaptation
to 2°C—an illustrative scenario 198
finance 271
4.2 Investment needs to limit warming to 2°C (450 ppm CO2e)
6.7 National and multilateral initiatives to reduce deforestation
in 2030 199
and degradation 273
4.3 Different country circumstances require tailored
7.1 International technology-oriented agreements specific to
approaches 204
climate change 294
4.4 Policy instruments tailored to the maturity of
7.2 Key national policy priorities for innovation 303
technologies 207
Foreword
Climate change is one of the most complex challenges of our young century. No country
is immune. No country alone can take on the interconnected challenges posed by climate
change, including controversial political decisions, daunting technological change, and far-
reaching global consequences.
As the planet warms, rainfall patterns shift and extreme events such as droughts, floods,
and forest fires become more frequent. Millions in densely populated coastal areas and
in island nations will lose their homes as the sea level rises. Poor people in Africa, Asia,
and elsewhere face prospects of tragic crop failures; reduced agricultural productivity; and
increased hunger, malnutrition, and disease.
As a multilateral institution whose mission is inclusive and sustainable development, the
World Bank Group has a responsibility to try to explain some of those interconnections
across disciplines—development economics, science, energy, ecology, technology, finance,
and effective international regimes and governance. With 186 members, the World Bank
Group faces the challenge, every day, of building cooperation among vastly different states,
the private sector, and civil society to achieve common goods. This 32nd World Develop-
ment Report seeks to apply that experience, combined with research, to advance knowledge
about Development and Climate Change.
Developing countries will bear the brunt of the effects of climate change, even as they
strive to overcome poverty and advance economic growth. For these countries, climate
change threatens to deepen vulnerabilities, erode hard-won gains, and seriously undermine
prospects for development. It becomes even harder to attain the Millennium Development
Goals—and ensure a safe and sustainable future beyond 2015. At the same time, many
developing countries fear limits on their critical call to develop energy or new rules that
might stifle their many needs—from infrastructure to entrepreneurism.
Tackling the immense and multidimensional challenge of climate change demands
extraordinary ingenuity and cooperation. A “climate-smart” world is possible in our
time—yet, as this Report argues, effecting such a transformation requires us to act now,
act together, and act differently.
We must act now, because what we do today determines both the climate of tomorrow
and the choices that shape our future. Today, we are emitting greenhouse gases that trap
heat in the atmosphere for decades or even centuries. We are building power plants, res-
ervoirs, houses, transport systems, and cities that are likely to last 50 years or more. The
innovative technologies and crop varieties that we pilot today can shape energy and food
sources to meet the needs of 3 billion more people by 2050.
We must act together, because climate change is a crisis of the commons. Climate change
cannot be solved without countries cooperating on a global scale to improve energy effi-
ciencies, develop and deploy clean technologies, and expand natural “sinks” to grow green
by absorbing gases. We need to protect human life and ecological resources. We must act
together in a differentiated and equitable way. Developed countries have produced most of
the emissions of the past and have high per capita emissions. These countries should lead
the way by significantly reducing their carbon footprints and stimulating research into
xiii
xiv F O R E WO R D
green alternatives. Yet most of the world’s future emissions will be generated in the devel-
oping world. These countries will need adequate funds and technology transfer so they can
pursue lower carbon paths—without jeopardizing their development prospects. And they
need assistance to adapt to inevitable changes in climate.
We must act differently, because we cannot plan for the future based on the climate of
the past. Tomorrow’s climate needs will require us to build infrastructure that can with-
stand new conditions and support greater numbers of people; use limited land and water
resources to supply sufficient food and biomass for fuel while preserving ecosystems; and
reconfigure the world’s energy systems. This will require adaptation measures that are
based on new information about changing patterns of temperature, precipitation, and spe-
cies. Changes of this magnitude will require substantial additional finance for adaptation
and mitigation, and for strategically intensified research to scale up promising approaches
and explore bold new ideas.
We need a new momentum. It is crucial that countries reach a climate agreement in
December in Copenhagen that integrates development needs with climate actions.
The World Bank Group has developed several financing initiatives to help countries
cope with climate change, as outlined in our Strategic Framework for Development and
Climate Change. These include our carbon funds and facilities, which continue to grow as
financing for energy efficiency and new renewable energy increases substantially. We are
trying to develop practical experience about how developing countries can benefit from
and support a climate change regime—ranging from workable mechanisms to provide
incentives for avoided deforestation, to lower carbon growth models and initiatives that
combine adaptation and mitigation. In these ways, we can support the UNFCCC process
and the countries devising new international incentives and disincentives.
Much more is needed. Looking forward, the Bank Group is reshaping our energy and envi-
ronment strategies for the future, and helping countries to strengthen their risk management
practices and expand their safety nets to cope with risks that cannot be fully mitigated.
The 2010 World Development Report calls for action on climate issues: If we act now, act
together, and act differently, there are real opportunities to shape our climate future for an
inclusive and sustainable globalization.
Robert B. Zoellick
President
The World Bank Group
Acknowledgments
This Report has been prepared by a core team led by Rosina Bierbaum and Marianne Fay
and comprising Julia Bucknall, Samuel Fankhauser, Ricardo Fuentes-Nieva, Kirk Hamilton,
Andreas Kopp, Andrea Liverani, Alexander Lotsch, Ian Noble, Jean-Louis Racine, Mark Roseg-
rant, Xiaodong Wang, Xueman Wang, and Michael Ian Westphal. Major contributions were
made by Arun Agrawal, Philippe Ambrosi, Elliot Diringer, Calestous Juma, Jean-Charles Hour-
cade, Kseniya Lvovsky, Muthukumara Mani, Alan Miller, and Michael Toman. Helpful advice
and data were provided by Leon Clarke, Jens Dinkel, Jae Edmonds, Per-Anders Enkvist, Brigitte
Knopf, and Volker Krey. The team was assisted by Rachel Block, Doina Cebotari, Nicola Cenac-
chi, Sandy Chang, Nate Engle, Hilary Gopnik, and Hrishikesh Patel. Additional contributions
were made by Lidvard Gronnevet and Jon Strand.
Bruce Ross-Larson was the principal editor. The World Bank’s Map Design Unit created the
maps under the direction of Jeff Lecksell. The Office of the Publisher provided editorial, design,
composition, and printing services under the supervision of Mary Fisk and Andres Meneses;
Stephen McGroarty served as acquisitions editor.
The World Development Report 2010 was co-sponsored by Development Economics (DEC)
and the Sustainable Development Network (SDN). The work was conducted under the general
guidance of Justin Yifu Lin in DEC and Katherine Sierra in SDN. Warren Evans and Alan H.
Gelb also provided valuable guidance. A Panel of Advisers comprised of Neil Adger, Zhou Dadi,
Rashid Hassan, Geoffrey Heal, John Holdren (until December 2008), Jean-Charles Hourcade,
Saleemul Huq, Calestous Juma, Nebojša Nakićenović, Carlos Nobre, John Schellnhuber, Robert
Watson, and John Weyant provided extensive and excellent advice at all stages of the Report.
World Bank President Robert B. Zoellick provided comments and guidance.
Many others inside and outside the World Bank contributed with comments and inputs. The
Development Data Group contributed to the data appendix and was responsible for the Selected
World Development Indicators.
The team benefited greatly from a wide range of consultations. Meetings and regional work-
shops were held locally or through videoconferencing (using the World Bank’s Global Develop-
ment Learning Network) in: Argentina, Bangladesh, Belgium, Benin, Botswana, Burkina Faso,
China, Costa Rica, Côte d’Ivoire, Denmark, Dominican Republic, Ethiopia, Finland, France,
Germany, Ghana, India, Indonesia, Kenya, Kuwait, Mexico, Mozambique, the Netherlands,
Nicaragua, Norway, Peru, the Philippines, Poland, Senegal, South Africa, Sweden, Tanzania,
Thailand, Togo, Tunisia, Uganda, the United Arab Emirates, and the United Kingdom. The
team wishes to thank participants in these workshops and videoconferences, which included
academics, policy researchers, government officials, and staff of nongovernmental, civil society,
and private sector organizations.
Finally, the team would like to acknowledge the generous support of the Government of
Norway, the UK Department for International Development, the Government of Denmark,
the Government of Germany through Deutsche Gesellschaft für technische Zusammenarbeit,
the Swedish Government through Biodiversity Centre/Swedish International Biodiversity Pro-
gramme (SwedBio), the Trust Fund for Environmentally & Socially Sustainable Development
xv
xvi AC K N OW L E D G M E N T S
(TFESSD), the multi-donor programmatic trust fund, and the Knowledge for Change Pro-
gram (KCP).
Rebecca Sugui served as senior executive assistant to the team—her 17th year with the
WDR—Sonia Joseph and Jason Victor as program assistants, and Bertha Medina as team
assistant. Evangeline Santo Domingo served as resource management assistant.
Abbreviations and Data Notes
Abbreviations
AAU assigned amount unit
ARPP Annual Report on Portfolio Performance
BRIICS Brazil, the Russian Federation, India, Indonesia, China, and South Africa
Bt Bacillus thuringiensis
CCS carbon capture and storage
CDM Clean Development Mechanism
CER certified emission reduction
CGIAR Consultative Group on International Agricultural Research
CIPAV Centro para Investigación en Sistemas Sostenibles de Producción
Agropecuaria
CH4 methane
CO2 carbon dioxide
CO2e carbon dioxide equivalent
CPIA Country Policy and Institutional Assessment
CTF Clean Technology Fund
EE energy efficiency
EIT economies in transition
ENSO El Niño–Southern Oscillation
ESCO energy service company
ETF–IW Environmental Transformation Fund–International Window
EU European Union
FCPF Forest Carbon Partnership Facility
FDI foreign direct investment
FIP Forest Investment Program
GCCA Global Climate Change Alliance
GCS global climate services enterprise
GDP gross domestic product
GEO Group on Earth Observation
GEOSS Global Earth Observation System of Systems
GEEREF Global Energy Efficiency and Renewable Energy Fund
GEF Global Environment Facility
GFDRR Global Facility for Disaster Reduction and Recovery
GHG greenhouse gas
GM genetically modified
Gt gigaton
GWP global warming potential
IAASTD International Assessment of Agricultural Science and Technology for
Development
IATAL international air travel adaptation levy
xvii
xviii A B B R E V I AT I O N S A N D DATA N O T E S
Data notes
The countries included in regional and income groupings in this Report are listed in the
Classification of Economies table at the end of the Selected World Development Indicators.
Income classifications are based on gross national product (GNP) per capita; thresholds for
income classifications in this edition may be found in the Introduction to Selected World
Development Indicators. Figures, maps, and tables (including selected indicators) show-
ing income groupings are based on the World Bank’s income classification in 2009. The
data shown in the Selected World Development Indicators are based on the classification
in 2010. Group averages reported in the figures and tables are unweighted averages of the
countries in the group, unless noted to the contrary.
The use of the word countries to refer to economies implies no judgment by the World
Bank about the legal or other status of a territory. The term developing countries includes
low- and middle-income economies and thus may include economies in transition from
central planning, as a matter of convenience. The terms industrialized countries or devel-
oped countries may be used as a matter of convenience to denote high-income economies.
Dollar figures are current U.S. dollars, unless otherwise specified. Billion means 1,000
million; trillion means 1,000 billion.
Main Messages of the
World Development Report 2010
• Acting now is essential, or else options disappear and costs increase as the world
commits itself to high-carbon pathways and largely irreversible warming trajec-
tories. Climate change is already compromising efforts to improve standards of
living and to achieve the Millennium Development Goals. Staying close to 2°C
above preindustrial levels—likely the best that can be done—requires a verita-
ble energy revolution with the immediate deployment of energy efficiency and
available low-carbon technologies, accompanied by massive investments in the
next generation of technologies without which low-carbon growth cannot be
achieved. Immediate actions are also needed to cope with the changing climate
and to minimize the costs to people, infrastructure and ecosystems today as well
as to prepare for the greater changes in store.
xx
Main Messages: World Development
Chapter Title
Report
Goes 2010
Here xxi
• Acting together is key to keeping the costs down and effectively tackling both adap-
tation and mitigation. It has to start with high-income countries taking aggressive
action to reduce their own emissions. That would free some “pollution space” for
developing countries, but more importantly, it would stimulate innovation and the
demand for new technologies so they can be rapidly scaled up. It would also help
create a sufficiently large and stable carbon market. Both these effects are critical
to enable developing countries to move to a lower carbon trajectory while rapidly
gaining access to the energy services needed for development, although they will
need to be supplemented with financial support. But acting together is also critical
to advance development in a harsher environment—increasing climate risks will
exceed communities’ capacity to adapt. National and international support will
be essential to protect the most vulnerable through social assistance programs, to
develop international risk-sharing arrangements, and to promote the exchange of
knowledge, technology, and information.
• Acting differently is required to enable a sustainable future in a changing world. In
the next few decades, the world’s energy systems must be transformed so that global
emissions drop 50 to 80 percent. Infrastructure must be built to withstand new
extremes. To feed 3 billion more people without further threatening already stressed
ecosystems, agricultural productivity and efficiency of water use must improve.
Only long-term, large-scale integrated management and flexible planning can sat-
isfy increased demands on natural resources for food, bioenergy, hydropower, and
ecosystem services while conserving biodiversity and maintaining carbon stocks in
land and forests. Robust economic and social strategies will be those that take into
account increased uncertainty and that enhance adaptation to a variety of climate
futures—not just “optimally” cope with the climate of the past. Effective policy
will entail jointly evaluating development, adaptation, and mitigation actions, all
of which draw on the same finite resources (human, financial, and natural).
An equitable and effective global climate deal is needed. Such a deal would
recognize the varying needs and constraints of developing countries, assist them
with the finance and technology to meet the increased challenges to development,
ensure they are not locked into a permanently low share of the global commons,
and establish mechanisms that decouple where mitigation happens from who pays
for it. Most emissions growth will occur in developing nations, whose current car-
bon footprint is disproportionately low and whose economies must grow rapidly to
reduce poverty. High-income countries must provide financial and technical assis-
tance for both adaptation and low-carbon growth in developing countries. Cur-
rent financing for adaptation and mitigation is less than 5 percent of what may be
needed annually by 2030, but the shortfalls can be met through innovative fi nanc-
ing mechanisms.
Success hinges on changing behavior and shifting public opinion. Individuals,
as citizens and consumers, will determine the planet’s future. Although an increas-
ing number of people know about climate change and believe action is needed, too
few make it a priority, and too many fail to act when they have the opportunity.
So the greatest challenge lies with changing behaviors and institutions, particu-
larly in high-income countries. Public policy changes—local, regional, national,
and international—are necessary to make private and civic action easier and more
attractive.
Overview
Changing the Climate
for Development
T
hirty years ago, half the developing temperatures, warming that will require
world lived in extreme poverty— substantial adaptation.
today, a quarter.1 Now, a much High-income countries can and must
smaller share of children are mal- reduce their carbon footprints. They cannot
nourished and at risk of early death. And continue to fill up an unfair and unsustain-
access to modern infrastructure is much able share of the atmospheric commons. But
more widespread. Critical to the progress: developing countries—whose average per
rapid economic growth driven by techno- capita emissions are a third those of high-
logical innovation and institutional reform, income countries (figure 1)—need massive
particularly in today’s middle-income coun- expansions in energy, transport, urban sys-
tries, where per capita incomes have dou- tems, and agricultural production. If pursued
bled. Yet the needs remain enormous, with using traditional technologies and carbon
the number of hungry people having passed intensities, these much-needed expansions
the billion mark this year for the first time will produce more greenhouse gases and,
in history.2 With so many still in poverty hence, more climate change. The question,
and hunger, growth and poverty alleviation then, is not just how to make development
remain the overarching priority for develop- more resilient to climate change. It is how to
ing countries. pursue growth and prosperity without caus-
Climate change only makes the challenge ing “dangerous” climate change.3
more complicated. First, the impacts of a Climate change policy is not a simple
changing climate are already being felt, with choice between a high-growth, high-carbon
more droughts, more floods, more strong world and a low- growth, low- carbon
storms, and more heat waves—taxing indi- world—a simple question of whether to
viduals, firms, and governments, drawing grow or to preserve the planet. Plenty of
resources away from development. Second, inefficiencies drive today’s high- carbon
continuing climate change, at current rates, intensity.4 For example, existing technolo-
will pose increasingly severe challenges to gies and best practices could reduce energy
development. By century’s end, it could lead consumption in industry and the power
to warming of 5°C or more compared with sector by 20–30 percent, shrinking carbon
preindustrial times and to a vastly differ- footprints without sacrificing growth. 5
ent world from today, with more extreme Many mitigation actions—meaning
weather events, most ecosystems stressed changes to reduce emissions of greenhouse
and changing, many species doomed to gases—have significant co-benefits in pub-
extinction, and whole island nations threat- lic health, energy security, environmental
ened by inundation. Even our best efforts sustainability, and fi nancial savings. In
are unlikely to stabilize temperatures at Africa, for example, mitigation opportuni-
anything less than 2°C above preindustrial ties are linked to more sustainable land and
2 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
Figure 1 Unequal footprints: Emissions per capita in low-, middle-, and high-income munications (8 percent) or pharmaceuticals
countries, 2005 (15 percent) invest in RD&D.10
CO2e per capita (tons) A switch to a low-carbon world through
16 technological innovation and complemen-
14 Emissions from tary institutional reforms has to start with
land-use change immediate and aggressive action by high-
12 All other income countries to shrink their unsus-
emissions
tainable carbon footprints. That would
10
free some space in the atmospheric com-
8 mons (figure 2). More important, a credible
Developing-country averages: commitment by high-income countries to
6
with land-use change drastically reduce their emissions would
4 without land-use change stimulate the needed RD&D of new tech-
nologies and processes in energy, transport,
2
industry, and agriculture. And large and
0 predictable demand for alternative tech-
High-income Middle-income Low-income nologies will reduce their price and help
countries countries countries
make them competitive with fossil fuels.
Sources: World Bank 2008c; WRI 2008 augmented with land-use change emissions from Houghton 2009. Only with new technologies at competi-
Note: Greenhouse gas emissions include carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), and high-
global-warming-potential gases (F-gases). All are expressed in terms of CO2 equivalent (CO2e)—the quantity tive prices can climate change be curtailed
of CO2 that would cause the same amount of warming. In 2005 emissions from land-use change in high income without sacrificing growth.
countries were negligible.
There is scope for developing countries
forest management, to cleaner energy (such to shift to lower-carbon trajectories without
as geothermal or hydro power), and to the compromising development, but this var-
creation of sustainable urban transport ies across countries and will depend on the
systems. So the mitigation agenda in Africa extent of financial and technical assistance
is likely to be compatible with furthering from high-income countries. Such assis-
development.6 This is also the case for Latin tance would be equitable (and in line with
America.7 the 1992 United Nations Framework Con-
Nor do greater wealth and prosperity vention on Climate Change, or UNFCCC):
inherently produce more greenhouse gases, high-income countries, with one-sixth of
even if they have gone hand in hand in the world’s population, are responsible for
the past. Particular patterns of consump- nearly two-thirds of the greenhouse gases
tion and production do. Even excluding oil in the atmosphere (figure 3). It would
producers, per capita emissions in high- also be efficient: the savings from helping
income countries vary by a factor of four, to fi nance early mitigation in developing
from 7 tons of carbon dioxide equivalent countries—for example, through infra-
(CO2e) 8 per capita in Switzerland to 27 in structure and housing construction over
Australia and Luxembourg.9 the next decades—are so large that they
And dependence on fossil fuel can hardly produce clear economic benefits for all.11
be considered unavoidable given the inad- But designing, let alone implementing, an
equacy of the efforts to find alternatives. international agreement that involves sub-
While global subsidies to petroleum products stantial, stable, and predictable resource
amount to some $150 billion annually, public transfers is no trivial matter.
spending on energy research, development, Developing countries, particularly the
and deployment (RD&D) has hovered around poorest and most exposed, will also need
$10 billion for decades, apart from a brief spike assistance in adapting to the changing cli-
following the oil crisis (see chapter 7). That mate. They already suffer the most from
represents 4 percent of overall public RD&D. extreme weather events (see chapter 2). And
Private spending on energy RD&D, at even relatively modest additional warm-
$40 billion to $60 billion a year, amounts to ing will require big adjustments to the way
0.5 percent of private revenues—a fraction of development policy is designed and imple-
what innovative industries such as telecom- mented, to the way people live and make a
Overview: Changing the Climate for Development 3
living, and to the dangers and the opportu- Figure 2 Rebalancing act: Switching from SUVs to fuel-efficient passenger cars in the U.S. alone
nities they face. would nearly offset the emissions generated in providing electricity to 1.6 billion more people
The current financial crisis cannot be an Emissions (million tons of CO2)
excuse to put climate on the back burner. 350
On average, a financial crisis lasts less than
two years and results in a 3 percent loss in 300
gross domestic product (GDP) that is later
offset by more than 20 percent growth over
250
eight years of recovery and prosperity.12 So
for all the harm they cause, financial crises
come and go. Not so with the growing threat 200
imposed by a changing climate. Why?
Because time is not on our side. The 150
impacts of greenhouse gases released into
the atmosphere will be felt for decades, even
millennia,13 making the return to a “safe” 100
level very difficult. This inertia in the cli-
mate system severely limits the possibility 50
of making up for modest efforts today with
accelerated mitigation in the future.14 Delays
0
also increase the costs because impacts Emission reductions by switching Emission increase by providing
worsen and cheap mitigation options disap- fleet of American SUVs to cars with basic electricity to 1.6 billion people
pear as economies become locked into high- EU fuel economy standards. without access to electricity.
carbon infrastructure and lifestyles—more Source: WDR team calculations based on BTS 2008.
inertia. Note: Estimates are based on 40 million SUVs (sports utility vehicles) in the United States traveling a total of
480 billion miles (assuming 12,000 miles a car) a year. With average fuel efficiency of 18 miles a gallon, the
Immediate action is needed to keep SUV fleet consumes 27 billion gallons of gasoline annually with emissions of 2,421 grams of carbon a gallon.
warming as close as possible to 2°C. That Switching to fuel-efficient cars with the average fuel efficiency of new passenger cars sold in the European
Union (45 miles a gallon; see ICCT 2007) results in a reduction of 142 million tons of CO2 (39 million tons of car-
amount of warming is not desirable, but it bon) annually. Electricity consumption of poor households in developing countries is estimated at 170 kilowatt-
is likely to be the best we can do. There isn’t hours a person-year and electricity is assumed to be provided at the current world average carbon intensity of
160 grams of carbon a kilowatt-hour, equivalent to 160 million tons of CO2 (44 million tons of carbon). The size
a consensus in the economic profession that of the electricity symbol in the global map corresponds to the number of people without access to electricity.
this is the economic optimum. There is,
however, a growing consensus in policy and Figure 3 High-income countries have historically contributed a disproportionate share of
global emissions and still do
scientific circles that aiming for 2°C warm-
ing is the responsible thing to do.15 This Share of global emissions, historic and 2005
Report endorses such a position. From the Greenhouse gas emissions
perspective of development, warming much Cumulative CO2 emissions CO2 emissions in 2005: All sectors, including
since 1850: Energy in 2005: Energy land-use change
above 2°C is simply unacceptable. But sta-
bilizing at 2°C will require major shifts in 2% 3% 6%
lifestyle, a veritable energy revolution, and a
transformation in how we manage land and 34% 38%
forests. And substantial adaptation would 47% 50%
still be needed. Coping with climate change 64% 56%
will require all the innovation and ingenu-
ity that the human race is capable of.
Inertia, equity, and ingenuity are three Low-income countries (1.2 billion people) Middle-income countries (4.2 billion people)
themes that permeate this Report. Inertia High-income countries (1 billion people) Overuse relative to population share
is the defining characteristic of the climate
Sources: DOE 2009; World Bank 2008c; WRI 2008 augmented with land-use change emissions from Houghton 2009.
challenge—the reason we need to act now. Note: The data cover over 200 countries for more recent years. Data are not available for all countries in
Equity is the key to an effective global deal, the 19th century, but all major emitters of the era are included. Carbon dioxide (CO2) emissions from energy
include all fossil-fuel burning, gas flaring, and cement production. Greenhouse gas emissions include CO2,
to the trust needed to find an efficient reso- methane (CH4), nitrous oxide (N2O), and high-global-warming-potential gases (F-gases). Sectors include
lution to this tragedy of the commons—the energy and industrial processes, agriculture, land-use change (from Houghton 2009), and waste. Overuse of
the atmospheric commons relative to population share is based on deviations from equal per capita emissions;
reason we need to act together. And ingenuity in 2005 high-income countries constituted 16 percent of global population; since 1850, on average, today’s
is the only possible answer to a problem that high-income countries constituted about 20 percent of global population.
4 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
is politically and scientifically complex—the million (ppm) for 800,000 years, but shot
quality that could enable us to act differ- up to about 387 ppm over the past 150 years
ently than we have in the past. Act now, act (figure 4), mainly because of the burning of
together, act differently—those are the steps fossil fuels and, to a lesser extent, agriculture
that can put a climate-smart world within and changing land use. A decade after the
our reach. But first it requires believing there Kyoto Protocol set limits on international
is a case for action. carbon emissions, as developed countries
enter the first period of rigorous accounting
The case for action of their emissions, greenhouse gases in the
The average temperature on Earth has atmosphere are still increasing. Worse, they
already warmed by close to 1°C since the are increasing at an accelerating rate.17
beginning of the industrial period. In the The effects of climate change are already
words of the Fourth Assessment Report of visible in higher average air and ocean tem-
the Intergovernmental Panel on Climate peratures, widespread melting of snow and
Change (IPCC), a consensus document ice, and rising sea levels. Cold days, cold
produced by over 2,000 scientists represent- nights, and frosts have become less fre-
ing every country in the United Nations: quent while heat waves are more common.
“Warming of the climate system is unequiv- Globally, precipitation has increased even
ocal.”16 Global atmospheric concentrations as Australia, Central Asia, the Mediterra-
of CO2, the most important greenhouse nean basin, the Sahel, the western United
gas, ranged between 200 and 300 parts per States, and many other regions have seen
more frequent and more intense droughts.
Heavy rainfall and floods have become
Figure 4 Off the charts with CO2 more common, and the damage from—
and probably the intensity of—storms and
Carbon dioxide concentration (ppm)
tropical cyclones have increased.
1,000
Climate change threatens all, but
Higher emissions scenario for 2100
particularly developing countries
800 The more than 5°C warming that unmiti-
gated climate change could cause this cen-
tury18 amounts to the difference between
today’s climate and the last ice age, when gla-
600
ciers reached central Europe and the north-
Lower emissions scenario for 2100 ern United States. That change occurred
over millennia; human-induced climate
400 change is occurring on a one-century time
Observed in 2007
scale giving societies and ecosystems little
time to adapt to the rapid pace. Such a
drastic temperature shift would cause large
200
dislocations in ecosystems fundamental to
human societies and economies—such as
the possible dieback of the Amazon rain
0 forest, complete loss of glaciers in the Andes
800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 and the Himalayas, and rapid ocean acidifi-
Number of years ago cation leading to disruption of marine eco-
systems and death of coral reefs. The speed
Source: Lüthi and others 2008.
Note: Analysis of air bubbles trapped in an Antarctic ice core extending back 800,000 years documents the
and magnitude of change could condemn
Earth’s changing CO2 concentration. Over this long period, natural factors have caused the atmospheric CO2 more than 50 percent of species to extinc-
concentration to vary within a range of about 170 to 300 parts per million (ppm). Temperature-related data
make clear that these variations have played a central role in determining the global climate. As a result of
tion. Sea levels could rise by one meter this
human activities, the present CO2 concentration of about 387 ppm is about 30 percent above its highest level century,19 threatening more than 60 mil-
over at least the last 800,000 years. In the absence of strong control measures, emissions projected for this
century would result in a CO2 concentration roughly two to three times the highest level experienced in the
lion people and $200 billion in assets in
past 800,000 or more years, as depicted in the two projected emissions scenarios for 2100. developing countries alone.20 Agricultural
Overview: Changing the Climate for Development 5
Map 1 Climate change will depress agricultural yields in most countries in 2050, given current agricultural practices and crop varieties
No data
-50 -20 0 20 50 100
BOX 1 All developing regions are vulnerable to the impacts of climate change—for different reasons
The problems common to developing well-managed coral reefs is $13 billion in disastrous impact could be a dramatic
countries—limited human and financial Southeast Asia alone—which are already dieback of the Amazon rain forest and
resources, weak institutions—drive their stressed by industrial pollution, coastal a conversion of large areas to savannah,
vulnerability. But other factors, attribut- development, overfishing, and runoff of with severe consequences for the region’s
able to their geography and history, are agricultural pesticides and nutrients. climate—and possibly the world’s.
also significant. Vulnerability to climate change in East- Water is the major vulnerability in
Sub-Saharan Africa suffers from ern Europe and Central Asia is driven by the Middle East and North Africa, the
natural fragility (two-thirds of its sur- a lingering Soviet legacy of environmen- world’s driest region, where per capita
face area is desert or dry land) and high tal mismanagement and the poor state water availability is predicted to halve by
exposure to droughts and floods, which of much of the region’s infrastructure. 2050 even without the effects of climate
are forecast to increase with further An example: rising temperatures and change. The region has few attractive
climate change. The region’s econo- reduced precipitation in Central Asia will options for increasing water storage,
mies are highly dependent on natural exacerbate the environmental catastro- since close to 90 percent of its fresh-
resources. Biomass provides 80 percent phe of the disappearing Southern Aral water resources are already stored in
of the domestic primary energy supply. Sea (caused by the diversion of water to reservoirs. The increased water scarcity
Rainfed agriculture contributes some grow cotton in a desert climate) while combined with greater variability will
23 percent of GDP (excluding South sand and salt from the dried-up seabed threaten agriculture, which accounts for
Africa) and employs about 70 percent of are blowing onto Central Asia’s glaciers, some 85 percent of the region’s water
the population. Inadequate infrastructure accelerating the melting caused by higher use. Vulnerability is compounded by a
could hamper adaptation efforts, with temperature. Poorly constructed, badly heavy concentration of population and
limited water storage despite abundant maintained, and aging infrastructure and economic activity in flood-prone coastal
resources. Malaria, already the biggest housing—a legacy of both the Soviet era zones and by social and political tensions
killer in the region, is spreading to higher, and the transition years—are ill suited to that resource scarcity could heighten.
previously safe, altitudes. withstand storms, heat waves, or floods. South Asia suffers from an already
In East Asia and the Pacific one major Latin America and the Caribbean’s stressed and largely degraded natural
driver of vulnerability is the large num- most critical ecosystems are under threat. resource base resulting from geography
ber of people living along the coast and First, the tropical glaciers of the Andes coupled with high levels of poverty and
on low-lying islands—over 130 million are expected to disappear, changing the population density. Water resources are
people in China, and roughly 40 million, timing and intensity of water available to likely to be affected by climate change
or more than half the entire population, in several countries, resulting in water stress through its effect on the monsoon, which
Vietnam. A second driver is the continued for at least 77 million people as early as provides 70 percent of annual precipita-
reliance, particularly among the poorer 2020 and threatening hydropower, the tion in a four-month period, and on the
countries, on agriculture for income and source of more than half the electricity in melting of Himalayan glaciers. Rising sea
employment. As pressures on land, water, many South American countries. Second, levels are a dire concern in the region,
and forest resources increase—as a result warming and acidifying oceans will result which has long and densely populated
of population growth, urbanization, and in more frequent bleaching and possible coastlines, agricultural plains threatened
environmental degradation caused by diebacks of coral reefs in the Caribbean, by saltwater intrusion, and many low-
rapid industrialization—greater vari- which host nurseries for an estimated lying islands. In more severe climate-
ability and extremes will complicate their 65 percent of all fish species in the basin, change scenarios, rising seas would
management. In the Mekong River basin, provide a natural protection against submerge much of the Maldives and
the rainy season will see more intense pre- storm surge, and are a critical tourism inundate 18 percent of Bangladesh’s land.
cipitation, while the dry season lengthens asset. Third, damage to the Gulf of Mex- Sources: de la Torre, Fajnzylber, and Nash
by two months. A third driver is that the ico’s wetlands will make the coast more 2008; Fay, Block, and Ebinger 2010; World
region’s economies are highly depen- vulnerable to more intense and more Bank 2007a; World Bank 2007c; World Bank
dent on marine resources—the value of frequent hurricanes. Fourth, the most 2008b; World Bank 2009b.
policy makers in some developing countries account for 16 percent of world popula-
note that more of their development bud- tion but would bear 20–25 percent of the
get is diverted to cope with weather-related global impact costs. But their much greater
emergencies.27 wealth makes them better able to cope with
High-income countries will also be such impacts. Climate change will wreak
affected even by moderate warming. havoc everywhere—but it will increase the
Indeed, damages per capita are likely to gulf between developed and developing
be higher in wealthier countries since they countries.
Overview: Changing the Climate for Development 7
trajectory. But there are some emerging 3°C.30 But they do note that the incremen-
agreements. In the major models, the bene- tal cost of keeping warming around 2°C
fits of stabilization exceed the costs at 2.5°C would be modest, less than half a percent of
warming (though not necessarily at 2°C).29 GDP (see box 3). In other words, the total
And all conclude that business as usual costs of the 2°C option is not much more
(meaning no mitigation efforts whatsoever) than the total cost of the much less ambi-
would be disastrous. tious economic optimum. Why? Partly
Advocates of a more gradual reduction because the savings from less mitigation
in emissions conclude that the optimal tar- are largely offset by the additional costs of
get—the one that will produce the lowest more severe impacts or higher adaptation
total cost (meaning the sum of impact and spending. 31 And partly because the real
mitigation costs)—could be well above difference between ambitious and modest
climate action lies with costs that occur between 0.3 percent and 0.7 percent (table
in the future, which gradualists heavily 2). Developing countries’ mitigation costs
discount. would represent a higher share of their own
The large uncertainties about the poten- GDP, however, ranging between 0.5 and
tial losses associated with climate change 1.2 percent.
and the possibility of catastrophic risks There are far fewer estimates of needed
may well justify earlier and more aggressive adaptation investments, and those that exist
action than a simple cost-benefit analysis are not readily comparable. Some look only
would suggest. This incremental amount at the cost of climate-proofi ng foreign aid
could be thought of as the insurance pre- projects. Others include only certain sec-
mium to keep climate change within what tors. Very few try to look at overall country
scientists consider a safer band.32 Spending needs (see chapter 6). A recent World Bank
less than half a percent of GDP as “climate study that attempts to tackle these issues
insurance” could well be a socially accept- suggests that the investments needed could
able proposition: the world spends 3 percent be between $75 billion and $100 billion
of global GDP on insurance today.33 annually in developing countries alone.35
But beyond the question of “climate
insurance” is the question of what might Table 1 Incremental mitigation costs and associated financing requirements for a 2°C
be the resulting mitigation costs—and the trajectory: What will be needed in developing countries by 2030?
Constant 2005$
associated financing needs. In the medium
term, estimates of mitigation costs in devel- Model Mitigation cost Financing requirement
oping countries range between $140 billion IEA ETP 565
and $175 billion annually by 2030. This McKinsey 175 563
represents the incremental costs relative to
MESSAGE 264
a business-as-usual scenario (table 1).
Financing needs would be higher, how- MiniCAM 139
ever, as many of the savings from the lower REMIND 384
operating costs associated with renewable Sources: IEA ETP: IEA 2008c; McKinsey: McKinsey & Company 2009 and additional data provided by McKinsey
(J. Dinkel) for 2030, using a dollar-to-euro exchange rate of $1.25 to €1; MESSAGE: IIASA 2009 and additional
energy and energy efficiency gains only data provided by V. Krey; MiniCAM: Edmonds and others 2008 and additional data provided by J. Edmonds and
materialize over time. McKinsey, for exam- L. Clarke; REMIND: Knopf and others, forthcoming and additional data provided by B. Knopf.
ple, estimates that while the incremental cost Note: Both mitigation costs and associated financing requirements are incremental relative to a business-as-
usual baseline. Estimates are for the stabilization of greenhouse gases at 450 ppm CO2e, which would provide a
in 2030 would be $175 billion, the upfront 40–50 percent chance of staying below 2°C warming by 2100 (Schaeffer and others 2008; Hare and Meinshausen
investments required would amount to 2006). IEA ETP is the model developed by the International Energy Agency, and McKinsey is the proprietary
methodology developed by McKinsey & Company; MESSAGE, MiniCAM, and REMIND are the peer-reviewed
$563 billion over and above business-as-usual models of the International Institute for Applied Systems Analysis, the Pacific Northwest Laboratory, and the
investment needs. McKinsey does point out Potsdam Institute for Climate Impact Research, respectively. McKinsey includes all sectors; other models
only include mitigation efforts in the energy sector. MiniCAM reports $168 billion in mitigation costs in 2035, in
that this amounts to a roughly 3 percent constant 2000 dollars; this figure has been interpolated to 2030 and converted to 2005 dollars.
increase in global business-as-usual invest-
ments, and as such is likely to be within the Table 2 In the long term, what will it cost? Present value of mitigation costs to 2100
capacity of global financial markets.34 How-
Present value of mitigation costs to 2100 for 450 ppm CO 2e
ever, financing has historically been a con- (% of GDP)
straint in developing countries, resulting in
Models World Developing countries
underinvestment in infrastructure as well
as a bias toward energy choices with lower DICE 0.7
upfront capital costs, even when such choices FAIR 0.6
eventually result in higher overall costs. The MESSAGE 0.3 0.5
search for suitable financing mechanisms MiniCAM 0.7 1.2
must therefore be a priority.
PAGE 0.4 0.9
What about the longer term? Mitigation
costs will increase over time to cope with REMIND 0.4
growing population and energy needs— Sources: DICE: Nordhaus 2008 (estimated from table 5.3 and figure 5.3); FAIR: Hof, den Elzen, and van Vuuren
2008; MESSAGE: IIASA 2009; MiniCAM: Edmonds and others 2008 and personal communications; PAGE: Hope
but so will income. As a result, the present 2009 and personal communications; REMIND: Knopf and others, forthcoming.
value of global mitigation costs to 2100 is Note: DICE, FAIR, MESSAGE, MiniCAM, PAGE, and REMIND are peer-reviewed models. Estimates are for the
stabilization of greenhouse gases at 450 ppm CO2e, which would provide a 40–50 percent chance of staying
expected to remain well below 1 percent below 2°C warming by 2100 (Schaeffer and others 2008; Hare and Meinshausen 2006). The FAIR model result
of global GDP, with estimates ranging reports abatement costs using the low settings (see table 3 in Hof, den Elzen, and van Vuuren 2008).
10 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
for low-density cities; gas-fired heat and Figure 6 Climate impacts are long-lived: Rising temperatures and sea levels associated with
power generation capacity in response to gas higher concentrations of CO2
pipelines), locking economies into lifestyles Annual CO2 emissions Time to reach
and energy consumption patterns. equilibrium
The inertia in physical capital is nowhere
close to that in the climate system and is
more likely to affect the cost rather than the CO2 emissions peak:
feasibility of achieving a particular emission 0 to 100 years
goal—but it is substantial. The opportuni-
ties to shift from high-carbon to low-carbon CO2 concentration
capital stocks are not evenly distributed in
CO2 stabilization:
time.40 China is expected to double its build- 100 to 300 years
ing stock between 2000 and 2015. And the
coal-fired power plants proposed around the
world over the next 25 years are so numer-
ous that their lifetime CO2 emissions would Temperature
equal those of all coal-burning activities
since the beginning of the industrial era.41 Temperature
Only those facilities located close enough to stabilization:
the storage sites could be retrofitted for car- a few centuries
bon capture and storage (if and when that
technology becomes commercially available:
see chapters 4 and 7). Retiring these plants
before the end of their useful life—if changes
Sea-level rise
in the climate force such action—would be
Sea-level rise due
extremely costly. to ice melting:
Inertia is also a factor in research and several millennia
development (R&D) and in the deployment
Sea-level rise due
of new technologies. New energy sources to thermal expansion:
have historically taken about 50 years to centuries to millennia
reach half their potential.42 Substantial
investments in R&D are needed now to
ensure that new technologies are available
and rapidly penetrating the marketplace
in the near future. This could require an
additional $100 billion to $700 billion
annually.43 Innovation is also needed in
Today 100 1,000
transport, building, water management, years years
urban design, and many other sectors
Source: WDR team based on IPCC 2001.
that affect climate change and are in turn
Note: Stylized figures; the magnitudes in each panel are intended for illustrative purposes.
affected by climate change—so innovation
is a critical issue for adaptation as well.
Inertia is also present in the behavior areas, and infrastructure continues to
of individuals and organizations. Despite be designed for the climate of the past.44
greater public concern, behaviors have not Changing behaviors and organizational
changed much. Available energy-efficient goals and standards is difficult and usu-
technologies that are effective and pay for ally slow, but it has been done before (see
themselves are not adopted. R&D in renew- chapter 8).
ables is underfunded. Farmers face incen-
tives to over-irrigate their crops, which in Act together: For equity and efficiency
turn affects energy use, because energy is Collective action is needed to effectively
a major input in water provision and treat- tackle climate change and reduce the
ment. Building continues in hazard-prone costs of mitigation.45 It is also essential to
12 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
facilitate adaptation, notably through bet- delays are so large that there are clear eco-
ter risk management and safety nets to pro- nomic benefits for high-income countries
tect the most vulnerable. committed to limiting dangerous climate
change to fi nance early action in develop-
To keep costs down and fairly distributed. ing countries.50 More generally, the total
Affordability hinges on mitigation being cost of mitigation could be greatly reduced
done cost effectively. When estimating the through well-performing carbon-fi nance
mitigation costs discussed earlier, model- mechanisms, financial transfers, and price
ers assume that greenhouse gas emission signals that help approximate the out-
reductions occur wherever and whenever come produced by the whenever, wherever
they are cheapest. Wherever means pur- assumption.
suing greater energy efficiency and other
low-cost options to mitigate in whatever To manage risk better and protect the poor-
country or sector the opportunity arises. est. In many places previously uncom-
Whenever entails timing investments in mon risks are becoming more widespread.
new equipment, infrastructure, or farm- Consider floods, once rare but now increas-
ing and forestry projects to minimize costs ingly common, in Africa and the first hur-
and keep economies from getting locked ricane ever recorded in the South Atlantic,
into high-carbon conditions that would be which hit Brazil in 2004.51 Reducing disas-
expensive to alter later. Relaxing the wher- ter risk—through community-based early
ever, whenever rule—as would necessarily warning systems, climate monitoring,
happen in the real world, especially in the safer infrastructure, and strengthened and
absence of a global carbon price—dramat- enforced zoning and building codes, along
ically increases the cost of mitigation. with other measures—becomes more
The implication is that there are enor- important in a changing climate. Finan-
mous gains to global efforts—on this point, cial and institutional innovations can also
analysts are unanimous. If any country or limit risks to health and livelihoods. This
group of countries does not mitigate, oth- requires domestic action—but domestic
ers must reach into higher-cost mitigation action will be greatly enhanced if it is sup-
options to achieve a given global target. For ported by international finance and sharing
example, by one estimate, the nonparticipa- of best-practice.
tion of the United States, which is respon- But as discussed in chapter 2, actively
sible for 20 percent of world emissions, in reducing risk will never be enough because
the Kyoto Protocol increases the cost of there will always be a residual risk that
achieving the original target by about 60 must also be managed through better
percent.46 preparedness and response mechanisms.
Both equity and efficiency argue for The implication is that development may
developing financial instruments that sepa- need to be done differently, with much
rate who finances mitigation from where it greater emphasis on climate and weather
happens. Otherwise, the substantial miti- risk. International cooperation can help,
gation potential in developing countries for example, through pooling efforts to
(65–70 percent of emission reductions, improve the production of climate infor-
adding up to 45–70 percent of global miti- mation and its broad availability (see chap-
gation investments in 2030)47 will not be ter 7) and through sharing best practices to
fully tapped, substantially increasing the cope with the changing and more variable
cost of achieving a given target. Taking climate.52
it to the extreme, a lack of fi nancing that Insurance is another instrument to
results in fully postponing mitigation in manage the residual risk, but it has its limi-
developing countries to 2020 could more tations. Climate risk is increasing along a
than double the cost of stabilizing around trend and tends to affect entire regions
2°C.48 With mitigation costs estimated to or large groups of people simultaneously,
add up to $4 trillion to $25 trillion49 over making it difficult to insure. And even
the next century, the losses implied by such with insurance, losses associated with
Overview: Changing the Climate for Development 13
more intensively, they will have to scale up and providing better information on both
cooperation on international water bodies climate and market indexes can make food
through new international treaties or the trade more efficient and prevent large price
revision of existing ones. The system of shifts. Price spikes can also be prevented
water allocation will need to be reworked by investing in strategic stockpiles of key
due to the increased variability, and coop- grains and foodstuffs and in risk-hedging
eration can be effective only when all ripar- instruments.60
ian countries are involved and responsible
for managing the watercourse. Act differently: To transform energy,
Similarly, increasing arid conditions in food production, and decision-making
countries that already import a large share systems
of their food, along with more frequent Achieving the needed emission reductions
extreme events and growth in income and will require a transformation both of our
population, will increase the need for food energy system and of the way we manage
imports. 58 But global food markets are agriculture, land use, and forests (figure 7).
thin—relatively few countries export food These transformations must also incorpo-
crops.59 So small changes in either supply or rate the needed adaptations to a changing
demand can have big effects on prices. And climate. Whether they involve deciding
small countries with little market power which crop to plant or how much hydro-
can fi nd it difficult to secure reliable food electric power to develop, decisions will
imports. have to be robust to the variety of climate
To ensure adequate water and nutrition outcomes we could face in the future rather
for all, the world will have to rely on an than being optimally adapted to the climate
improved trade system less prone to large of the past.
price shifts. Facilitating access to markets
for developing countries by reducing trade To ignite a veritable energy revolution. If
barriers, weatherproofi ng transport (for financing is available, can emissions be cut
example, by increasing access to year-round sufficiently deeply or quickly without sacri-
roads), improving procurement methods, ficing growth? Most models suggest that they
can, although none find it easy (see chapter
4). Dramatically higher energy efficiency,
Figure 7 Global CO2e emissions by sector: Energy,
but also agriculture and forestry, are major sources stronger management of energy demand,
and large-scale deployment of existing
Waste and low-CO2-emitting electricity sources could
wastewater
3% Land-use produce about half the emission reductions
Power change and needed to put the world on a path toward
26% forestry 2°C (figure 8). Many have substantial co-
17%
benefits but are hampered by institutional
and financial constraints that have proven
hard to overcome.
Agriculture So known technologies and practices
14%
Transportation can buy time—if they can be scaled up. For
13% that to happen, appropriate energy pricing
Residential and Industry is absolutely essential. Cutting subsidies
commercial buildings 19% and increasing fuel taxes are politically dif-
8%
ficult, but the recent spike and fall in oil
Source: IPCC 2007a, figure 2.1. and gas prices make the time opportune for
Note: Share of anthropogenic (human-caused) greenhouse doing so. Indeed, European countries used
gas emissions in 2004 in CO2e (see figure 1 for the definition
of CO2e). Emissions associated with land use and land-use the 1974 oil crisis to introduce high fuel
change, such as agricultural fertilizers, livestock, deforesta- taxes. As a result, fuel demand is about half
tion, and burning, account for about 30 percent of total green-
house gas emissions. And uptakes of carbon into forests and what it likely would have been had prices
other vegetation and soils constitute an important carbon been close to those in the United States.61
sink, so improved land-use management is essential in efforts
to reduce greenhouse gases in the atmosphere. Similarly, electricity prices are twice as high
Overview: Changing the Climate for Development 15
in Europe as they are in the United States spur innovation and increase competitive-
and electricity consumption per capita is ness.66 And because utilities are potentially
half.62 Prices help explain why European effective delivery channels for making
emissions per capita (10 tons of CO2e) are homes, commercial buildings, and indus-
less than half those in the United States try more energy efficient, incentives have to
(23 tons).63 Global energy subsidies in be created for utilities to conserve energy.
developing countries were estimated at This can be done by decoupling a utility’s
$310 billion in 2007,64 disproportionately profits from its gross sales, with profits
benefiting higher-income populations. instead increasing with energy conserva-
Rationalizing energy subsidies to target the tion successes. Such an approach is behind
poor and encourage sustainable energy and California’s remarkable energy conserva-
transport could reduce global CO2 emis- tion program; its adoption has become a
sions and provide a host of other benefits. condition for any U.S. state to receive fed-
But pricing is only one tool for advanc- eral energy-efficiency grants from the 2009
ing the energy-efficiency agenda, which suf- fiscal stimulus.
fers from market failures, high transaction For renewable energy, long-term power-
costs, and fi nancing constraints. Norms, purchase agreements within a regulatory
regulatory reform, and financial incentives framework that ensures fair and open grid
are also needed—and are cost-effective. access for independent power producers will
Efficiency standards and labeling programs attract investors. This can be done through
cost about 1.5 cents a kilowatt-hour, much mandatory purchases of renewable energy at
less than any electricity supply options,65 a fi xed price (known as a feed-in tariff) as in
while industrial energy performance targets Germany and Spain; or through renewable
Figure 8 The full portfolio of existing measures and advanced technologies, not a silver bullet, will be needed to get the world onto a 2°C path
CO2e (gigatons)
70
ual
sas us
ines
60 Bus Demand reduction
Renewables
(hydro, solar, wind,
50 bioenergy)
Nuclear
40
2°C Fossil CCS
tr ajec
tory
30 Forest sinks
10
0
2000 2010 2020 2030 2040 2050 2060 2070 2080
Year
Source: WDR team with data from IIASA 2009.
16 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
portfolio standards that require a minimum on nonfood crops may reduce competition
share of power to come from renewables, as with agriculture by using more marginal
in many U.S. states.67 Importantly, predict- lands. But they could still lead to the loss of
ably higher demand is likely to reduce the pasture land and grassland ecosystems and
costs of renewables, with benefits for all compete for water resources.71
countries. In fact, experience shows that Breakthroughs in climate-smart tech-
expected demand can have an even higher nologies will require substantially more
impact than technological innovation in spending for research, development, dem-
driving down prices (figure 9). onstration, and deployment. As mentioned
But new technologies will be indispens- earlier, global public and private spending
able: every energy model reviewed for this on energy RD&D is modest, both rela-
Report concludes that it is impossible to get tive to estimated needs and in comparison
onto the 2°C trajectory with only energy with what innovative industries invest. The
efficiency and the diffusion of existing modest spending means slow progress,
technologies. New or emerging technolo- with renewable energy still accounting
gies, such as carbon capture and storage, for only 0.4 percent of all patents.72 More-
second-generation biofuels, and solar pho- over, developing countries need access to
tovoltaics, are also critical. these technologies, which requires boost-
Few of the needed new technologies ing domestic capacity to identify and adapt
are available off the shelf. Ongoing car- new technologies as well as strengthening
bon capture and storage demonstration international mechanisms for technology
projects currently store only about 4 mil- transfer (see chapter 7).
lion tons of CO2 annually.68 Fully proving
the viability of this technology in different To transform land and water management
regions and settings will require about 30 and manage competing demands. By 2050
full-size plants at a total cost of $75 billion the world will need to feed 3 billion more
to $100 billion.69 Storage capacity of 1 bil- people and cope with the changing dietary
lion tons a year of CO2 is necessary by 2020 demands of a richer population (richer peo-
to stay within 2°C warming. ple eat more meat, a resource-intensive way
Investments in biofuels research are also to obtain proteins). This must be done in a
needed. Expanded production using the harsher climate with more storms, droughts,
current generation of biofuels would dis- and floods, while also incorporating agricul-
place large areas of natural forests and grass- ture in the mitigation agenda—because agri-
lands and compete with the production of culture drives about half the deforestation
food.70 Second-generation biofuels that rely every year and directly contributes 14 per-
cent of overall emissions. And ecosystems,
already weakened by pollution, population
Figure 9 High expected demand drove cost reductions in solar photovoltaics by allowing for
larger-scale production
pressure, and overuse, are further threat-
ened by climate change. Producing more and
Cost reduction by factor ($/watt) protecting better in a harsher climate while
$25.30 reducing greenhouse gas emissions is a tall
$25
Expected demand effect
order. It will require managing the compet-
$20
ing demands for land and water from agri-
$15 43% culture, forests and other ecosystems, cities,
R&D
$10 and energy.
30%
$5 $3.68 So agriculture will have to become more
22% 5% productive, getting more crop per drop and
0
1979 price Plant size Efficiency Other Unexplained 2001 price per hectare—but without the increase in
environmental costs currently associated
Source: Adapted from Nemet 2006.
Note: Bars show the portion of the reduction in the cost of solar photovoltaic power, from 1979 to 2001,
with intensive agriculture. And societies will
accounted for by different factors such as plant size (which is determined by expected demand) and improved have to put much more effort into protecting
efficiency (which is driven by innovation from R&D). The “other” category includes reductions in the price of
the key input silicon (12 percent) and a number of much smaller factors (including reduced quantities of silicon
ecosystems. To avoid pulling more land into
needed for a given energy output, and lower rates of discarded products due to manufacturing error). cultivation and spreading into “unmanaged”
Overview: Changing the Climate for Development 17
BOX 5 Promising approaches that are good for farmers and good for the environment
Promising practices minimum necessary fertilizer and water the Amazon rain forest could sequester
Cultivation practices such as zero-tillage could help the intensive, high-input farms carbon on a huge scale while improv-
(which involves injecting seeds directly of high-income countries, Asia, and Latin ing soil productivity. Burning wet crop
into the soil instead of sowing on America to reduce emissions and nutrient residues or manure (biomass) at low
ploughed fields) combined with residue runoff, and increase water-use efficiency. temperatures in the almost complete
management and proper fertilizer use can New technologies that limit emissions absence of oxygen produces biochar,
help to preserve soil moisture, maximize of gaseous nitrogen include controlled- a charcoal-type solid with a very high
water infiltration, increase carbon storage, release nitrogen through the deep place- carbon content. Biochar is highly stable
minimize nutrient runoff, and raise yields. ment of supergranules of fertilizer or in soil, locking in the carbon that would
Now being used on about 2 percent of the addition of biological inhibitors to otherwise be released by simply burning
global arable land, this practice is likely fertilizers. Remote sensing technologies the biomass or allowing it to decom-
to expand. Zero tillage has mostly been for communicating precise information pose. In industrial settings this process
adopted in high-income countries, but about soil moisture and irrigation needs transforms half the carbon into biofuel
is expanding rapidly in countries such as can eliminate unnecessary application and the other half into biochar. Recent
India. In 2005, in the rice–wheat farming of water. Some of these technologies analysis suggests biochar may be able to
system of the Indo- Gangetic plain, farm- may remain too expensive for most store carbon for centuries, possibly mil-
ers adopted zero-tillage on 1.6 million developing- country farmers (and could lennia, and more studies are underway
hectares; by 2008, 20–25 percent of the require payment schemes for soil carbon to verify this property.
wheat in two Indian states (Haryana and conservation or changes in water pric-
Punjab) was cultivated using minimum ing). But others such as biological inhibi-
tillage. And in Brazil, about 45 percent of tors require no extra labor and improve
cropland is farmed using these practices. productivity. Sources: de la Torre, Fajnzylber, and Nash
2008; Derpsch and Friedrich 2009; Eren-
Promising technologies Learning from the past stein 2009; Erenstein and Laxmi 2008; Leh-
Precision agriculture techniques for tar- Another approach building on a tech- mann 2007; Wardle, Nilsson, and Zackrisson
geted, optimally timed application of the nology used by indigenous peoples in 2008.
18 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
of the solution, and they will need to be Robust strategies typically build flex-
designed flexibly to deal with more variable ibility, diversification, and redundancy in
rainfall. Other approaches include using response capacities (see chapter 2). They
recycled water and desalination, which, favor “no-regrets” actions that provide
while costly, can be worthwhile for high- benefits (such as water and energy effi-
value use in coastal areas, especially if pow- ciency) even without climate change. They
ered by renewable energy (see chapter 3). also favor reversible and flexible options
But changing practices and technolo- to keep the cost of wrong decisions as low
gies can be a challenge, particularly in poor, as possible (restrictive urban planning for
rural, and isolated settings, where introduc- coastal areas can easily be relaxed while
ing new ways of doing things requires work- forced retreats or increased protection can
ing with a large number of very risk-averse be difficult and costly). They include safety
actors located off the beaten track and fac- margins to increase resilience (paying the
ing different constraints and incentives. marginal costs of building a higher bridge
Extension agencies usually have limited or one that can be flooded, or extending
resources to support farmers and are staffed safety nets to groups on the brink). And
with engineers and agronomists rather than they rely on long-term planning based on
trained communicators. Taking advantage scenario analysis and an assessment of
of emerging technologies will also require strategies under a wide range of possible
bringing higher technical education to rural futures.79 Participatory design and imple-
communities. mentation is critical, because it permits
the use of local knowledge about existing
To transform decision-making processes: vulnerability and fosters ownership of the
Adaptive policy making to tackle a riskier and strategy by its beneficiaries.
more complex environment. Infrastructure Policy making for adaptation also needs
design and planning, insurance pricing, and to be adaptive itself, with periodic reviews
numerous private decisions—from planting based on the collection and monitoring of
and harvesting dates to siting factories and information, something increasingly fea-
designing buildings—have long been based sible at low cost thanks to better technolo-
on stationarity, the idea that natural systems gies. For example, a key problem in water
fluctuate within an unchanging envelope of management is the lack of knowledge about
variability. With climate change, stationarity underground water, or about who con-
is dead.76 Decision makers now have to con- sumes what. New remote-sensing technol-
tend with the changing climate compound- ogy makes it possible to infer groundwater
ing the uncertainties they already faced. consumption, identify which farmers have
More decisions have to be made in a context low water productivity, and specify when to
of changing trends and greater variability, increase or decrease water applications to
not to mention possible carbon constraints. maximize productivity without affecting
The approaches being developed and crop yields (see chapter 3).
applied by public and private agencies, cities,
and countries around the world from Aus- Making it happen:
tralia to the United Kingdom are showing New pressures, new instruments,
that it is possible to increase resilience even and new resources
in the absence of expensive and sophisticated The previous pages describe the many steps
modeling of future climate.77 Of course bet- needed to manage the climate change chal-
ter projections and less uncertainty help, lenge. Many read like the standard fare of
but these new approaches tend to focus on a development or environmental science
strategies that are “robust” across a range of textbook: improve water resource manage-
possible future outcomes, not just optimal ment, increase energy efficiency, promote
for a particular set of expectations (box 6).78 sustainable agricultural practices, remove
Robust strategies can be as simple as pick- perverse subsidies. But these have proven
ing seed varieties that do well in a range of elusive in the past, raising the question of
climates. what might make the needed reforms and
Overview: Changing the Climate for Development 19
BOX 6 Ingenuity needed: Adaptation requires new tools and new knowledge
Regardless of mitigation efforts, human- migration corridors, may be needed to Human health
ity will need to adapt to substantial facilitate species movements to keep up Many adaptations of health systems
changes in the climate—everywhere, and with the change in climate. to climate change will initially involve
in many different fields. practical options that build on existing
Physical capital
knowledge. But others will require new
Natural capital Climate change is likely to affect infra-
skills. Advances in genomics are making
A diversity of natural assets will be structure in ways not easily predictable
it possible to design new diagnostic tools
needed to cope with climate change and and varying greatly with geography.
that can detect new infectious diseases.
ensure productive agriculture, forestry, For example, infrastructure in low-lying
These tools, combined with advances in
and fisheries. For example, crop variet- areas is threatened by flooding rivers and
communications technologies, can detect
ies are needed that perform well under rising seas whether in Tangier Bay, New
emerging trends in health and provide
drought, heat, and enhanced CO2. But the York City, or Shanghai. Heat waves soften
health workers with early opportunities
private-sector- and farmer-led process asphalt and can require road closures;
to intervene. Innovations in a range of
of choosing crops favors homogeneity they affect the capacity of electricity
technologies are already transforming
adapted to past or current conditions, transmission lines and warm the water
medicine. For example, the advent of
not varieties capable of producing con- needed to cool thermal and nuclear
hand-held diagnostic devices and video-
sistently high yields in warmer, wetter, or power plants just as they increase elec-
mediated consultations are expanding
drier conditions. Accelerated breeding tricity demand. Uncertainties are likely to
the prospects for telemedicine and
programs are needed to conserve a wider influence not only investment decisions
making it easier for isolated communi-
pool of genetic resources of existing but the design of infrastructure that will
ties to connect to the global health
crops, breeds, and their wild relatives. need to be robust to the future climate.
infrastructure.
Relatively intact ecosystems, such as Similar uncertainty about the reliability of
forested catchments, mangroves, and water supply is leading to both integrated
wetlands, can buffer the impacts of cli- management strategies and improved
mate change. Under a changing climate water-related technologies as hedges Sources: Burke, Lobell, and Guarino 2009;
Ebi and Burton 2008; Falloon and Betts,
these ecosystems are themselves at risk, against climate change. Greater technical forthcoming; Guthrie, Juma, and Sillem
and management approaches will need knowledge and engineering capabilities 2008; Keim 2008; Koetse and Rietveld 2009;
to be more proactive and adaptive. Con- will be needed to design future infra- National Academy of Engineering 2008;
nections between natural areas, such as structure in the light of climate change. Snoussi and others 2009.
behavior changes possible. The answer lies New pressures: Success hinges
in a combination of new pressures, new on changing behavior and shifting
instruments, and new resources. public opinion
New pressures are coming from a grow- International regimes influence national
ing awareness of climate change and its policies but are themselves a product of
current and future costs. But awareness domestic factors. Political norms, gover-
does not always lead to action: to suc- nance structures, and vested interests drive
ceed, climate-smart development policy the translation of international law into
must tackle the inertia in the behavior of domestic policy, while shaping the inter-
individuals and organizations. Domes- national regime.80 And in the absence of a
tic perception of climate change will also global enforcement mechanism, the incen-
determine the success of a global deal—its tives for meeting global commitments are
adoption but also its implementation. And domestic.
while many of the answers to the climate To succeed, climate-smart development
and development problem will be national policy has to factor in these local determi-
or even local, a global deal is needed to gen- nants. The mitigation policies that a country
erate new instruments and new resources will follow depend on domestic factors such
for action (see chapter 5). So while new as the energy mix, the current and potential
pressures must start at home with chang- energy sources, and the preference for state
ing behaviors and shifting public opinion, or market-driven policies. The pursuit of
action must be enabled by an efficient and ancillary local benefits—such as cleaner air,
effective international agreement, one that technology transfers, and energy security—
factors in development realities. is crucial to generating sufficient support.
20 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
can take the form of joint production and commit to output targets, where the “out-
technology sharing—or financial support put” is greenhouse gas emissions, and devel-
for the incremental cost of adopting new oping countries commit to policy changes
cleaner technology (as was done through rather than emission targets.
the Multilateral Fund for the Implementa- This approach is appealing for three rea-
tion of the Montreal Protocol on Substances sons. First, it can advance mitigation oppor-
that Deplete the Ozone Layer). tunities that carry development co-benefits.
A global deal will also have to be accept- Second, it is well suited to developing coun-
able to high-income countries. They worry tries, where fast population and economic
about the financial demands that could be growth is driving the rapid expansion of the
placed on them and want to ensure that capital stock (with opportunities for good
financial transfers deliver the desired adap- or bad lock-in) and increases the urgency of
tation and mitigation results. They also are moving energy, urban, and transport sys-
concerned that a tiered approach allowing tems toward a lower-carbon path. A policy-
developing countries to delay actions might based track can also offer a good framework
affect their own competitiveness with lead- for countries with a high share of hard-to-
ing middle-income countries. measure emissions from land use, land-use
change, and forestry. Third, it is less likely
An effective deal: Lessons from aid effective- to require monitoring of complex flows—a
ness and international agreements. An challenge for many countries. Neverthe-
effective climate deal will achieve agreed less, some overall monitoring and evalua-
targets for mitigation and adaptation. Its tion of these approaches is critical, if only
design can build on the lessons of aid effec- to understand their effectiveness.89
tiveness and international agreements. Cli-
mate finance is not aid finance, but the aid An efficient deal: The role of
experience does offer critical lessons. In climate finance
particular, it has become clear that com- Climate finance can reconcile equity and
mitments are seldom respected unless they efficiency by separating where climate action
correspond to a country’s objectives—the takes place from who pays for it. Sufficient
conditionality versus ownership debate. finance flowing to developing countries—
So funding for adaptation and mitigation combined with capacity building and access
should be organized around a process that to technology—can support low-carbon
encourages recipient-country development growth and development. If mitigation
and ownership of a low-carbon development finance is directed to where mitigation costs
agenda. The aid experience also shows that a are lowest, efficiency will increase. If adapta-
multiplicity of funding sources imposes huge tion finance is directed to where the needs
transaction costs on recipient countries and are greatest, undue suffering and loss can be
reduces effectiveness. And while the sources avoided. Climate finance offers the means to
of funding might be separate, the spending reconcile equity, efficiency, and effectiveness
of adaptation and mitigation resources must in dealing with climate change.
be fully integrated into development efforts. But current levels of climate fi nance
International agreements also show that fall far short of foreseeable needs. The
tiered approaches can be an appropriate way estimates presented in table 1 suggest
of bringing hugely different partners into a mitigation costs in developing countries
single deal. Look at the World Trade Orga- could reach $140–$175 billion a year by
nization: special and differential treatment 2030 with associated fi nancing needs of
for developing countries has been a defining $265–$565 billion. Current flows of miti-
feature of the multilateral trading system for gation finance averaging some $8 billion a
most of the postwar period. Proposals are year to 2012 pale in comparison. And the
emerging in the climate negotiations around estimated $30–$100 billion that could be
the multitrack framework put forward in needed annually for adaptation in develop-
the UNFCCC’s Bali Action Plan.88 These ing countries dwarfs the less than $1 billion
proposals would have developed countries a year now available (figure 10).
Overview: Changing the Climate for Development 23
Compounding the shortfalls in climate Figure 10 The gap is large: Estimated annual
finance are significant inefficiencies in how incremental climate costs required for a 2°C
trajectory compared with current resources
funds are generated and deployed. Key
problems include fragmented sources of Constant 2005$, billions
finance; high costs of implementing market 200
mechanisms such as the Clean Development Mitigation:
Mechanism; and insufficient, distortionary $139 billion–$175 billion
175
instruments for raising adaptation fi nance.
Chapter 6 identifies nearly 20 different
bilateral and multilateral funds for climate 150
change currently proposed or in operation.
This fragmentation has a cost identified in 125
the Paris Declaration on Aid Effectiveness:
each fund has its own governance, raising Adaptation:
$28 billion–$100 billion
transaction costs for developing countries; 100
and alignment with country development
objectives may suffer if sources of fi nance
75
are narrow. Other tenets of the Paris
Declaration, including ownership, donor
harmonization, and mutual accountabil- 50
ity, also suffer when fi nancing is highly
Funding for
fragmented. An eventual consolidation adaptation and
25
of funds into a more limited number is mitigation
clearly warranted. $9 billion
Looking forward, pricing carbon (whether 0
through a tax or through a cap and trade 2008–2012 2030
scheme) is the optimal way of both generat- Sources: See table 1 on page 9 and the discussion in chapter 6.
ing carbon-finance resources and directing Note: Mitigation and adaptation costs for developing coun-
those resources to efficient opportunities. In tries only. Bars represent the range of estimates for the
incremental costs of the adaptation and mitigation efforts
the near future, however, the CDM and other associated with a 2°C trajectory. Mitigation financing needs
performance-based mechanisms for carbon associated with the incremental costs depicted here are
much higher, ranging between $265 billion and $565 billion
offsets are likely to remain the key market- annually by 2030.
based instruments for mitigation finance in
developing countries and are therefore criti-
cal in supplementing direct transfers from
high-income countries. simply change where they occur (in devel-
The CDM has in many ways exceeded oping rather than developed countries)
expectations, growing rapidly, stimulating and lower the cost of mitigation (thereby
learning, raising awareness of mitigation increasing efficiency).
options, and building capacity. But it also The Adaptation Fund under the Kyoto
has many limitations, including low devel- Protocol employs a novel financing instru-
opment co-benefits, questionable addition- ment in the form of a 2 percent tax on cer-
ality (because the CDM generates carbon tified emission reductions (units of carbon
credits for emission reductions relative to a offset generated by the CDM). This clearly
baseline, the choice of baseline can always raises finance that is additional to other
be questioned), weak governance, inefficient sources, but as pointed out in chapter 6, this
operation, limited scope (key sectors such approach has several undesirable character-
as transport are not covered), and concerns istics. The instrument is taxing a good (miti-
about market continuity beyond 2012.90 For gation finance) rather than a bad (carbon
the effectiveness of climate actions it is also emissions) and like any tax, there are inevi-
important to understand that CDM trans- table inefficiencies (deadweight losses). Anal-
actions do not reduce global carbon emis- ysis of the CDM market suggests that most
sions beyond agreed commitments—they of the lost gains from trade as a result of the
24 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
tax would fall on developing-country suppli- forest carbon, and major monitoring issues
ers of carbon credits.91 Adaptation finance would need to be resolved (see box 8). Pilot
will also require an allocation mechanism programs must be developed rapidly to
that ideally would embrace the principles of encourage more resilient and sustainable
transparency, efficiency, and equity—effi- agriculture and to bring more resources
cient approaches would direct finance to the and innovation to a sector that has lacked
most vulnerable countries and those with the both in recent decades.92
greatest capacity to manage adaptation, while Within countries the role of the public
equity would require that particular weight sector will be critical in creating incentives
be given to the poorest countries. for climate action (through subsidies, taxes,
Strengthening and expanding the climate caps, or regulations), providing informa-
finance regime will require reforming exist- tion and education, and eliminating mar-
ing instruments and developing new sources ket failures that inhibit action. But much
of climate finance (see chapter 6). Reform of of the finance will come from the private
the CDM is particularly important in view sector, particularly for adaptation. For pri-
of its role in generating carbon finance for vate infrastructure service providers the
projects in developing countries. One set of flexibility of the regulatory regime will be
proposals aims at reducing costs through crucial in providing the right incentives for
streamlining project approval, including climate-proofi ng investments and opera-
upgrading the review and administrative tions. While it will be possible to leverage
functions. A key second set of proposals private finance for specific adaptation invest-
focuses on allowing the CDM to support ments (such as flood defenses) experience
changes in policies and programs rather to date with public-private partnerships on
than limit it to projects. “Sector no-lose tar- infrastructure in developing countries sug-
gets” are an example of a performance-based gests that the scope will be modest.
scheme, where demonstrable reductions in Generating additional finance for
sectoral carbon emissions below an agreed adaptation is a key priority, and innova-
baseline could be compensated through the tive schemes such as auctioning assigned
sale of carbon credits, with no penalty if the amount units (AAUs, the binding caps that
reductions are not achieved. countries accept under the UNFCCC), tax-
Forestry is another area where climate ing international transport emissions, and a
finance can reduce emissions (box 8). Addi- global carbon tax have the potential to raise
tional mechanisms for pricing forest car- tens of billions of dollars of new fi nance
bon are likely to emerge from the current each year. For mitigation it is clear that hav-
climate negotiations. Already several ini- ing an efficient price for carbon, through
tiatives, including the World Bank’s Forest either a tax or cap-and-trade, will be trans-
Carbon Partnership Facility, are exploring formational. Once this is achieved, the pri-
how financial incentives can reduce defores- vate sector will provide much of the needed
tation in developing countries and thereby fi nance as investors and consumers factor
reduce carbon emissions. The major chal- in the price of carbon. But national carbon
lenges include developing a national strat- taxes or carbon markets will not neces-
egy and implementation framework for sarily provide the needed flows of fi nance
reducing emissions from deforestation and to developing countries. If the solution to
degradation; a reference scenario for emis- the climate problem is to be equitable, a
sions; and a system for monitoring, report- reformed CDM and other performance-
ing, and verification. based schemes, the linking of national
Efforts to reduce emissions of soil car- carbon markets, the allocation and sale of
bon (through incentives to change till- AAUs, and fiscal transfers will all provide
ing practices, for example) could also be finance to developing countries.
a target of fi nancial incentives—and are As this Report goes to press, countries
essential to ensure natural areas are not are engaged in negotiations on a global cli-
converted to food and biofuel production. mate agreement under the auspices of the
But the methodology is less mature than for UNFCCC. Many of these same countries
Overview: Changing the Climate for Development 25
BOX 8 The role of land use, agriculture, and forestry in managing climate change
Land use, agriculture, and forestry have a earn $400 million to $2 billion a year. First, the carbon monitoring should fol-
substantial mitigation potential but have As for soil carbon, even in Africa, where low an “activity-based” approach, where
been contentious in the climate negotia- relatively carbon-poor lands cover close emission reductions are estimated based
tions. Could emissions and uptakes be to half the continent, the potential for on the activities carried out by the farmer
measured with sufficient accuracy? What soil carbon sequestration is 100 million rather than on much more expensive
can be done about natural fluctuations in to 400 million tons of CO2e a year. At $10 soil analyses. Specific and conservative
growth and losses from fires associated a ton, this would be on par with current emission reduction factors can be applied
with climate change? Should countries official development assistance to Africa. for different agroecological and climatic
get credits for actions taken decades or Largely through the efforts of a group zones. This is simpler, cheaper, and more
centuries before the climate negotia- of developing countries that formed predictable for the farmer, who knows up
tions? Would credits from land-based the Coalition for Rainforests, land use, front what the payments, and possible
activities swamp the carbon market and land-use change, and forestry account- penalties, are for any given activity.
drive down the carbon price, reducing ing were reintroduced into the UNFCCC Second, transaction costs can be
incentives for further mitigation? Progress agenda. Those countries seek opportuni- reduced by “aggregators,” who combine
has been made on many of these issues, ties to contribute to reducing emissions activities over many smallholder farms, as
and the Intergovernmental Panel on Cli- under their common but differentiated in the Kenya pilot project. By working with
mate Change has developed guidelines responsibility and to raise carbon finance many farms, aggregators can build up a
for measuring land-related greenhouse to better manage their forested systems. permanent buffer and average out occa-
gases. Negotiations over what has become sional reversals in sequestration. Pooling
Net global deforestation averaged known as REDD (Reduced Emissions from over a portfolio of projects with conserva-
7.3 million hectares a year from 2000 to Deforestation and Forest Degradation) tive estimates of permanence can make
2005, contributing about 5.0 gigatons of continue, but most expect some ele- soil carbon sequestration fully equivalent
CO2 a year in emissions, or about a quar- ments of REDD to be part of an agree- to CO2 reduction in other sectors.
ter of the emission reduction needed. ment in Copenhagen. Third, logistical help, especially for poor
Another 0.9 gigaton reduction could Initiatives on soil carbon are not so farmers who need help to finance up-
come from reforestation and better forest advanced. While carbon sequestration in front costs, must include strengthened
management in developing countries. agriculture would be an inexpensive, tech- extension services. They are key to dis-
But improved forest management and nically simple, and efficient response to seminating knowledge about sequestra-
reduced deforestation in developing climate change, developing a market for tion practices and finance opportunities.
countries are currently not part of the it is no easy feat. A pilot project in Kenya
Sources: Canadell and others 2007; Eliasch
international Clean Development Mecha- (see chapter 3) and soil carbon offsets on
2008; FAO 2005; Smith and others 2008;
nism of the UNFCCC. the Chicago Climate Exchange point to Smith and others 2009; Tschakert 2004;
There is also interest in creating a opportunities. Three steps can help move UNEP 1990; Voluntary Carbon Standard
mechanism for payments for improved soil carbon sequestration forward. 2007; World Bank 2008c.
management of soil carbon and other
greenhouse gases produced by agri- It’s not just about energy: At high carbon prices the combined mitigation potential of agriculture
and forestry is greater than that of other individual sectors of the economy
culture. Technically about 6.0 gigatons
of CO2e in emissions could be reduced Potential emission reduction (GtCO2e/yr)
through less tillage of soils, better wetland 7
and rice paddy management, and bet- Non-OECD/EIT
6 EIT
ter livestock and manure management. OECD
About 1.5 gigatons of emission reductions 5 World total
a year could be achieved in agriculture for 4
a carbon price of $20 a ton of CO2e (figure).
Forestry and agricultural mitigation 3
would produce many co-benefits. The 2
maintenance of forests keeps open a
wider diversity of livelihood options, 1
protects biodiversity, and buffers against 0
extreme events such as floods and land-
0
0
00
0
0
00
0
0
00
0
0
00
0
0
00
0
0
00
0
0
00
<2
<5
<2
<5
<2
<5
<2
<5
<2
<5
<2
<5
<2
<5
<1
<1
<1
<1
<1
<1
<1
are also in the throes of one of the most ference with the climate system.” http://unfccc
severe fi nancial crises of recent decades. .int/resource/docs/convkp/conveng.pdf (accessed
Fiscal difficulties and urgent needs could August 1, 2009).
make it difficult to get legislatures to agree 4. Defined as carbon emitted per dollar of
GDP.
to spend resources on what is incorrectly
5. On a global scale, this would reduce CO2
perceived as solely a longer-term threat.
emissions by 4–6 gigatons a year given the cur-
Yet a number of countries have adopted rent energy mix in the power sector and industry
fiscal recovery packages to green the econ- (IEA 2008e). Similar reductions would be pos-
omy while restoring growth, for a global sible in the building sector in high-income coun-
total of more than $400 billion over the tries. See, for example, Mills 2009.
next few years in the hope of stimulating 6. World Bank 2009b.
the economy and creating jobs.93 Invest- 7. de la Torre, Fajnzylber, and Nash 2008.
ments in energy efficiency can produce a 8. Greenhouse gases each have different
triple dividend of greater energy savings, heat-trapping potential. The carbon dioxide
fewer emissions, and more jobs. equivalent (CO2e) concentration can be used to
describe the composite global warming effect of
The current climate negotiations, to cul-
these gases in terms of the amount of CO2 that
minate in Copenhagen in December 2009,
would have the same heat-trapping potential
have been making slow progress—inertia over a specified period of time.
in the political sphere. For all the reasons 9. Authors’ calculations, based on data from
highlighted in this Report—inertia in the Climate Analysis Indicators Tool (WRI 2008).
climate system, inertia in infrastructure, The range is much greater if small island states
inertia in socioeconomic systems—a cli- such as Barbados (4.6 tons of CO2e per capita)
mate deal is urgently needed. But it must be and oil producers such as Qatar (55 tons of CO2e
a smart deal, one that creates the incentives per capita) or the United Arab Emirates (39 tons
for efficient solutions, for flows of fi nance of CO2e per capita) are included.
and the development of new technologies. 10. IEA 2008c.
11. Edmonds and others 2008; Hamilton 2009.
And it must be an equitable deal, one that
Blanford, Richels, and Rutherford (2008) also show
meets the needs and aspirations of develop-
substantial savings from countries announcing in
ing countries. Only this can create the right advance the date when they will engage in mitiga-
climate for development. tion, because that allows those investing in long-
lived assets to factor in the likely change in future
regulatory regimes and carbon prices and there-
Notes fore minimizes the number of stranded assets.
1. Extreme poverty is defined as living on 12. Financial crises that are highly synchro-
$1.25 a day or less. Chen and Ravallion 2008. nized across countries are associated with similar
2. FAO 2009b. durations and are followed by similar recover-
3. Article 2 of the United Nations Framework ies, although the losses tend to be more severe
Convention on Climate Change (UNFCCC) calls (5 percent of GDP on average). IMF 2009, table
for stabilizing greenhouse gas concentrations 3.1. Even the Great Depression in the United
in the atmosphere at a level that “would prevent States lasted only three and a half years, from
dangerous anthropogenic [human-caused] inter- August 1929 to March 1933. National Bureau of
Many people are taking action to protect our environment. I think that only by
working as a team will we succeed in making a difference. Even children can join
together to help because we are the next generation and we should treasure our
own natural environment.
—Adrian Lau Tsun Yin, China, age 8
Economic Research Business Cycle Expansion 25. Nordhaus 2008; Stern 2007; Yohe and
and Contraction database, http://www.nber.org/ others 2007, figure 20.3.
cycles.html (accessed August 1, 2009). 26. The PAGE model, used for the Stern
13. Matthews and Caldeira 2008. Review of Climate Change, estimates that 80
14. Schaeffer and others 2008. percent of the costs of damages would be borne
15. While the question of what constitutes dan- by developing countries; Hope (2009), with
gerous climate change requires value judgments, further data breakdowns communicated by the
summaries of recent research by the Intergovern- author. The RICE model (Nordhaus and Boyer
mental Panel on Climate Change (IPCC) suggest 2000), as expanded to include adaptation in de
that warming by more than 2°C above preindus- Bruin, Dellink, and Agrawala (2009), suggests
trial levels sharply increases risks, so that “signifi- that about three-quarters of the costs of dam-
cant benefits result from constraining tempera- ages would be borne by developing countries.
tures to not more than 1.6°C–2.6°C.” Fisher and See also Smith and others (2009); Tol (2008).
others 2007; IPCC 2007b; IPCC 2007c; Parry and Note that this may well be an underestimate,
others 2007. Recent scientific publications further since it does not take into account the value of
support the notion that warming should be con- lost ecosystem services. See chapter 1 for a dis-
strained to remain as close as possible to 2°C above cussion of the limitation of models’ ability to
preindustrial temperatures. Focus A on science; capture costs of impacts.
Mann 2009; Smith and others 2009. The organiz- 27. Noted during consultations with East
ers of the 2009 International Scientific Congress on African and Latin American countries.
Climate Change concluded that “there is increas- 28. Barbera and McConnell 1990; Barrett
ing agreement that warming above 2°C would 2003; Burtraw and others 2005; Jaffe and others
be very difficult for contemporary societies and 1995; Meyer 1995.
ecosystems to cope with.” http://climatecongress 29. Hope 2009; Nordhaus 2008.
.ku.dk/ (accessed August 1, 2009). Other calls for 30. Nordhaus 2008.
not allowing warming to exceed 2°C include Euro- 31. Few models incorporate adaptation costs.
pean Commission 2007; SEG 2007; and Interna- See de Bruin, Dellink, and Agrawala (2009) for a
tional Scientific Steering Committee 2005. The discussion.
leaders of Australia, Brazil, Canada, China, the 32. Nordhaus 2008, p. 86, figure 5.3. Nordhaus
European Union, France, Germany, India, Indone- finds the additional cost of stabilizing warming at
sia, Italy, Japan, the Republic of Korea, Mexico, the 2°C rather than his optimal target of 3.5°C to be
Russian Federation, South Africa, the United King- 0.3 percent of GDP annually. The additonal cost
dom, and the United States—meeting at the Major of 2.5°C rather than 3.5°C is less than 0.1 percent
Economies Forum on Energy and Climate in July of GDP annually.
2009—recognized “the scientific view that the 33. The developing-country average is 1.5 per-
increase in global average temperature above pre- cent of GDP; it includes health insurance and
industrial levels ought not to exceed 2°C.” http:// excludes life insurance. Swiss Re 2007.
usclimatenetwork.org/resource-database/MEF_ 34. McKinsey & Company 2009.
Declarationl-0.pdf (accessed August 1, 2009). 35. In constant 2005 dollars. World Bank
16. IPCC 2007c. 2009c.
17. Raupach and others 2007. 36. Adger and others 2009.
18. Lawrence and others 2008; Matthews 37. IPCC 2001.
and Keith 2007; Parry and others 2008; Scheffer, 38. Mignone and others 2008. This is true in
Brovkin, and Cox 2006; Torn and Harte 2006; the absence of effective and acceptable geoengi-
Walter and others 2006. neering technology (see chapter 7).
19. Horton and others 2008. 39. This can result from economies of scale
20. This estimate does not take into account in technology provision (as was the case for the
the increase of damages from storm surges, and French nuclear program and appears to be an
it uses current population and economic activi- issue for concentrated solar power); network
ties. So in the absence of large-scale adaptation, effects (for a highway or rail construction pro-
it is likely to be a significant underestimate. Das- gram); or demographic or economic shocks.
gupta and others 2009. This and the rest of the paragraph are based on
21. Stern 2007. Shalizi and Lecocq 2009.
22. Easterling and others 2007, table 5.6, p 299. 40. Shalizi and Lecocq 2009.
23. Parry and others 2007, table TS.3, p 66. 41. Folger 2006; Levin and others 2007.
24. Nordhaus and Boyer 2000. Stern (2007) also 42. Häfele and others 1981, as cited in Ha-
finds that losses associated with climate change Duong, Grubb, and Hourcade 1997.
would be much greater in India and Southeast Asia 43. Davis and Owens 2003; IEA 2008b; Nemet
than the world average. and Kammen 2007; SEG 2007; Stern 2007.
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CHAPTER
1
Understanding the Links between
Climate Change and Development
I
n about 2200 BCE a shift in the Medi- Societies have always depended on the
terranean westerly winds and a reduc- climate but are only now coming to grips
tion in the Indian monsoon produced with the fact that the climate depends on
300 years of lower rainfall and colder their actions. The steep increase in green-
temperatures that hit agriculture from the house gases since the Industrial Revolution
Aegean Sea to the Indus River. This change has transformed the relationship between
in climate brought down Egypt’s pyramid- people and the environment. In other
building Old Kingdom and Sargon the words, not only does climate affect develop-
Great’s empire in Mesopotamia.1 After only ment but development affects the climate.
a few decades of lower rainfall, cities lin- Left unmanaged, climate change will
ing the northern reaches of the Euphrates, reverse development progress and compro-
the breadbasket for the Akkadians, were mise the well-being of current and future
deserted. At the city of Tell Leilan on the generations. It is certain that the earth will
northern Euphrates, a monument was halted get warmer on average, at unprecedented
half-built.2 With the city abandoned, a thick speed. Impacts will be felt everywhere, but
layer of wind-blown dirt covered the ruins. much of the damage will be in developing
Even intensively irrigated southern Meso- countries. Millions of people from Bangla-
potamia, with its sophisticated bureaucracy desh to Florida will suffer as the sea level
and elaborate rationing, could not react fast rises, inundating settlements and contami-
enough to the new conditions. Without the nating freshwater.4 Greater rainfall variabil-
shipments of rainfed grain from the north, ity and more severe droughts in semiarid
and faced with parched irrigation ditches Africa will hinder efforts to enhance food
and migrants from the devastated northern security and combat malnourishment.5 The
cities, the empire collapsed.3 hastening disappearance of the Himalayan
and Andean glaciers—which regulate river
flow, generate hydropower, and supply clean
water for over a billion of people on farms
Key messages and in cities—will threaten rural liveli-
Development goals are threatened by climate change, with the heaviest impacts on poor hoods and major food markets (map 1.1).6
countries and poor people. Climate change cannot be controlled unless growth in both rich and That is why decisive, immediate action
poor countries becomes less greenhouse-gas-intensive. We must act now: country develop- is needed. Even though the debate about
ment decisions lock the world into a particular carbon intensity and determine future warming. the costs and benefits of climate change
Business-as-usual could lead to temperature increases of 5°C or more this century. And we mitigation continues, the case is very strong
must act together: postponing mitigation in developing countries could double mitigation costs, for immediate action to avoid unmanage-
and that could well happen unless substantial financing is mobilized. But if we act now and act
able increases in temperature. The unac-
together, the incremental costs of keeping warming around 2°C are modest and can be justified
ceptability of irreversible and potentially
given the likely dangers of greater climate change.
catastrophic impacts and the uncertainty
about how, and how soon, they could occur
38 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
Map 1.1 More than a billion people depend on water from diminishing Himalayan glaciers
• ••••••••••••••• •
••
••••••••••
•••
••••••• •••••••••••• • • ••
•• •••••
••••••• ••• •••
••••••• • •• ••••• • •
••
•••
•• •••• •
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•••••••• ••••••• • •• •• ••• ••• • •••
• ••••••••••••••••••••• •••••••• ••••• ••••• •••••••••••• •••• •••••••
• •••••••••••••••• ••••• • •• ••
•••••••••••••• • •• ••••••••• ••••••••••••••••••••••• ••••• ••••••
•• •• ••• ••
• ••• •••••• • • •• •••• ••
HWANG HE
•••
•••••••
• ••••••••••••••••• ••••••• •
• ••
•
•
•
••
150 million
• •• •
• • •
••• • •• • •• •• • • • •
• •• • •••• •••
•••••• • •••
• •• •••
•••••••••••••• •
INDUS ••
• •
•• • •
•• ••
200 million ••
•
• •
••• ••• •• • ••
• • ••
••• ••• • •• • •• •• •••• ••••••
••••••••• ••• •• • • • • • ••••••••••••••••••••••• • •
••• • •• • • •• •
••••• ••••••••••••
• •••••••••• ••••••• ••••••••••• •
••••
•••••••••
• ••••• •
• • •
• •• • •• •••
• ••• •
• ••• •
• •
••• •••••• •••• • •••••
• •• •••••••••••••••••••••••••••••••••••
••••••
• •••••••
•••••••••• ••••
•• ••• •• • •
• ••
YANGTZE
••••• •••••••••• •• • • BRAHMAPUTRA
• •• •
•• •• ••••••• • • •••••••••••••••• •••• ••••••••••••• 450 million
GANGES • 60 million
400 million
GANGES-
BRAHMAPUTRA
DELTA
120 million
Sources: Center for International Earth Science Information Network, http://sedac.ciesin.columbia.edu/gpw/global.jsp (accessed
May 15, 2009); Armstrong and others 2005; ESRI 2002; WDR team.
Note: The glaciers of the Himalayas and Tibetan Plateau regulate the supply of water throughout the year in major river basins
supporting large agricultural and urban populations, with meltwater providing between 3 and 45 percent of river flow in the Gan-
ges and Indus, respectively. Reduced storage as ice and snowpack will result in larger flows and flooding during rainy months
and water shortages during warmer, drier months when water is most needed for agriculture. Glacier locations shown in the map
only include glaciers larger than 1.5 sq. km in area. Numbers indicate how many people live in each river basin.
compel bold actions. The strong inertia in cutting their own emissions by reshaping
the climate system, in the built environ- their built and economic environments.
ment, and in the behavior of individuals They also need to promote and finance the
and institutions requires that this action be transition to low-carbon growth in develop-
urgent and immediate. ing countries. Better application of known
Over the past two centuries the direct practices and fundamental transforma-
benefits of carbon-intensive development tions—in natural resource management,
have been concentrated largely in today’s energy provision, urbanization, social safety
high-income countries. The inequity in nets, international financial transfers, tech-
the global distribution of past and current nological innovation, and governance, both
emissions, and in current and future dam- international and national—are needed to
ages, is stark (figure 1.1; see also focus A fig- meet the challenge.
ure FA.6 and the overview). But if countries Increasing people’s opportunities and
are willing to act, the economic incentives material well-being without undermining
for a global deal exist. the sustainability of development is still
The window of opportunity to choose the main challenge for large swaths of the
the right policies to deal with climate world, as a severe fi nancial and economic
change and promote development is clos- crisis wreaks havoc across the globe. Stabi-
ing. The further countries go along current lizing the financial markets and protecting
emissions trajectories, the harder it will be the real economy, labor markets, and vul-
to reverse course and alter infrastructures, nerable groups are the immediate priority.
economies, and lifestyles. High-income But the world must exploit this moment of
countries must face head-on the task of opportunity for international cooperation
Understanding the Links between Climate Change and Development 39
Figure 1.1 Individuals’ emissions in high-income countries overwhelm those in developing countries
CO2e/person (tons)
30 Australia
Canada
United States High-income country
Middle-income country
Brazil
25 Low-income country
Russian Federation Emissions from land-use change
Germany
Japan
United Kingdom
20
Ukraine
Italy Peru
Indonesia
South Africa Myanmar
15 Ghana
France Iraq; Colombia
Iran, Islamic Rep. of Vietnam
Mexico Congo, Dem. Rep. Pakistan
Turkey Algeria Ethiopia
10 Thailand Nigeria Tanzania
Egypt, Arab Rep. of Bangladesh
Philippines Sudan
0
0.30 0.19 0.13 0.22 0.10 1.32 0.15 1.13 0.16 0.16
Population in 2005 (billions)
Sources: Emissions of greenhouse gases in 2005 from WRI 2008, augmented with land-use change emissions from Houghton 2009; population from World Bank 2009c.
Note: The width of each column depicts population and the height depicts per capita emissions, so the area represents total emissions. Per capita emissions of Qatar (55.5 tons of carbon
dioxide equivalent per capita), UAE (38.8), and Bahrain (25.4)—greater than the height of the y-axis—are not shown. Among the larger countries, Brazil, Indonesia, the Democratic Republic
of Congo, and Nigeria have low energy-related emissions but significant emissions from land-use change; therefore, the share from land-use change is indicated by the hatching.
and domestic intervention to tackle the rest By defi nition, then, unmitigated climate
of development’s problems. Among them, change is incompatible with sustainable
and a top priority, is climate change. development.
In the last half century the use of natu- epidemic in western Canadian forests,
ral resources (among them fossil fuels) has partly a consequence of milder winters,
supported improvements in well-being, is ravaging the timber industry, threaten-
but when accompanied by resource degra- ing the livelihoods and health of remote
dation and climate change, such use is not communities, and requiring millions in
sustainable. Neglecting the natural envi- government spending for adjustment and
ronment in the pursuit of growth, people prevention.18 Attempts to adapt to similar
have made themselves more vulnerable to future threats, in developed and developing
natural disasters (see chapter 2). And the countries, will have real human and eco-
poorest often rely more directly on natu- nomic costs even as they cannot eliminate
ral resources for their livelihoods. Roughly all direct damage.
70 percent of the world’s extremely poor Warming can have a big impact on both
people live in rural areas. the level and growth of gross domestic
By 2050 the global population will reach product (GDP), at least in poor countries.
9 billion, barring substantial changes in An examination of year-to-year variations
demographic trends, with 2.5 billion more in temperature (relative to a country’s aver-
people in today’s developing countries. age) shows that anomalously warm years
Larger populations put more pressure on reduce both the current level and subse-
ecosystems and natural resources, inten- quent growth rate of GDP in developing
sify the competition for land and water, and countries.19 Consecutive warm years might
increase the demand for energy. Most of the be expected to lead to adaptation, lessen-
population increase will be in cities, which ing the economic impacts of warming, yet
could help limit resource degradation and the developing countries with more pro-
individual energy consumption. But both nounced warming trends have had lower
could increase, along with human vulner- growth rates.20 Evidence from Sub-Saharan
ability, if urbanization is poorly managed. Africa indicates that rainfall variability,
Climate change imposes an added burden projected to increase substantially, also
on development.15 Its impacts are already reduces GDP and increases poverty.21
visible, and the most recent scientific evi- Agricultural productivity is one of many
dence shows the problem is worsening fast, factors driving the greater vulnerability of
with current trajectories of greenhouse gas developing countries (see chapter 3, map
(GHG) emissions and sea-level rise outpac- 3.3). In northern Europe and North Amer-
ing previous projections.16 And the disrup- ica crop yields and forest growth might
tions to socioeconomic and natural systems increase under low levels of warming and
are happening even now—that is, even carbon dioxide (CO2) fertilization.22 But
sooner than previously thought (see focus in China and Japan yields of rice, a major
A on science).17 Changing temperature and global staple, will likely decline, while yields
precipitation averages and a more variable, of wheat, maize, and rice in Central and
unpredictable, or extreme climate can alter South Asia will be particularly hard hit.23
today’s yields, earnings, health, and physi- Prospects for crops and livestock in rainfed
cal safety and ultimately the paths and lev- semiarid lands in Sub-Saharan Africa are
els of future development. also bleak, even before warming reaches
Climate change will affect numerous sec- 2–2.5°C above preindustrial levels.24
tors and productive environments, includ- India’s post-1980 deceleration in the
ing agriculture, forestry, energy, and coastal increase of rice productivity (from the
zones, in developed and developing coun- Green Revolution in the 1960s) is attrib-
tries. Developing economies will be more utable not only to falling rice prices and
affected by climate change, in part because deteriorating irrigation infrastructure, as
of their greater exposure to climate shocks previously postulated, but also to adverse
and in part because of their low adaptive climate phenomena from local pollution
capacity. But no country is immune. The and global warming.25 Extrapolating from
2003 summer heat wave killed more than past year-to-year variations in climate and
70,000 people in a dozen European coun- agricultural outcomes, yields of major crops
tries (map 1.2). The mountain pine beetle in India are projected to decline by 4.5 to
Understanding the Links between Climate Change and Development 41
Map 1.2 Rich countries are also affected by anomalous climate: The 2003 heat wave killed more than 70,000
people in Europe
Number of deaths
Affected
Not affected
UNITED
KINGDOM
301 THE
NETHERLANDS
965
BELGIUM
1,175 GERMANY
9,355
LUXEMBOURG
166
SLOVENIA
SWITZERLAND 289 CROATIA
1,039 788
FRANCE
19,490
PORTUGAL ITALY
2,696 20,089
SPAIN
15,090
9 percent within the next three decades, the number of people exposed to malaria and
even allowing for short-term adaptations.26 dengue will increase, with the burden most
The implications of such climate change pronounced in developing countries.29 The
for poverty—and GDP—could be enor- incidence of drought, projected to increase
mous given projected population growth in the Sahel and elsewhere, is strongly cor-
and the evidence that one percentage point related with past meningitis epidemics in
of agricultural GDP growth in developing Sub-Saharan Africa.30 Declining agricultural
countries increases the consumption of the yields in some regions will increase malnu-
poorest third of the population by four to trition, reducing people’s resistance to ill-
six percentage points.27 ness. The burden of diarrheal diseases from
The impacts of climate change on health climate change alone is projected to increase
add to the human and economic losses, up to 5 percent by 2020 in countries with
especially in developing countries. The per capita incomes below $6,000. Higher
World Health Organization estimates that temperatures are likely to increase cardio-
climate change caused a loss of 5.5 mil- vascular illness, especially in the tropics but
lion disability-adjusted life years in 2000— also in higher-latitude (and higher-income)
84 percent of them in Sub-Saharan Africa and countries—more than offsetting the relief
East and South Asia.28 As temperatures rise, from fewer cold-related deaths.31
42 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
Map 1.3 Climate change is likely to increase poverty in most of Brazil, especially its poorest regions
Sources: Center for International Earth Science Information Network, http://sedac.ciesin.columbia.edu/gpw/global.jsp (accessed May 15, 2009); Dell, Jones, and Olken 2009;
Assunçao and Chein 2008.
Note: Climate-change poverty impact estimates for mid-21st century based on a projected decline in agricultural yields of 18 percent. The change in poverty is expressed in per-
centage points; for example, the poverty rate in the northeast, estimated at 30 percent (based on $1 a day with year 2000 data), could rise by 4 percentage points to 34 percent.
The estimates allow for internal migration, with the poverty outcomes of migrants counted in the sending municipality.
Adverse climate trends, variability, and A cycle of descent into poverty could
shocks do not discriminate by income, but emerge from the confluence of climate
better- off people and communities can change, environmental degradation, and
more successfully manage the setbacks market and institutional failures. The cycle
(map 1.3). When Hurricane Mitch swept could be precipitated by the gradual col-
through Honduras in 1998, more wealthy lapse of a coastal ecosystem, less predict-
households than poor ones were affected. able rainfall, or a more severe hurricane
But poor households lost proportionally season.35 While large-scale natural disas-
more: among affected households, the poor ters cause the most visible shocks, small
lost 15 to 20 percent of their assets, while but repeated shocks or subtle shifts in the
the richest lost only 3 percent.32 The longer- distribution of rainfall throughout the
term impacts were greater too: all affected year can also produce abrupt yet persistent
households suffered a slowdown in asset changes in welfare.
accumulation, but the slump was greater for Empirical evidence on poverty traps—
poorer households.33 And impacts varied by defined as consumption permanently below
gender (box 1.1): male-headed households, a given threshold—is mixed.36 But there is
with greater access to new lodging and growing evidence of slower physical asset
work, spent shorter periods in postdisas- recovery and human capital growth among
ter shelters compared with female-headed the poor after shocks. In Ethiopia a season
households, which struggled to get back with starkly reduced rainfall depressed
on their feet and remained in the shelters consumption even after four to five years.37
longer.34 Instances of drought in Brazil have been
Understanding the Links between Climate Change and Development 43
followed by significantly reduced rural low sensitivity to rainfall variation but also
wages in the short term, with the wages with low average returns, locking in patterns
of affected workers catching up with their of inequality in the country.40
peers’ only after five years.38 Climate shocks can also permanently
In addition limited access to credit, insur- affect people’s health and education.
ance, or collateral hampers poor households’ Research in Côte d’Ivoire linking rain-
opportunities to make productive invest- fall patterns and investment in children’s
ments or leads them to choose investments education shows that in regions experi-
with low risk and low returns to guard against encing greater-than-usual weather vari-
future shocks.39 In villages throughout India ability, school enrollment rates declined
poorer farmers have mitigated climatic risk by 20 percent for both boys and girls.41
by investing in assets and technologies with And when coupled with other problems,
44 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
environmental shocks can have long-term change when incomes grow.45 The average
effects. People exposed to drought and civil carbon footprint of citizens in rich coun-
strife in Zimbabwe during early childhood tries, including oil producers and small
(between 12 and 24 months of age) suffered island states, varies by a factor of twelve,
from a height loss of 3.4 centimeters, close as does the energy intensity of GDP,46
to 1 fewer years of schooling, and a nearly suggesting that carbon footprints do not
six-month delay in starting school. The always increase with income. And today’s
estimated effect on lifetime earnings was 14 developing economies use much less energy
percent, a big difference to someone near per capita than developed countries such as
the poverty line.42 the United States did at similar incomes,
showing the potential for lower- carbon
Balancing growth and assessing policies growth.47
in a changing climate Adaptation and mitigation need to be
Growth: Changing carbon footprints and integrated into a climate-smart develop-
vulnerabilities. By 2050 a large share of ment strategy that increases resilience,
the population in today’s developing coun- reduces the threat of further warming, and
tries will have a middle-class lifestyle. But improves development outcomes. Adapta-
the planet cannot sustain 9 billion people tion and mitigation measures can advance
with the carbon footprint of today’s aver- development, and prosperity can raise
age middle- class citizen. Annual emis- incomes and foster better institutions. A
sions would nearly triple. Moreover, not all healthier population living in better-built
development increases resilience: growth houses and with access to bank loans and
may not happen fast enough and can create social security is better equipped to deal
new vulnerabilities even as it reduces oth- with a changing climate and its conse-
ers. And poorly designed climate change quences. Advancing robust, resilient devel-
policies could themselves become a threat opment policies that promote adaptation
to sustainable development. is needed today because changes in the cli-
But it is ethically and politically unac- mate, already begun, will increase even in
ceptable to deny the world’s poor the oppor- the short term.
tunity to ascend the income ladder simply The spread of economic prosperity has
because the rich reached the top first. Devel- always been intertwined with adaptation
oping countries now contribute about half to changing ecological conditions. But as
of annual greenhouse gas emissions but have growth has altered the environment and as
nearly 85 percent of the world’s population; environmental change has accelerated, sus-
the energy-related carbon footprint of the taining growth and adaptability demands
average citizen of a low- or middle-income greater capacity to understand our environ-
country is 1.3 or 4.5 metric tons of carbon ment, generate new adaptive technologies
dioxide equivalent (CO2e), respectively, com- and practices, and diffuse them widely. As
pared with 15.3 in high-income countries.43 economic historians have explained, much
Moreover, the bulk of past emissions— of humankind’s creative potential has
and thus the bulk of the existing stock of been directed at adapting to the changing
greenhouse gases in the atmosphere—is world.48 But adaptation cannot cope with
the responsibility of developed countries.44 all the impacts related to climate change,
Resolving the threat of climate change to especially as larger changes unfold in the
human well-being thus not only depends long term (see chapter 2).49
on climate-smart development—increasing Countries cannot grow out of harm’s
incomes and resilience while reducing emis- way fast enough to match the changing cli-
sions relative to projected increases. It also mate. And some growth strategies, whether
requires climate-smart prosperity in the driven by the government or the market,
developed countries—with greater resilience can also add to vulnerability—particularly
and absolute reductions in emissions. if they overexploit natural resources. Under
Evidence shows that policy can make the Soviet development plan, irrigated cot-
a big difference in how carbon footprints ton cultivation expanded in water-stressed
Understanding the Links between Climate Change and Development 45
Central Asia and led to the near disappear- But mitigation policies can also go wrong
ance of the Aral Sea, threatening the liveli- and reduce welfare if ancillary effects are not
hoods of fishermen, herders, and farmers.50 considered in design and execution. Relative
And clearing mangroves—natural coastal to cleaner cellulosic ethanol production and
buffers against storm surges—to make way even gasoline, corn-based biofuel produc-
for intensive shrimp farming or housing tion in the United States imposes higher
development increases the physical vulner- health costs from local pollution and offers
ability of coastal settlements, whether in only dubious CO2 emission reductions (fig-
Guinea or in Louisiana. ure 1.2).53 Moreover, biofuel policies in the
Climate shocks can strain normally ade- United States and Europe have diverted
quate infrastructure or reveal previously inputs from food to fuel production and
untested institutional weaknesses, even in
fast-growing and high-income countries. Map 1.4 The January 2008 storm in China severely disrupted mobility, a pillar of its economic
For example, despite impressive economic growth
growth for more than two decades, and in
part because of accompanying labor-market
transitions, millions of migrant workers in Beijing
D.P.R.
Tianjin OF
China were stranded during the unexpect- Shijiazhuang KOREA
edly intense snow storms in January 2008
(map 1.4). The train system collapsed as Jinan
Lanzhou
workers returned home for the Chinese Jinghu Line
Qingdao
Zhengzhou
New Year, stranding millions, while the Xi’an
Longhai Line Luoyang
southern and central provinces suffered
food shortages and power failures. Hur- Nanjing
ricane Katrina exposed the United States Jingguang Line Hefei
as unprepared and ill equipped, showing Chengdu Suzhou Shanghai
Hangzhou
that even decades of steady prosperity do Chongqing Wuhan
Map 1.5 Africa has enormous untapped hydropower potential, compared to lower potential but more
exploitation of hydro resources in the United States
N
ile
er
Nig
Blu
e
Nil
e
e
nu
Be
W
hit
e Ni
le
Ubangi
ngo
Co
4.50
25% of world electricity Lukaga
production in 2005
4.00
ba
Gigawatt hours / year in 2005 (millions)
Luala
3.50 Total electricity
production
3.00 Economically feasible
hydropower Chire
2.00
1.50
Orange
1.00
0.50
0.00
United States Sub-Saharan
Africa
Sources: International Journal on Hydropower and Dams, World Atlas, 2006 (http://hydropower-dams.com, accessed July 9, 2009);
IEA Energy Balances of OECD Countries 2008; and IEA Energy Balances of Non-OECD Countries 2007 (http://www.oecd.org/
document/10/0,3343,en_21571361_33915056_39154634_1_1_1_1,00.html, accessed July 9, 2009).
Note: The United States has exploited over 50 percent of its hydropower potential, compared to only 7–8 percent in the countries
of Sub-Saharan Africa. Total electricity production in the United States is shown for scale.
contributed to increases in global food Ukraine, have responded with export bans
prices.54 Such food price hikes often increase and other protectionist measures, limiting
poverty rates.55 The overall impact on pov- the gains for domestic producers, reducing
erty depends on the structure of the econ- grain supplies, and narrowing the scope for
omy, because net producers will benefit from future market solutions.56
higher prices, and net buyers will be worse The interrelationship of trade and mit-
off. But many governments in food-surplus igation policies is not straightforward. It
countries, including Argentina, India, and has been suggested that the carbon content
Understanding the Links between Climate Change and Development 47
of exports be counted in the carbon tally that spending on energy constitutes a larger
of the destination country, so that the share of total expenditures for poor house-
exporting countries are not punished for holds than for rich ones. But the regressive
specializing in the heavy industrial goods effect could be offset either through scaled
consumed by others. But if importers tariff design or a targeted program based
place a border tax on the carbon content of on existing social policy mechanisms.58
goods to equalize the carbon price, export- And green taxes in developing countries
ing countries would still bear some of the could even be progressive, as suggested by
burden through a loss in competitiveness a recent study for China. Most poor house-
(see focus C on trade). holds in China reside in rural areas and con-
sume products much less carbon intensive
Green taxes. As outlined in chapter 6, than those consumed by generally better-
carbon taxes can be an efficient instrument off urban households. If revenues from a
for controlling carbon emissions—but carbon tax were recycled into the economy
changes in the tax system to incorporate on an equal per capita basis, the progressive
environmental costs (green taxes) could effect would be larger still.59
be regressive, depending on the country’s Gaining political support for green
economic structure, the quality of target- taxes and ensuring they do not harm the
ing, and the distribution of burden shar- poor will not be easy. Revenue recycling
ing. In the United Kingdom a carbon tax would be critical for Latin America and
imposed equally on all households would Eastern Europe, where a significant share
be very regressive, consistent with findings of the poor live in urban areas and would
from other OECD countries.57 The reason is be directly hurt by green taxes. But such
revenue recycling, as well as the targeting
suggested by the Great Britain study, would
Figure 1.2 Corn-based biofuels in the United States require a strong commitment to such a
increase CO2 emissions and health costs relative to
gasoline policy shift, difficult in the many develop-
ing countries where regressive subsidies for
Nonmarket costs ($/liter)
energy and other infrastructure services
Heat source for ethanol production
Corn Natural Coal
are politically entrenched. Without revenue
0.40 wastes gas recycling, the impact of carbon pricing or
green taxes—even if progressive—is likely
to harm the poor because poor households
0.30
spend as much as 25 percent of their income
on electricity, water, and transport. It is also
0.20 likely to be politically difficult because even
the average household spends about 10 per-
cent of its income on these services.60
0.10
The real income of the poorest will also
be reduced in the near term as the higher
0.00 up-front costs of greener infrastructure
Gasoline Corn ethanol construction, operation, and services hit
the supply side of the economy.61 A green
Cost of GHG emissions Health cost from
from production and use particulates tax could have a direct effect on households
Cost of GHG emissions due to land-use change (caused by the increase in energy prices)
and an indirect effect (on total household
Source: Hill and others 2009. expenditure as a result of higher costs of
Note: Costs are in terms of dollar per liter of gasoline or
gasoline equivalent. Health costs (green) are estimated costs
production and thus prices of consumer
because of particulate matter emissions, from the produc- goods). A study in Madagascar found that
tion and end-use combustion of an additional liter of ethanol.
Greenhouse-gas emission costs (blue) assume a carbon price
the indirect effects could represent 40 per-
of $120 a ton, based on the estimated price of carbon capture cent of the welfare losses through higher
and storage. A portion (diagonal hatching in figure) of the
greenhouse gas emissions associated with corn ethanol pro-
prices of food, textiles, and transport.62
duction comes from clearing, conversion, or cultivation of land. Despite the greater direct consumption of
48 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
infrastructure services by the middle class, and scarce resources. But monetizing costs
the poorest quintile was projected to suffer and benefits can too easily omit nonmar-
the biggest loss in real income. ket environmental goods and services and
There is ample scope around the world becomes impossible if future risks (and atti-
for better energy tariff and subsidy design tudes toward risk) are highly uncertain.
that both increases cost recovery and bet- Additional decision tools, comple-
ter targets benefits to the poor.63 Climate menting cost-benefit analysis, are needed
change (and green tax proceeds) may to establish overall goals and acceptable
make it worthwhile and feasible to expand risks. Multicriteria approaches can pro-
income support programs to countries that vide insights about tradeoffs that are not all
now rely on energy and water pricing as expressed in monetary terms. In the face of
part of their social policy. Greater energy risk aversion and uncertainty about future
efficiency reduces costs for everyone, while climate risks, the “tolerable windows”
greener technologies can be less expensive approach can identify emissions paths that
than traditional carbon-intensive ones. For stay within chosen boundaries of accept-
example, upgrading to improved wood- able risk and then evaluate the cost of doing
fi red cook stoves in rural Mexico could so.66 “Robust decision making” can high-
reduce emissions by 160 million tons of light policies that provide an effective hedge
CO2 over the next 20 years, with net eco- against undesirable future outcomes.67
nomic gains (from lower direct energy costs
and better health) of $8 to $24 for each ton The cost-benefit debate: Why it’s not
of avoided CO2 emissions.64 just about the discount rate
The economic debate about the cost-benefit
Evaluating the tradeoffs analysis of climate change policy has been
While few still debate the need for action particularly active since the publication
to mitigate climate change, controversy of the Stern Review of the Economics of
remains over how much and how soon to Climate Change in 2007. That report esti-
mitigate. Holding the changes in global mated the potential cost of unmitigated cli-
average temperatures below “dangerous” mate change to be very high—a permanent
levels (see focus A on science) would require annualized loss of 5–20 percent of GDP—
immediate and global actions—actions that and argued for strong and immediate
are costly—to reduce emissions from pro- action. The report’s recommendations con-
jected levels by 50 to 80 percent by 2050. tradicted many other models that make an
A growing literature shows that the case economic case for more gradual mitigation
for immediate and significant mitigation in the form of a “climate policy ramp.”68
is stronger when taking into account the The academic debate on the appropri-
inertia in the climate system, meaning that ate discount rate—which drives much
warming and its impacts cumulate slowly of the difference between Stern’s result
but are to a considerable extent irreversible; and the others—will most likely never be
the inertia of the built environment, which resolved (box 1.2).69 Stern used a very low
implies a higher cost of reducing emissions discount rate. In this approach, commonly
in the future if higher-emission fi xed capi- justified on ethical grounds, the fact that
tal is put into place today; and the benefit future generations will likely be richer is
of reducing the greater uncertainty and risk the only factor that makes the valuation of
of catastrophic outcomes associated with future welfare lower than that of today; in
higher temperatures.65 all other ways, the welfare of future genera-
Any response to climate change involves tions is just as valuable as the welfare of the
some weighing of pros and cons, strengths current generation.70 Good arguments can
and weaknesses, benefits and costs. The be presented in favor of both high and low
question is how this evaluation is to be discount rates. Unfortunately, intergenera-
undertaken. Cost-benefit analysis is a tional welfare economics cannot help solve
crucial tool for policy evaluation in the the debate—because it raises more ques-
unavoidable context of competing priorities tions than it can answer.71
Understanding the Links between Climate Change and Development 49
BOX 1.2 The basics of discounting the costs and benefits of climate change mitigation
The evaluation of resource allocation Three factors determine the discount judgments and empirical information
across time is a staple of applied eco- rate. The first is how much weight to that attempt to assess preferences from
nomics and project management. Such give to the welfare enjoyed in the future, past behavior are used, sometimes in
evaluations have been used extensively strictly because it comes later rather combination. Because the costs of miti-
to analyze the problem of costs and ben- than sooner. This pure rate of time pref- gation policies are borne immediately,
efits of climate change mitigation. But big erence can be thought of as a measure and the possibly large benefits of such
disagreements remain about the correct of impatience. The second factor is the policies (avoided damages) are enjoyed
values of the parameters. growth rate in per capita consumption: far in the future, the choice of parameters
The social discount rate expresses the if growth is rapid, future generations will for the social discount rate strongly influ-
monetary costs and benefits incurred in be much wealthier, reducing the value ences climate-policy prescriptions.
the future in terms of their present value, assigned today to losses from future Sources: Stern 2007; Stern 2008; Dasgupta
or their value to decision makers today. climate damages compared with costs 2008; Roemer 2009; Sterner and Persson
By definition, then, the primary tool of of mitigation borne today. The third fac- 2008.
intergenerational welfare analysis—total tor is how steeply the marginal utility of a. The marginal utility of consumption
expected net present value—collapses consumption (a measure of how much an declines as income rises because an addi-
the distribution of welfare over time. additional dollar is enjoyed) declines as tional dollar of consumption provides more
Determining the appropriate value for the income rises.a utility to a poor person than to a person
already consuming a lot. The steepness of
elements of the discount rate in the con- There is no universal agreement on
the change—known as the elasticity of the
text of a long-term problem like climate how to choose the numerical values for marginal utility of consumption with respect
change involves deep economic and ethi- each of the three factors that determine to changes in income level—also measures
cal considerations (see box 1.4). the social discount rate. Both ethical tolerance of risk and inequality.
Yet the call for rapid and significant unmitigated climate change.74 In fact, fac-
action to mitigate greenhouse gas emis- toring the loss of biodiversity into a stan-
sions is not solely dependent on a low dis- dard model results in a strong call for more
count rate. While its role in determining rapid mitigation, even with a higher dis-
the relative weight of costs and benefits is count rate.
important, other factors raise the benefits
of mitigation (avoided damages) in ways More accurately modeled dynamics:
that also strengthen the case for rapid and Threshold effects and inertia. The dam-
significant mitigation, even with a higher age function, which links changes in tem-
discount rate.72 peratures to associated monetized damages,
is usually modeled in cost-benefit analysis
Broader impacts. Most economic mod- as rising smoothly. But mounting scien-
els of climate change impacts do not ade- tific evidence suggests that natural systems
quately factor in the loss of biodiversity and could exhibit nonlinear responses to cli-
associated ecosystem services—a paradoxi- mate change as a consequence of positive
cal omission that amounts to analyzing the feedbacks, tipping points, and thresholds
tradeoffs between consumption goods and (box 1.3). Positive feedbacks could occur,
environmental goods without including for example, if warming causes the perma-
environmental goods in individuals’ utility frost to thaw, releasing the vast amounts of
function.73 Although the estimated market methane (a potent greenhouse gas) it con-
value of lost environmental services may be tains and further accelerating warming.
difficult to calculate and may vary across Thresholds or tipping points are relatively
cultures and value systems, such losses do rapid and large-scale changes in natural (or
have a cost. The losses increase the rela- socioeconomic) systems that lead to serious
tive price of environmental services as they and irreversible losses. Positive feedbacks,
become relatively and absolutely scarcer. tipping points, and thresholds mean that
Introducing environmental losses into there might be great value to keeping both
a standard integrated assessment model the pace and magnitude of climate change
significantly increases the overall cost of as low as possible.75
50 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
BOX 1.3 Positive feedbacks, tipping points, thresholds, and nonlinearities in natural and
socioeconomic systems
Positive feedbacks in the weather events remain within the enve- direct damages. This effect is evident in
climate system lope of past variations—but that impacts some natural disasters. Recent evidence
Positive feedbacks amplify the effects could increase sharply if climate condi- in Louisiana shows that the economy has
of greenhouse gases. One such positive tions consistently exceed these boundar- the capacity to absorb up to $50 billion of
feedback is the change in reflectiveness, ies in the future. direct losses with minimal indirect losses.
or albedo, of the earth’s surface: highly But indirect losses increase rapidly with
Nonlinearities and indirect
reflective surfaces like ice and snow more destructive disasters (figure). Direct
economic effects
bounce the sun’s warming rays back out losses from Hurricane Katrina reached
The economic response to these impacts
to the atmosphere, but as higher tempera- $107 billion, with indirect losses adding
is itself nonlinear, in part because climate-
tures cause ice and snow to melt, more another $42 billion; a simulated disaster
change impacts will simultaneously
energy is absorbed on the earth’s surface, with direct losses of $200 billion would
increase the need for adaptation and
leading to further warming and more cause an additional $200 billion in indi-
potentially decrease adaptive capacity.
melting, as the process repeats itself. rect losses.
Direct impacts can also beget indirect
Tipping points in natural systems effects (macroeconomic feedbacks, busi- Sources: Schmidt 2006; Kriegler and others
Even smooth, moderate changes in the ness interruptions, and supply- chain 2009; Adams and others 2009; Hallegatte
climate can lead a natural system to a disruptions) that increase more than 2008; personal communication from
point beyond which relatively abrupt, dollar for dollar in response to greater Stéphane Hallegatte, May 2009.
possibly accelerating, irreversible, and
ultimately very damaging changes occur.
For example, regional forest die- off could Indirect losses increase even more steeply as direct damages rise: Estimates from Louisiana
result from the combination of drought,
Indirect losses ($ billions)
pests, and higher temperatures that
400
combine to exceed physiological limits. A
possible tipping point of global concern 350
is the melting of the ice sheet that covers
much of Greenland. Past a certain level of 300
warming, summer melt will not refreeze
250
in winter, dramatically increasing the rate
of melting and leading to a sea-level rise 200
of 6 meters.
150
Thresholds in socioeconomic systems
The economic cost of direct impacts could 100
also present strong threshold effects—a
result of the fact that current infrastruc- 50
tures and production practices are engi-
0
neered to be robust only to previously
experienced variation in weather condi- –50
tions. This suggests that any increases 0 50 100 150 200 250 300
in impacts will be driven primarily by
Direct losses ($ billions)
rising concentrations of population and
assets rather than by climate—so long as Source: Data provided by Stéphane Hallegatte, based on Hallegatte 2008.
Substantial inertia in the climate sys- example, a delay of more than 10 years
tem adds to the concern about positive would likely preclude stabilization of the
feedbacks, threshold effects, and irre- atmosphere at any less than 3°C of warm-
versibility of climate change impacts. ing.77 In addition, the climate system will
Scientists have found that the warming keep changing for several centuries even
caused by increases in greenhouse gas after concentrations of greenhouse gases
concentration may be largely irrevers- stabilize (see overview). So only imme-
ible for a thousand years after emissions diate mitigation preserves the option
stop.76 Postponing mitigation forgoes the value—that is, avoids the loss of options
option of a lower warming trajectory: for in stabilization outcomes.
Understanding the Links between Climate Change and Development 51
Inertia is also substantial in the built envi- becomes commercially available. This is
ronment—transport, energy, housing, and not the case in India, South Africa, or many
the urban form (the way cities are designed). other countries, where retrofits will prove
In response to this inertia, some argue for unaffordable unless new plants are sited
postponing mitigation investments to avoid close to the few existing storage sites (see
getting locked into higher cost, lower-carbon chapters 4 and 7).
investments unnecessarily, instead waiting Developing countries, with less existing
until better, less expensive technology allows infrastructure than developed countries,
quick ramping up of mitigation and more is have a f lexibility advantage and could
known about the risks societies will need to potentially leapfrog to cleaner technolo-
protect against. gies. Developed countries must provide
But it is not possible in practice to post- leadership in bringing new technologies to
pone major investments in infrastructure market and sharing knowledge from their
and energy provision without compromis- experiences of deployment. The ability to
ing economic development. Energy demand change emissions trajectories depends on
is likely to triple in developing countries the availability of appropriate and afford-
between 2002 and 2030. In addition, many able technology, which will not be in place
power plants in high-income countries were at some future date without research and
built in the 1950s and 1960s so are coming development (R&D) investment, dissemi-
to the end of their useful life, implying that nation, and learning-by- doing starting
many new plants will need to be built over today.
the next 10–20 years even with constant Opportunities to shift from higher- to
demand. Currently, coal plants remain lower-carbon long-lived capital stock are
among the cheapest option for many coun- not equally available over time.80 The choice
tries—in addition to offering energy secu- to switch to a more energy and economi-
rity for those with ample coal reserves. If all cally efficient system realistically cannot be
coal-burning power plants scheduled to be made in the future if the required technolo-
built in the next 25 years come into opera- gies are not yet on the shelf and at sufficient
tion, their lifetime CO2 emissions would be scale to be affordable and if people do not
equal to those of all coal-burning activities yet have the know-how to use them (see
since the beginning of industrialization.78 chapter 7).81 Effective, affordable backstop
Consequently, the absence of stronger mitigation technologies for transforming
emission reduction commitments by the energy systems will not be available in the
power sector today will lock in relatively future without active research and dem-
high emission trajectories. onstration initiatives that move potential
Nor is it always possible to cost- technologies along the cost and learning
effectively retrofit such investments on a curves. To that end, developed countries
large scale. Retrofits are not always pos- need to provide leadership in developing
sible, and they can be prohibitively costly. and bringing new technologies to market
Staying with the coal example, carbon and in sharing knowledge from their expe-
capture and storage—a technology that is riences of deployment.
being developed to capture the CO2 pro-
duced by a fossil-fuel power plant and store Accounting for uncertainties. Economic
it underground—requires that the plant be assessments of climate change policies
located within 50 to 100 miles of an appro- must factor in the uncertainties about the
priate CO2 storage site or else the cost of size and timing of adverse impacts and
transporting the carbon becomes prohibi- about the feasibility, cost, and time pro-
tively high.79 For countries endowed with fi les of mitigation efforts. A key uncer-
an abundance of potential storage sites, this tainty missed by most economic models is
is not an issue: about 70 percent of China’s the possibility of large catastrophic events
power plants happen to be close enough to related to climate change (see focus A on
storage sites and therefore could reasonably science), a topic that is at the center of an
be retrofitted if and when the technology ongoing debate. 82 The underlying prob-
52 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
Value systems also play a role in environ- catastrophe through massive deforestation.
mental policy decisions. Recently climate But as early as 1700 it had an elaborate sys-
change has emerged as a human rights issue tem of woodland management in place.90
(box 1.4). And most societies have ethical One reason the Tokugawa shogunate, the
or religious systems that value nature and rulers at the time, decided to act was con-
identify human responsibilities for the stew- cern for future family generations—a con-
ardship of the earth and its natural riches— cern that resulted from Confucian cultural
though the results often fall short of the traditions91—and a desire to maintain the
espoused ideals. In the first half of the 1600s, hereditary political system. Today, Japan’s
Japan was hurtling toward an environmental territory is almost 80 percent forested.92
Robust decision analysis can also be done changes in fossil-fuel use in middle-income
with more formal quantitative tools, in countries suggest that their CO2 emissions
an exploratory modeling approach, using will continue to increase and will exceed
mathematical methods for characterizing the cumulative emissions of developed
decisions and outcomes under conditions countries in the coming decades.103
of deep uncertainty. The implication, as stated in the UNFCCC
Under robust decision making, costs, and the Bali Action Plan,104 is that all nations
benefits, and the tradeoffs inherent in cli- have a role in an agreement that reduces
mate policies are assessed under all sce- global emissions and that this role has to be
narios. The policy prescription is not to commensurate with their development sta-
pursue an “optimal” policy—in the tradi- tus. In this approach, developed countries
tional sense of maximizing utility—that take the lead in meeting significant reduction
performs, on average, better than the oth- targets, and they assist developing countries
ers. Instead, sound policies are those that in laying the foundations for lower-carbon
withstand unpredictable futures in a robust growth pathways and meeting their citizens’
way. In this framing near-term policies can adaptation needs. The UNFCC also calls for
be understood as a hedge against the cost developed countries to compensate develop-
of policy adjustments—lending support to ing countries for the additional mitigation
efforts to invest in R&D and infrastructure and adaptation costs developing countries
today to keep open the option of a low- will incur.
carbon future tomorrow.99 A critical component of global action
is a global mechanism allowing those who
The costs of delaying the global mitigate to differ from those who pay (the
mitigation effort subject of chapter 6). Negotiated interna-
Today’s global warming was caused over- tional fi nancial transfers can enable the
whelmingly by emissions from rich coun- direct fi nancing—by high-income coun-
tries.100 Developing countries are rightly tries—of mitigation measures undertaken
concerned about the consequences of in developing countries. (In developing
imposing limitations on their growth. This countries, mitigation will often entail
supports the argument, embodied in the reorienting future emission trajectories
principle of “common but differentiated to more sustainable levels, not reducing
responsibilities” in the United Nations absolute emission levels.) Unlocking large-
Framework Convention on Climate Change scale fi nance from the high-income coun-
(UNFCCC), which holds that high-income tries seems a great challenge. However, if
countries should lead in reducing emis- high-income countries are committed to
sions, given both their historical respon- achieving lower total global emissions, it
sibility and their significantly higher per is in their interest to provide the fi nancing
capita emissions today. Developed coun- to ensure that significant mitigation takes
tries’ much greater financial and technolog- place in developing countries. Estimates
ical resources further argue for their taking of global mitigation costs usually assume
on the bulk of mitigation costs, regardless that mitigation will happen wherever or
of where the mitigation occurs. whenever it is cheapest. Many low- cost
But emission reductions by rich countries measures to reduce emissions relative to
alone will not be enough to limit warming projected trajectories are in developing
to tolerable levels. While cumulative per countries. So global least-cost mitigation
capita past emissions are small especially paths always imply that a large share of
in low-income but also in middle-income mitigation is in developing countries—
countries,101 total annual energy-related regardless of who pays.105
CO2 emissions in middle-income countries Delayed action by any country to signif-
have caught up with those of rich countries, icantly lower emission trajectories implies
and the largest share of current emissions a higher global cost for any chosen mitiga-
from land-use change comes from tropi- tion target. For example, delaying mitiga-
cal countries.102 More important, projected tion actions in developing countries until
56 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
2050 could more than double the total cost is much cheaper for the world as a whole
of meeting a particular target, according to to reach a given mitigation goal with a full
one estimate.106 Another estimate suggests portfolio of measures occurring in all coun-
that an international agreement that cov- tries. It is so much cheaper that, provided
ers only the five countries with the high- enough countries are committed to a global
est total emissions (covering two-thirds of mitigation objective, all will be better off if
emissions) would triple the cost of achiev- the developed countries bear the cost of
ing a given target, compared with full par- fi nancing scaled-up measures in develop-
ticipation.107 The reason is that shrinking ing countries today.
the pool of mitigation opportunities avail- Developed countries have the means
able for reaching a set target requires pur- and incentives to transfer enough fi nance
suing not only the negative- and low-cost to non-Annex I countries109 to make them
measures but also high-cost measures. at least as well off by receiving transfers and
Although developed and developing scaling up their mitigation efforts imme-
countries have similar potential for nega- diately, compared with delaying commit-
tive cost (net benefit) measures and high- ment a decade or more before phasing in
cost measures, the middle range of low-cost their own national targets and policies. For
mitigation options is predominantly in a given mitigation target, each dollar trans-
developing countries (with many in agri- ferred to that end could yield an average of
culture and forestry). Exploiting all avail- three dollars in welfare gains by eliminat-
able measures will be crucial for achieving ing deadweight losses—gains that can be
substantial mitigation. This point is illus- shared according to negotiated terms. In
trated by the McKinsey analysis (figure other words, the participation of develop-
1.3a), but the results are not exclusive to ing countries in reaching a global target
it. If developing countries do not reduce is worth a lot. Sharing the large recovered
their emission trajectories, the total cost of deadweight losses can form a strong incen-
any chosen amount of mitigation will be tive for universal participation in a fair deal.
much higher (the marginal cost of abate- It is not a zero-sum game.110
ment in developed countries alone—the That said, it is crucial not to underesti-
red line in figure 1.3b—is always higher mate the difficulties of reaching agreement
than if the global portfolio of options—the on global emissions targets. The reason is
orange line in figure 1.3b—is considered). that such agreement suffers from a kind of
The decline in total mitigation potential international “tragedy of the commons”: all
and the increase in global mitigation costs countries can benefit from global partici-
stemming from an approach involving mit- pation, but unilateral incentives to partici-
igation mostly in high-income countries pate are weak for most countries. This is the
do not depend on any particular model.108 case not only because all countries would
Nor do they depend on any differences in like to free ride, enjoying the benefits with-
opportunities and costs between developed out bearing the costs.111 Most countries are
and developing countries: if the developed small enough that if one decided to defect
countries declined to reduce their emis- from a global agreement, the agreement
sions, similarly global costs would rise and would not unravel. When applied to all
some amount of potential abatement would countries, however, this reasoning under-
be forgone (figure 1.3c). mines the possibility of reaching a deal in
These increases in global abatement the first place.112
costs represent pure deadweight losses— In fact, simulations exploring a variety
wasted additional costs that yield zero wel- of coalition structures and international
fare gains. Avoiding such losses (the shaded resource transfers to persuade reluctant
wedges between the marginal cost curves participants to stay in the coalition reveal
in figures 1.3b and 1.3c) creates plenty of the difficulty in reaching a stable agreement
incentives and space to negotiate the loca- (one that is consistent with self-interest) to
tion and fi nancing of mitigation actions undertake deep and costly cuts in global
while making all participants better off. It emissions. Stable and effective coalitions
Figure 1.3 Assessing deadweight losses from partial participation in a climate deal
a. Global greenhouse gas mitigation marginal cost curve beyond 2030 business-as-usual
Marginal mitigation cost ($/tCO2e)
120
Efficiency in buildings: Land-use and land-use change, mostly in developing Advanced technologies:
100
residential and commercial; countries: reduced deforestation, grassland carbon capture and storage
80 building envelope, heat & water management, soil restoration, afforestation,
60 changed agronomy practices, livestock practices,
40 reduced intensive agricultural conversion
20
0
–20
–40 Small hydro and nuclear power
in developing countries Renewable energy: on- and off-shore wind,
–60 More efficient motors; solar photovoltaic energy, concentrated solar power
–80 energy co-generation;
–100 electricity from landfill waste;
Marginal cost, all countries
–120 gasoline plug-in hybrid engine
Mitigation measure in a developing country
–140 Negative costs: Long-term savings Mitigation measure in a high-income country
–160 outweigh initial costs
0 10 20 30 40
Mitigation potential (GtCO2e/year)
b. Deadweight loss from only mitigating in developed countries: a limited participation marginal cost curve
Marginal mitigation cost ($/tCO2e)
120
100 Gt of forgone mitigation at $120/tCO2e
80
60
40 Additional cost of
achieving 10 Gt of
20 mitigation
0
–20
–40
–60
–80
Marginal cost, all countries
–100 Marginal cost, only
–120 high-income countries
–140 Deadweight loss
–160
0 10 20 30 40
Mitigation potential (GtCO2e/year)
c. Deadweight loss from only mitigating in developing countries: a limited participation marginal cost curve
Marginal mitigation cost ($/tCO2e)
120
100 Gt of forgone mitigation at $120/tCO2e
80
60 Additional cost of achieving
40 25 Gt of mitigation
20
0
–20
–40
–60
–80
Marginal cost, all countries
–100 Marginal cost, only
–120 developing countries
–140 Deadweight loss
–160
0 10 20 30 40
Mitigation potential (GtCO2e/year)
Source: McKinsey & Company 2009 with further data breakdown provided for WDR 2010 team.
Note: The bars in (a) represent various mitigation measures, with the width indicating the amount of emission reduction each measure would achieve and the height indicating the
cost, per ton of avoided emissions, of the measure. Tracing the height of the bars creates a marginal mitigation cost curve. Panels (b) and (c) show the marginal mitigation cost curve
if mitigation only takes place in high-income countries (b) or only in developing countries (c), as well as the resulting deadweight losses associated with these scenarios. Such dead-
weight losses could be avoided or minimized through financial mechanisms that allow a separation between who pays and who mitigates, and ensure the most cost-effective mitiga-
tion measures are adopted.
58 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
are possible for milder and less costly global The fi nancial crisis presents an added
emissions cuts, but such cuts do not suffi- burden to development efforts and a likely
ciently address the threats to sustainability distraction from the urgency of climate
of greater climate change.113 change. Individual, community, and coun-
try vulnerability to the climate threat will
Seizing the moment: Immediate increase as economic growth slows down,
stimulus and long-term revenues disappear, and assistance shrinks.
transformations While the economic slowdown will be
In 2008 the global economy suffered a dra- matched by a temporary deceleration in
matic shock, triggered by disruptions in emissions, people remain vulnerable to the
the housing and fi nancial markets in the warming already in the pipeline; and with-
United States and eventually encompass- out concerted efforts to decouple emissions
ing many countries. The world had not from growth, emissions will again acceler-
experienced such a financial and economic ate as economic recovery takes hold.
upheaval since the Great Depression. Credit Governments in many developed and
markets froze, investors f led to safety, developing countries are responding to
scores of currencies realigned, and stock the crisis by expanding public spending.
markets dropped sharply. At the height of Spending proposed in several national and
the financial volatility the stock market in regional stimulus plans totals $2.4 trillion
the United States lost $1.3 trillion in value to $2.8 trillion.120 Governments expect that
in one session.114 this spending increase will protect or create
The ongoing consequences for the real jobs by increasing effective demand—one
economy and development indicators of the main priorities for halting the down-
around the world are huge—and continue turn. The World Bank has proposed that 0.7
to unfold. The global economy is projected percent of high-income countries’ stimulus
to contract in 2009. Unemployment is on packages be channeled into a “vulnerability
the rise around the world. The United States fund” to minimize the social costs of the
alone had lost almost 5 million jobs between economic crisis in developing countries.122
December 2007, when the recession began
and March 2009.115 Some estimates suggest The case for a green stimulus
32 million job losses in developing coun- Despite the economic chaos the case for
tries.116 Between 53 million and 90 million urgent action against climate change
people will fail to escape poverty because remains. And it becomes more pressing
of the fallout during 2009.117 Official devel- given the increase in poverty and vulnera-
opment assistance—already well below the bility around the world. Thus recent public
committed targets for several donor coun- debates have focused on the possibility of
tries—is likely to decline as public finances using fiscal packages to push for a greener
in developed countries worsen and atten- economy, combating climate change while
tion shifts toward domestic priorities. restoring growth.
Some regions are becoming more vulner- How can both the economic slump and
able to future challenges as a consequence climate change be tackled with the fiscal
of the economic downturn: Sub-Saharan stimulus? Solving the climate change prob-
economies grew rapidly in the first years of lem requires government intervention, not
the 21st century, but the collapse of com- least because climate change is created by
modity prices and global economic activity a large-scale negative externality. And the
will test this trend. Countries and commu- once-in-a lifetime crisis in the fi nancial
nities around the world that rely on remit- markets and the real economy calls for pub-
tances from nationals working in developed lic spending.
countries are severely affected as these Investment in climate policy can be an
financial transfers fall.118 In Mexico remit- efficient way to deal with the economic cri-
tances fell by $920 million in the six months sis in the short term. Low-carbon technolo-
leading up to March 2009—a decline of 14 gies could generate a net increase in jobs,
percent.119 because they can be more labor intensive
Understanding the Links between Climate Change and Development 59
than high- carbon sectors.122 Some esti- long-term savings for the public sector.128
mates suggest that $1 billion in government Similar virtues can be found in helping to
spending on green projects in the United fi nance other energy-efficiency measures
States can create 30,000 jobs in a year, that reduce the social cost of energy in
7,000 more than generated by traditional private buildings, as well as in water and
infrastructure.123 Other estimates suggest sanitation facilities and in improved traf-
that spending $100 billion would generate fic flows.
almost 2 million jobs—about half of them In each country the portfolio of projects
directly.124 But as with any short-term stim- and investments varies widely, according to
ulus, the job gains might not be sustained the specific conditions of the economy and
in the long run.125 the needs for job creation. Most stimulus
packages in Latin America, for instance,
Green spending around the world will be spent on public works—including
Several governments have included a share highways—with limited mitigation poten-
of “green” investments in their stimulus tial.129 In the Republic of Korea, where
proposals—including low- carbon tech- 960,000 jobs are expected to be created
nologies, energy efficiency, research and in the next four years, a large part of the
development, and water and waste man- investment—$13.3 billion of $36 billion—
agement (figure 1.4). The Republic of Korea will be allocated to three projects: river
will devote 80.5 percent of its fiscal plan to restoration, expansion of mass transit and
green projects. Some $100 billion to $130 railroads, and energy conservation in vil-
billion of the U.S. stimulus package has lages and schools, programs projected to
been allocated to climate-change-related create 500,000 jobs.130 China will devote
investments. Overall, some $436 billion $85 billion to rail transport as a low-
will be disbursed in green investments as carbon alternative to road and air transport
part of fiscal stimuli around the world, with that can also help alleviate transportation
half expected to be used during 2009.126 bottlenecks. Another $70 billion will be
The efficiency of these investments will allocated for a new electricity grid that
depend on how quickly they can be imple- improves the efficiency and availability of
mented; how well targeted they can be electricity.131 In the United States two fairly
in creating jobs and utilizing underused inexpensive projects—$6.7 billion for ren-
resources; and how much they shift econo- ovating federal buildings, and another $6.2
mies toward long-lived, low-carbon infra- billion for weatherizing homes—will create
structure, reduced emissions, and increased an estimated 325,000 jobs a year.132
resilience.127 Investments in energy effi- In most developing countries the projects
ciency in public buildings, for instance, are in stimulus packages do not have a strong
appealing because they are usually “shovel emission-reduction component, but they
ready,” are very labor intensive, and generate could improve resilience to climate change
1.3 13.8
2.5 2.1 2.6 7.1 30.7 103.5 104.8
26.7 30.4 31.8 33.7 38.1
Australia United Canada France Korea, Italy Germany Japan China United States
Kingdom Rep. of
and create jobs. Improving water and sani- But behavioral change needs to be matched
tation networks in Colombia, for example, with institutional reform, additional
is estimated to create 100,000 direct jobs per fi nance, and technological innovation to
$1 billion invested while reducing the risk avoid irreversible, catastrophic increases
of water-borne illnesses.133 Both developing in temperature. In any case and under any
and developed countries should consider scenario, strong public policy can help
adaptation measures such as streambed and economies absorb the shocks of unavoid-
wetland restoration, which can be particu- able climate impacts, minimize net social
larly labor intensive and thus reduce both losses, and protect the welfare of those who
the physical and fi nancial vulnerability of most stand to lose.
some groups. The challenge would be to The response to climate change could
ensure that the adaptation measures are generate momentum to improve the devel-
sustained after the expenditure program opment process and promote welfare-
ends. enhancing reforms that need to happen
These preliminary figures will likely anyway. For example, the joint efforts to
change as the crisis unfolds. There is no increase energy efficiency and promote
guarantee that the green elements of the fis- development could find a policy—and
cal stimulus will succeed in either generat- physical—expression in greener, more
ing jobs or changing the carbon mix of the resilient cities. Improving urban design to
economy. And even in the best-case scenario, promote energy efficiency—through, say,
the fiscal interventions will not be enough more public transportation and a conges-
to eliminate the risk of high-carbon lock-in tion charge—can increase physical secu-
and climate vulnerability. But the opportu- rity and the quality of life. Much depends
nity to jump-start green investments and lay on the degree to which existing inadequate
the foundation for low-carbon economies is institutional mechanisms and policies
real and needs to be seized. can be strengthened or replaced thanks to
greater political space for change brought
Fundamental transformations in the about by the threat of global warming and
medium and long term to increased international technical and
Incorporating sound low-carbon and high- financial assistance.
resilience investment components in fiscal Individual citizens will have a large role
expansions to combat the financial crisis in the public debate and implementation of
will not be enough to thwart the long-term solutions. Opinion surveys show that peo-
problems posed by climate change. Funda- ple around the world are concerned about
mental transformations are needed in social climate change, even in the recent fi nan-
protection, in carbon finance, in research cial turmoil134 (though evidence on recent
and development, in energy markets, and in trends in the United States is mixed).135
the management of land and water. Most governments also recognize, at least
Over the medium and long terms the in discourse, the enormity of the danger.
challenge is to fi nd new paths to reach And the international community has
the twin goals of sustaining development acknowledged the problem, as exemplified
and limiting climate change. Reaching an by the 2007 Nobel Peace prize awarded for
equitable and fair global deal would be an the scientific assessment and communica-
important step toward avoiding worst-case tion to the public of climate change.
scenarios. But it requires transforming the The challenge for decision makers is
carbon-intensive lifestyles of rich coun- to ensure that this awareness creates the
tries (and rich people everywhere) and the momentum for reform of institutions and
carbon-intensive growth paths of develop- behavior and serves the needs of those
ing countries. This in turn requires com- most vulnerable.136 The fi nancial crises of
plementary socioeconomic changes. the 1990s catalyzed the revamping of social
Modifications in social norms that safety nets in Latin America, giving birth
reward a low-carbon lifestyle could prove a to Progresa–Oportunidades in Mexico
powerful element of success (see chapter 8). and Bolsa Escola–Bolsa Familia in Brazil,
Understanding the Links between Climate Change and Development 61
countries; measuring output at purchasing power 76. Solomon and others 2009.
parity, the range is 0.20 to 1.04 metric tons. 77. Mignone and others 2008.
47. Marcotullio and Schulz 2007. 78. Folger 2006; Auld and others 2007.
48. Rosenberg 1971. 79. Carbon capture and storage technology is
49. IPCC 2007a. described in chapter 4, box 4.6.
50. Lipovsky 1995. 80. Shalizi and Lecocq 2009.
51. “Annual Brazilian Ethanol Exports” and 81. For a general discussion, see Arthur 1994;
“Brazilian Ethanol Production,” http://english for a more specific application of increasing
.unica.com.br/dadosCotacao/estatistica/ (accessed returns and the need to invest in innovation in the
December 2008). area of energy efficiency, see Mulder 2005.
52. Ummel and Wheeler 2008. 82. Weitzman 2007; Weitzman 2009a; Weitz-
53. Hill and others 2009. man 2009b; Nordhaus 2009.
54. Mitchell 2008. 83. Gjerde, Grepperud, and Kverndokk 1999;
55. Ivanic and Martin 2008. Kousky and others 2009.
56. Ng and Aksoy 2008; World Bank 2008. 84. Hallegatte, Dumas, and Hourcade 2009.
57. Cramton and Kerr 1999. 85. See Pindyck (2007) and Quiggin (2008)
58. Ekins and Dresner 2004. for recent reviews.
59. Brenner, Riddle, and Boyce 2007. 86. O’Neill and others 2006.
60. Benitez and others 2008. 87. In their model, Sterner and Persson
61. Estache 2009. (2008) include environmental goods in the util-
62. Andriamihaja and Vecchi 2007. ity function.
63. Komives and others 2005. 88. Portney and Weyant 1999.
64. Johnson and others 2008. 89. Fisher and others 2007; Hourcade and
65. Pindyck 2007; Weitzman 2009a; Hallegatte, Ambrosi 2007; Tol 2005.
Dumas, and Hourcade 2009. 90. Diamond 2005.
66. Yohe 1999; Toth and Mwandosya 2001. 91. Komives and others 2007; Diamond 2005.
67. Lempert and Schlesinger 2000. 92. Diamond 2005.
68. Nordhaus 2008a. For a discussion of mod- 93. Hof, den Elzen, and van Vuuren 2008.
els and their results, see, for example, Heal 2008; 94. Bruckner and others 1999.
Fisher and others 2007; Tol 2005; and Hourcade 95. Yohe 1999.
and Ambrosi 2007. 96. Toth and Mwandosya 2001.
69. The 5 percent estimate is largely driven 97. Lempert and Schlesinger 2000.
by the discount rate, but the margin between 5 98. Savage 1951; Savage 1954.
percent and 20 percent is based on the inclu- 99. Klaus, Yohe, and Schlesinger 2008.
sion of nonmarket impacts (health and envi- 100. IPCC 2007a.
ronment), possibly higher sensitivity of the 101. See overview figure 3 for cumulative
climate to greenhouse gases, and the use of emissions relative to population share.
equity weighting. Stern 2007; Dasgupta 2007; 102. According to the IEA (2008), non-OECD
Dasgupta 2008. (Organisation for Economic Co-operation and
70. For a discussion, see Dasgupta 2007; Das- Development) countries reached the same level of
gupta 2008; and box 1.4. annual energy-related emissions as OECD coun-
71. Dasgupta 2008. tries in 2004 (approximately 13 gigatons of CO2 a
72. Heal 2008; Sterner and Persson 2008. year). The World Resource Institute’s CAIT emis-
73. Guesnerie 2004; Heal 2005; Hourcade and sion indicator database suggests the same conclu-
Ambrosi 2007. sion using the World Bank’s definition of devel-
74. Sterner and Persson 2008. oped and developing countries; WRI 2008.
75. Hourcade and others (2001) explore the 103. Wheeler and Ummel 2007.
sensitivity of seven different integrated assessment 104. Chapter 5, box 5.1, describes the Bali
models to the shape of the damage function and Action Plan in detail.
find that optimal concentration trajectories can 105. For 2030, this has been estimated at
imply significant departure from current emission 65–70 percent of the emission reduction, or
trends if significant damages occur with warming 45–70 percent of the investment cost. Over the
of 3°C or 500 parts per milion (ppm) CO2 concen- course of the century (using net present value
tration. More generally, they note that early action to 2100) the estimated share of investments
can be justified if a nonzero probability is assigned that should take place in developing countries is
to damages increasing very rapidly with warming, 65–70 percent. See overview note 47 for sources.
so that damages grow more rapidly than the rate at 106. Edmonds and others 2008.
which discounting shaves down their weight. 107. Nordhaus 2008b.
Understanding the Links between Climate Change and Development 63
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focus A The science of climate change
The climate is changing—that is now indisputable. There is a scientific consensus that the world is becoming a warmer
place principally attributable to human activities. In the words of the Intergovernmental Panel on Climate Change (IPCC)
in its fourth assessment report: “Warming of the climate system is unequivocal.”1 For nearly 1 million years before the
Industrial Revolution, the carbon dioxide (CO2) concentration in the atmosphere ranged between 170 and 280 parts per
million (ppm). Levels are now far above that range—387 ppm—higher than the highest point in at least the past 800,000
years, and the rate of increase may be accelerating.2 Under high-emissions scenarios, concentrations by the end of the 21st
century could exceed those experienced on the planet for tens of millions of years.
Article 2 of the United Nations But, even stabilizing global tempera- Defining “dangerous anthropogenic
Framework Convention on Climate tures at 2°C above preindustrial levels interference” will be a political deci-
Change sets the objective of achiev- will significantly change the world. sion, not a scientific determination.
ing a “stabilization of greenhouse gas Earth has warmed 0.8°C on average A decade after the Kyoto Protocol, as
emissions at a level that would prevent from preindustrial times, and high- we enter the first period of rigorous
dangerous anthropogenic interfer- latitude regions are already experiencing accounting of emissions by developed
ence with the climate system.”3 To the environmental and cultural disruption; countries, the world is negotiating the
extent that avoiding “dangerous” inter- further impacts will be unavoidable as course of action for the coming decades
ference is defined in the convention, it warming continues. A 2°C warming that will largely determine whether our
is described as keeping emissions to will cause more frequent and stronger children inherit a planet that has sta-
levels that “allow ecosystems to adapt extreme weather events, including heat bilized around 2°C warmer or is on a
naturally to climate change, ensure that waves, increased water stress in many path to much higher temperatures.
food production is not threatened and world regions, declining food produc- The term “dangerous” involves several
enable economic development to pro- tion in many tropical regions, and dam- components—the total magnitude of
ceed in a sustainable manner.” It is not aged ecosystems, including widespread change, the rate of change, the risk of
clear that this objective is fully achiev- loss of coral reefs from warming and sudden or abrupt change, and the like-
able because the warming already ocean acidification. lihood of crossing irreversibly harmful
observed has been linked to increases Unless the world acts quickly to alter thresholds. What is determined to be a
in droughts, floods, heat waves, forest emissions pathways, models project that dangerous degree of climate change can
fires, and intense rainfall events that by 2100 the global average temperature be expected to depend on the effects on
are already threatening human and will increase to 2.5–7°C above preindus- human and natural systems and their
natural systems. trial levels,6 depending on the amount capacity to adapt. This focus looks at
There is convincing evidence that and rate of energy growth, limits on how the climate system works, at the
the capacity of societies and ecosystems fossil-fuel energy sources, and the pace changes observed to date, what a 2°C
to adapt to global warming is severely of development of carbon-free energy warmer world versus a 5°C or warmer
tested beyond warming of 2°C.4 If the technologies (see chapter 4). Although world portends, the risks of crossing
world is able to limit the human-caused this temperature may seem like a mod- irreversible thresholds, and the chal-
temperature increase to about 2°C est increase compared with seasonal lenge to limit warming to 2°C.
above its preindustrial level, it might be variations, the lower end of this range
possible to limit significant loss from is the equivalent of moving from Oslo How the climate system works
the Greenland and West Antarctic ice to Madrid. The upper end is equivalent The climate of Earth is determined by
sheets and subsequent sea-level rise; to to the warming that has occurred since the incoming energy from the Sun, the
limit the increase of floods, droughts, the peak of the last glacial age, which outgoing energy radiated from Earth,
and forest fires in many regions; to led to the melting of two-kilometer and exchanges of energy among the
limit the increase of death and illness thick ice that covered northern Europe atmosphere, land, oceans, ice, and living
from the spread of infectious and diar- and North America.7 For the next few things. The composition of the atmo-
rheal diseases and from extreme heat; to decades, the global average tempera- sphere is particularly important because
avoid extinction of more than a quar- ture is projected to increase 0.2–0.3°C some gases and aerosols (very small
ter of all known species; and to pre- a decade,8 a rate of change that will tax particles) affect the flow of incoming
vent significant declines in global food the ability of species and ecosystems to solar radiation and outgoing infrared
production.5 adapt (see focus B on biodiversity). radiation. Water vapor, CO2, methane
The science of climate change 71
(CH4), ozone (O3), and nitrous oxide Gases released from human activi- FA.1). The combustion of coal, oil, and
(N2O) are all greenhouse gases (GHGs) ties have greatly amplified the natural natural gas now contributes about 80
naturally present in the atmosphere. greenhouse effect. The global average percent of the CO2 emitted annually,
They warm Earth’s surface by imped- atmospheric CO2 concentration has with land-use changes and defores-
ing the escape of infrared (heat) energy increased significantly since the begin- tation accounting for the remaining
into space. The warming effect created ning of the Industrial Revolution, 20 percent. In 1950 the contributions
by the natural levels of these gases is especially in the past 50 years. Over from fossil fuels and land use were
“the natural greenhouse effect.” This the 20th century, the CO2 concentra- about equal; since then, energy use has
effect warms the world about 33°C tion increased from about 280 ppm to grown by a factor of 18. The concen-
more than it would be otherwise, keeps 387 ppm—almost 40 percent—mainly trations of other heat-trapping gases,
most of the world’s water in the liquid because of the burning of carbon-based including methane and nitrous oxide,
phase, and allows life to exist from the fossil fuels and, to a lesser extent, defor- have also increased significantly as a
equator to near the poles. estation and changes in land use (box result of fossil-fuel combustion, farm-
ing and industrial activities, and land- warming influence causes long-term combustion of coal in coming decades
use changes (figure FA.1).9 climate change. In contrast, the warm- would reduce long-term warming, the
Some of the pollutants introduced by ing influence of methane emissions associated reduction in the cooling
humans warm Earth, and some cool it persists for only a few decades, and the effect from sulfur emissions caused
(figure FA.2). Some are long-lived, and climatic influences of aerosols—which mainly by coal combustion would lead
some short-lived. By trapping infrared can either be heat-trapping such as to an increase of perhaps 0.5°C.
radiation, carbon dioxide, nitrous oxide, black carbon (soot) or heat-reducing Temperatures today are already
and halocarbons10 warm Earth, and such as reflective sulfates11—persist for 0.8°C above preindustrial levels (figure
because the increased concentrations only days to weeks.12 So while a sharp FA.3). Were it not for the cooling influ-
of these gases persist for centuries, their decline in the CO2 emissions from the ence of reflective particles (such as sul-
10
20
CO2 other CO2 (other)
15
CO2 fossil fuel use 2.8%
10
0
1970 1980 1990 2000 2004
50
40
30
Total greenhouse gases
20
10
0
1970 1980 1990 2000 2004
Source: Reproduced from Barker and others 2007.
Note: This figure shows the sources and growth rates of some of the medium- to long-term greenhouse gases. Fossil fuels and land-use change have been the major sources of
CO2, while energy and agriculture contribute about equally to emissions of CH4. N2Ocomes mainly from agriculture. Additional greenhouse gases not included in the figure are
black carbon (soot), tropospheric ozone, and halocarbons. The comparisons of the equivalent emissions of different gases are based on the use of the 100-year Global Warming
Potential; see note 9 for explanation.
The science of climate change 73
Figure FA.2 Major factors affecting the climate since the Industrial Revolution fate aerosols) and the decades that it
Cooling influences Warming influences takes ocean temperatures to come into
Human activities equilibrium with the increased trap-
Carbon dioxide ping of infrared radiation, the global
Long-lived (CO2) average temperature increase caused
greenhouse N2O Nitrous oxide by human activities would likely
gases
CH4 Halocarbons already be about 1°C warmer than it is
Methane
today. Thus the current elevated con-
Ozone Stratospheric
centrations of greenhouse gases alone
Tropospheric
(–0.05) are near to committing the world to
Stratospheric
a 2°C warming, a level beyond which
water vapor the world can expect to experience
very disruptive, even “dangerous”
Surface
reflectivity
Land use Soot (black carbon) on snow consequences.13
effect
the implications of our changing
Cloud
reflective understanding of the science
effect The effects of changes in climate since
the mid-19th century are particularly
Total net human
activities evident today in the observations of
higher average air and ocean tem-
Total natural peratures; the widespread melting
influences
(solar output) of snow and ice around the world,
–2 –1 0 1 2 particularly in the Arctic and Green-
watts/square meter land (figure FA.4); and the increase in
global sea level. Cold days, cold nights,
Source: Adapted from Karl, Melillo, and Peterson 2009.
Note: The figure above shows the amount of warming influence (orange bars) or cooling influence (blue bars) that differ- and frosts have become less frequent,
ent factors have had on Earth’s climate since the beginning of the industrial age (from about 1750 to the present). Results while the frequency and intensity of
are in watts per square meter. The top part of the box includes all the major human-induced factors, while the second
part of the box includes the Sun, the only major natural factor with a long-term effect on climate. The cooling effect of heat waves have increased. Both floods
individual volcanoes is also natural but is relatively short-lived (2 to 3 years), thus their influence is not included in this and droughts are occurring more fre-
figure. The bottom part of the box shows that the total net effect (warming influences minus cooling influences) of human
activities is a strong warming influence. The thin lines on each bar provide an estimate of the range of uncertainty. quently.14 The interiors of continents
have tended to dry out despite an
Figure FA.3 Global annual average temperature and CO2 concentration continue to climb, 1880–2007 overall increase in total precipitation.
Global temperature (°C) CO2 concentration (ppm) Globally, precipitation has increased,
400 as the water cycle of the planet has
14.5
been sped up by warmer temperatures,
Above average temperature
380 even while the Sahel and Mediterra-
Below average temperature
14.3
CO2 concentration nean regions have seen more frequent
360
and more intense droughts. Heavy
14.1
rainfall and floods have become more
340
common, and there is evidence that
13.9 the intensities of storms and tropical
320
cyclones have increased.15
13.7 These impacts are not distributed
300
evenly across the globe (map FA.1).
13.5 As expected, temperature changes are
1880 1900 1920 1940 1960 1980 2000
greater at the poles, with some regions of
Year
the Arctic warming 0.5°C in just the past
Source: Adapted from Karl, Melillo, and Peterson 2009.
Note: Orange bars indicate temperature above the 1901–2000 average, blue bars are below average temperatures.
30 years.16 At low latitudes—those close
The green line shows the rising CO2 concentration. While there is a clear long-term global warming trend, each to the equator—a greater fraction of the
individual year does not show a temperature increase relative to the previous year, and some years show greater
changes than others. These year-to-year fluctuations in temperature are attributable to natural processes, such as
trapped infrared energy goes into evapo-
the effects of El Niños, La Niñas, and volcanic eruptions. ration, limiting warming but providing
74 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
Figure FA.4 Greenland’s melting ice sheet poles or six meters a decade up moun-
tains as an apparent result of the increase
1992 2002 2007 in temperatures.18 These rapid changes
are leading to asynchrony in many of
the long-established predator-prey rela-
tionships, with some species arriving too
early or too late to find their traditional
food sources.
Over the past 20 years, our under-
standing of the science of climate
change has greatly improved. In 1995,
70°N 70°N 70°N
for example, the IPCC concluded: “The
balance of evidence suggests a discern-
ible human influence on global cli-
mate.”19 In 2001 the IPPC concluded:
“There is new and stronger evidence
that most of the warming observed over
60°N 60°N 60°N
the last 50 years is attributable to human
activities.”20 Six years later, in 2007, the
50°W 40°W 50°W 40°W 50°W 40°W IPCC concluded: “Warming of the cli-
Permanent ice sheet that melts in summer Seasonal ice coverage Permanent ice sheet mate system is unequivocal. Most of the
observed increase in globally-averaged
temperatures since the mid-20th cen-
Seasonal melt departure (x1000 km2)
tury is very likely due to the observed
100
increase in anthropogenic greenhouse
80 gas concentrations.”21
60 In 2001 and 2007 the scientific com-
40 munity summarized the best under-
20 standing of climate change impacts or
0 reasons for concern in five categories:
–20 unique species/threatened ecosystems,
–40 extreme events, breadth of impacts,
–60
total economic impacts, and large-scale
–80 discontinuities. In the “burning ember”
–100
charts, the intensity of the red shading
1970 1975 1980 1985 1990 1995 2000 2005 signifies the degree of concern over the
Year effect in question (figure FA.5). Com-
Sources: Top panel: Adapted from ACIA 2005 and Cooperative Institute for Environmental Sciences (CIRES), http://
paring column B in the left and right
cires.colorado.edu/steffen/greenland/melt2005/ (accessed July, 2009). Bottom panel: Reproduced from Mote 2007. panels shows how the change in the best
Note: The orange areas on the maps of Greenland show the extent of summer ice melt, which has increased dramat- available information from 2001 to 2007
ically in recent years. Ten percent more ice was lost in 2007 than in 2005. The bar chart shows that despite annual
variation in ice cover, significant loss has occurred for more than a decade. moved the red area closer to the zero
degree line for extreme events—that is,
at the current global average tempera-
an increase in water vapor that pours out Major changes are projected in ecosys- ture, extreme events are already increas-
as more intense rains from convective tems as climate change shifts the ideal ing. A comparison of the two E columns
storms and tropical cyclones. geographic ranges of plant and animal shows that the threat of discontinuous
The resilience of many ecosystems species. Productivity of agriculture, events, such as changes in the ocean
is likely to be exceeded in the coming forests, and fisheries will be affected as conveyor-belt heat-distribution system
decades by a combination of the effects will other ecological services.17 Already or catastrophic thawing of the Arctic
of climate change and other stresses, 20,000 datasets show a wide range of spe- leading to massive releases of meth-
including habitat degradation, invasive cies on the move, with changes averaging ane, becomes much larger if the world
species, and air and water pollution. about six kilometers a decade toward the warms another 2°C over today’s levels.
Map FA.1 Regional variation in global climate trends over the last 30 years
a. Temperature
Figure FA.5 Embers burning hotter: Assessment of risks and damages has increased from 2001 to 2007
3 3
Future
2 2
Positive or Positive or
negative negative
Negative market Negative market
for some impacts; for some impacts;
1 1
regions; majority regions; majority
positive of people positive of people
Risks to for adversely Very Risks to for adversely
some Increase others affected low some Increase others affected Low
0 0
Past
–0.6 –0.6
A B C D E A B C D E
Risks to Risk of Distribution Aggregate Risks of large Risks to Risk of Distribution Aggregate Risks of large
unique extreme of impacts impacts scale unique extreme of impacts impacts scale
and weather discontinuities and weather discontinuities
threatened events threatened events
systems systems
Since the finalization of the IPCC’s Future changes if the on people and the environment at dif-
fourth assessment report in 2007, new temperature increase ferent temperature increases and in
information has further advanced sci- exceeds 2°C different regions (see figure FA.6). If
entific understanding. This information The physical impacts of future climate temperatures reach 2°C above prein-
includes updated observations of recent change on humans and the environ- dustrial levels, water availability will
changes in climate, better attribution ment will include increasing stresses be reduced for another 0.4–1.7 billion
of observed climate change to human on and even collapses of ecosystems, people in midlatitudes and semiarid
and natural causal factors, improved biodiversity loss, changing timing of low latitudes. Those affected by severe
understanding of carbon-cycle feed- growing seasons, coastal erosion and water shortages will be mainly in Africa
backs, and new projections of future aquifer salinization, permafrost thaw, and Asia. At these higher temperatures,
changes in extreme weather events and ocean acidification, 23 and shifting most coral reefs would die (box FA.2),
the potential for catastrophic change.22 ranges for pests and diseases. These and some crops, particularly cereals,
Many risks are now assessed to be impacts are shown for different tem- could not be successfully grown in
greater than previously thought, par- peratures and world regions in figure the altered climates prevailing in low-
ticularly the risks of large sea-level rise FA.6. latitude regions. About a quarter of
in the current century and of increases The physical effects of future cli- plant and animal species are likely to
in extreme weather events. mate change will have varying impacts be at increased risk of extinction (see
The science of climate change 77
0 1 2 3 4 5
Global mean annual temperature change relative to 1980–99 (°C)
Source: Adapted from Parry and others 2007.
78 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
focus B).24 Communities will suffer small island states and coastal plains comes can be worse than expected. As
more heat stress, and coastal areas will would be flooded by storm surges and the overview and chapter 1 highlight,
be more frequently flooded.25 sea-level rise as the major ice sheets the existence of uncertainties warrant
What if temperatures rise to 5°C deteriorate and the traditional ways of a precautionary approach to climate
above preindustrial levels? About 3 bil- life of Arctic peoples would be lost as change given the potential for irre-
lion additional people would suffer water the sea ice retreats. versible impacts and the inertia in the
stress, corals would have mostly died off, Recent evidence indicates that loss climate system, in infrastructure and
some 50 percent of species worldwide of sea ice, the melting of the Greenland technology turnover, and in socioeco-
would eventually go extinct, produc- and Antarctic ice sheets, the rate of sea- nomic systems.
tivity of crops in both temperate and level rise, and the thawing of the perma-
tropical zones would fall, about 30 per- frost and mountain glaciers are faster Crossing thresholds?
cent of coastal wetlands would be inun- than expected when the IPCC 2007 These impacts do not fully capture
dated, the world would be committed report was completed.28 New analyses the probability and uncertainty of an
to several meters of sea-level rise, and suggest that droughts in West Africa29 increase in extreme events or define the
there would be substantial burden on and a drying of the Amazon rain for- thresholds of irreversible catastrophic
health systems from increasing malnu- est30 may be more probable than previ- events. Although climate change is often
trition and diarrheal and cardiorespi- ously thought.31 characterized as a gradual increase in
ratory diseases.26 Terrestrial ecosystems While scientific uncertainty has global average temperature, this depic-
are expected to shift from being carbon often been cited as a reason to wait for tion is inadequate and misleading in at
“sinks” (storage) to being a source of more evidence before acting to control least two ways.
carbon; whether this carbon is released climate change, these recent surprises First, the historical and paleo-
as carbon dioxide or methane, it would all illustrate that uncertainty can cut climatic records both suggest that
still accelerate global warming.27 Many the other way as well and that out- the projected changes in the climate
The science of climate change 79
could well occur in jumps and shifts droughts and fires, less extensive per- term. For example, the higher emis-
rather than gradually. As mentioned, mafrost, and more frequent air pollu- sions are in 2020, the lower they will
the Greenland and West Antarctic ice tion episodes. Shifts in the timing and need to be in 2050 to stay within the
sheets are particularly at risk from patterns of the world’s monsoons and same overall budget. If carbon emis-
global warming, and there appear ocean-atmosphere oscillations (as in sions are allowed to increase another
to be mechanisms that could lead to the El Niño/Southern Oscillation and 20–40 percent before reductions begin,
large and rapid changes in the amount the North Atlantic Oscillation) are also the rate of decline would need to be
of ice they store.32 This is important likely. Map FA.2 and table FA.1 show between 4 percent (the orange path in
because total loss of the ice now stored some of the possible tipping points, figure FA.7a) and 8 percent (blue path)
in both sheets would eventually raise their location, and the temperatures each year to keep to the carbon budget.
the global sea level by about 12 meters. that might trigger change as well as the For comparison, at Kyoto the wealthy
Some analyses indicate that this pro- likely impacts. countries agreed to reduce emis-
cess would proceed slowly in a warm- sions on average by 5.2 percent from
ing world, taking as much as several Can we aim for 2°C warming 1990 levels over the 2008–12 period,
millennia or more. But recent studies and avoid 5°C or beyond? whereas total global emissions would
indicate that because these ice sheets Many studies conclude that stabilizing need to decline by 4–8 percent each
are largely below sea level and sur- atmospheric concentrations of green- and every year in order to limit warm-
rounded by warming water, their dete- house gases at 450 ppm CO2 or its ing to about 2°C.
rioration could happen much faster, equivalent will yield only a 40–50 per- Warming caused by other green-
conceivably in only a few centuries.33 cent chance of limiting the global aver- house gases such as methane, black
Sharply increased melting of either or age temperature increase to 2°C above carbon, and nitrous oxide—which cur-
both of these ice sheets, with accom- preindustrial levels.36 Many emission rently contribute about 25 percent of
panying changes in ocean circulation, paths can get us there, but all require total warming—means that an even
is only one of several possibilities for emissions to peak in the next decade lower limit for CO2 will be necessary
tipping points in the climate system of and then to decline worldwide to half to stay near 2°C warming from human
a warming world, where changes could of today’s levels by 2050, with fur- activities. These other greenhouse gases
mean passing a point of no return— ther emissions reductions thereafter. could account for about 125 billion of
one where a system will shift to a dif- However, for greater confidence that the remaining 500 billion tons in our
ferent state, causing the potential for a particular temperature will not be emissions budget, meaning that the
severe environmental and societal dis- exceeded, the emissions reductions carbon dioxide that can be emitted—
locations to go up accordingly.34 must be even steeper. As indicated in measured in carbon—is really only
Second, no one lives in the global figure FA.7c, the “best guess” of a 2°C about 375 billion tons total.38 Short-
average temperature. Climate change path cannot exclude the possibility of term measures that reduce 2020 emis-
impacts will differ sharply from region hitting 4°C. sions of potent, but short-lived gases,
to region and often will interact with A more robust way of thinking about such as methane and black carbon or
other environmental stresses. For the problem is in terms of an emissions tropospheric ozone, slow the rate of
example, evaporation and precipitation budget. Keeping warming caused by warming. Indeed, reducing black car-
are both increasing and will continue CO2 alone to 2°C will require limiting bon by 50 percent or ozone by 70 per-
to increase globally, but as the atmo- cumulative CO2 emissions to 1 tril- cent,39 or halting deforestation would
spheric circulation shifts, the changes lion tons (Tt) of carbon (3.7 Tt CO2).37 each offset about a decade of fossil-
will vary regionally, with some places The world has already emitted half that fuel emissions and would help to limit
become wetter and some drier. Among amount over the previous two-and-a- warming in concert with reductions in
the likely additional consequences will half centuries. For the 21st century, a CO2 emissions. To really reduce the risk
be shifts in storm tracks, more intense business-as-usual path would release of excessive warming, moving to nega-
tropical cyclones and extreme rainfall the remaining half trillion tons in 40 tive emissions may also be required.
events, a higher snow line leading to years, requiring future generations to Accomplishing this—that is, having no
less spring snowpack, further shrink- live in a world in which essentially zero new emissions and also removing CO2
age of mountain glaciers,35 reduced carbon was emitted. from the atmosphere—may be possible
coverage of winter snowfall and sea ice, The concept of a cumulative bud- using biomass to supply energy, fol-
faster evaporation of soil moisture lead- get provides a framework for thinking lowed by sequestration of the carbon
ing to more frequent and more intense about targets for the short and long (see chapter 4).
80 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
Map FA.2 Potential tipping elements in the climate system: Global distribution
Sahara Indian
Greening Monsoon
Instability
Instability of
West Antarctic
Ice Sheet
Table FA.1 Potential tipping elements in the climate system: Triggers, time-scale, and impacts
0 0.0 0
1950 2000 2050 2100 2150 1950 2000 2050 2100 2150 1950 2000 2050 2100 2150
Year Year Year
Peak reduction rates
–3% per year –4% per year –8% per year Observed temperatures relative to 1900–1920
Notes and nitrous oxide concentrations have also persistent and nonreactive. Until they were
increased, reaching new highs of 1,789 and banned to protect the ozone layer, many
1. IPCC 2007b. The Intergovernmental
321 parts per billion (ppb), respectively. were commonly used as refrigerants and
Panel on Climate Change (IPCC) was orga-
The carbon dioxide equivalent concentra- to form insulating materials. Because these
nized in 1988 as a joint effort of the World
tion (CO2e) is a quantity that describes, compounds also lead to global warming, the
Meteorological Organization and the UN
for a given mixture and amount of green- banning of them under the Montreal Proto-
Environment Programme to summarize the
house gases, the amount of CO2 that would col and subsequent amendments has helped
state of scientific knowledge about climate
have the same potential to contribute to to limit global warming (in fact, even more so
change in a periodic series of major assess-
global warming measured over a specified than the Kyoto Protocol). While the replace-
ments. The first of these was completed in
period. For example, for the same mass of ment compounds that have been introduced
1990, the second in 1995, the third in 2001,
gas, the Global Warming Potential (GWP) do contribute less to global warming and
and the fourth in 2007.
for methane over a 100-year period is 25, ozone depletion, greatly increased use of the
2. Raupach and others 2007.
and for nitrous oxide, 298. This means that replacements could exert a significant warm-
3. http://unfccc.int/essential_background/
emissions of 1 metric ton of methane and ing influence over time, and so emissions of
convention/background/items/1353.php
nitrous oxide, respectively, would cause such compounds should be reduced over
(accessed August 30, 2009).
the same warming influence as emissions coming decades.
4. Smith and others 2009.
of 25 and 298 metric tons of carbon diox- 11. Natural removal of the sulfate par-
5. Parry and others 2007.
ide. Fortunately, the mass of the emissions ticles from the atmosphere over the few
6. Temperature increases at the poles will
of these gases is not as great as for CO2, so weeks following their formation is also the
be about double the global average.
their effective warming influence is less. primary contributor to acidification of pre-
7. Schneider von Deimling and others
Note, however, that over different periods, cipitation (acid rain), which reduces soil
2006.
the GWPs can vary; for example, the near- fertility, damages plants and buildings, and
8. The observed increases have averaged
term (20-year) GWP for methane is 75, adversely affects human health.
about 0.2°C per decade since 1990, which
indicating that over short periods of time, 12. Forster and others 2007.
give us confidence in the future projections.
methane emissions are very important and 13. Adger and others 2008; SEG 2007.
See IPCC 2007a, table 3.1, which gives a
controlling them can slow the pace of cli- 14. Millennium Ecosystem Assessment
range of 0.1–0.6°C a decade across all sce-
mate change. 2005. These seemingly contradictory changes
narios.
10. Halocarbon compounds are chemi- are possible because, as temperature goes up,
9. According to the latest estimates from
cals containing carbon atoms bonded to both evaporation and the capacity of the
the World Meteorological Organization,
halogen atoms (fluorine, chlorine, bromine, atmosphere to hold water vapor increase.
the average CO2 concentration in 2008
or iodine). These compounds tend to be very With increased atmospheric water vapor,
was 387 parts per million (ppm). Methane
82 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
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PART
1
CHAPTER
2
Reducing Human Vulnerability:
Helping People Help Themselves
F
amilies in Bangladesh are deciding choices, asset allocations, and locational
whether to rebuild their homes and preferences. Experience shows that local
livelihoods after yet another flood— decision making, diversity, and social
once occasional, now every few learning are key features of flexible, resilient
years—or to take their chances in Dhaka, the communities2 and that vulnerable commu-
crowded capital. In the tall forests of south- nities can be effective agents of innovation
ern Australia, families are deciding whether and adaptation.3 But climate change threat-
to rebuild their homes after the most dam- ens to overwhelm local efforts, requiring
aging fires in history—aware that they are more from national and global supporting
still in the grip of the longest and most structures.
severe drought on record. With losses from People’s vulnerability is not static, and the
extreme climate events inevitable, societies effects of climate change will amplify many
have explicitly or implicitly chosen the risk forms of human vulnerability. Crowded cit-
they bear and the coping strategies to deal ies expand into hazardous zones. Natural
with them. Some losses are so high and the systems are transformed through modern
coping so insufficient that development is agriculture. Infrastructure development—
impeded. As the climate changes, more and dams and roads—create new opportunities
more people risk falling into what is called but can also create new risks for people.
the “adaptation deficit.” Climate change, superimposed on these
Reducing vulnerability and increasing processes, brings additional stress for natu-
resilience to the climate has traditionally ral, human, and social systems. People’s
been the responsibility of households and livelihoods need to function under condi-
communities1 through their livelihood tions that will almost certainly change but
cannot be predicted with certainty.
Whichever mitigation pathway is fol-
lowed, the temperature and other climate
Key messages changes over the next decades will be very
Further climate change is unavoidable. It will stress people physically and economically, similar. Temperatures are already about 1°C
particularly in poor countries. Adapting requires robust decision making—planning over a long above those of the preindustrial era, and all
time horizon and considering a broad range of climate and socioeconomic scenarios. Countries realistic mitigation scenarios suggest that
can reduce physical and financial risks associated with variable and extreme weather. They can we may expect another 1°C by midcentury.
also protect the most vulnerable. Some established practices will have to be expanded—such The world of 2050 and beyond, however,
as insurance and social protection—and others will have to be done differently—such as urban will be much different from today’s—just
and infrastructure planning. These adaptation actions would have benefits even without climate how different depends on mitigation. Con-
change. Promising initiatives are emerging, but applying them on the necessary scale will sider two possibilities for this generation’s
require money, effort, ingenuity, and information.
children and grandchildren. In the fi rst
scenario the world is on track to limiting
88 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
Map 2.1 At risk: Population and megacities concentrate in low-elevation coastal zones threatened by sea level rise and storm surges
Climate change is only one of many interventions show mixed results, however.
factors that determine urban vulner- The Arab Republic of Egypt’s attempt to cre-
ability. For many coastal cities, migration ate satellite cities to decongest Cairo never
increases the population exposed to rising attracted the projected population and did
sea levels, storm surges, and floods,31 as in little to stop population growth in Cairo,
Shanghai, where the net annual influx of partly because of the lack of policies to pro-
people exceeds the natural growth rate by mote regional integration.37 Successful pol-
a factor of four.32 And many cities in river icies facilitate concentration and migration
deltas are sinking as a result of groundwater during the early stages of urbanization and
extraction and declining sediment deposits interurban connectivity during the later
caused by dams upstream. While subsid- stages. Public investments in infrastructure
ing land has been an issue for some time in are most effective when they increase social
many coastal cities (New Orleans, Shang- equity (through broader access to services)
hai), it is an emerging threat for Hanoi, and integrate the urban space (through the
Jakarta, and Manila.33 Urban development transport system).38
farther inland increases the water demand Urbanization seldom is harmoni-
upstream, and many rivers, including the ous, generating pollution and pockets of
Nile, no longer reach their delta. wrenching poverty and social dislocation.
Urbanization, done well, can increase Today, urban areas in developing coun-
resilience to climate-related risks. Higher tries are home to 746 million people liv-
population densities lower the per capita ing below the poverty line (a quarter of the
costs of providing piped treated water, sewer world’s poor),39 and the urban poor suffer
systems, waste collection, and most other from more than low income and consump-
infrastructure and public amenities. Sound tion. Overcrowding, insecure tenure, illegal
urban planning restricts development in settlements sited in landslide- and flood-
flood-prone areas and provides critical prone areas, poor sanitation, unsafe hous-
access to services. Infrastructure develop- ing, inadequate nutrition, and poor health
ments (embankments or levees) can provide exacerbate the vulnerabilities of the 810
physical protection for many and will require million people in urban slums.40
additional safety margins where climate These many vulnerabilities call for com-
change increases risk. And well-established prehensive improvements in urban planning
communication, transport, and early warn- and development. Government agencies,
ing systems help evacuate people swiftly, as particularly local ones, can shape the
is the case in Cuba, where up to 800,000 peo- adaptive capacity of households and busi-
ple are routinely evacuated within 48 hours nesses (box 2.2). But action by community-
when hurricanes approach.34 Such measures based and nongovernmental organizations
can increase the ability of urban dwellers to (NGOs) is also crucial, particularly those
cope with shocks in the short term and adapt that build homes and directly provide ser-
to a changing climate in the long term.35 vices, as slum-dweller organizations do.41
Cities are dynamic and highly adaptive Sound planning and regulation can identify
systems that offer a wide range of creative high-risk zones in urban areas and allow
solutions to environmental challenges. A low-income groups to find safe and afford-
number of countries are looking into new able housing, as in Ilo, Peru, where local
urban development strategies that aim at authorities safely accommodated a fivefold
spreading regional prosperity. The Repub- increase in the population after 1960.42 But
lic of Korea has embarked on an ambitious hard investments in infrastructure may also
program to develop “Innovation Cities” as a be required to protect urban zones, such as
way to decentralize the country’s economic coastal cities in North Africa, with seawalls
activities.36 Many of these efforts focus on and embankments (box 2.3).
technological innovation and offer new A major risk for urban areas is flooding—
opportunities to redesign future cities to often caused by buildings, infrastructure,
deal with the climate-change challenges. and paved areas that prevent infi ltration,
Attempts to influence the spatial pat- exacerbated by overwhelmed drainage sys-
terns of urban areas through public policy tems. In well-managed cities flooding is
Reducing Human Vulnerability: Helping People Help Themselves 93
BOX 2.2 Planning for greener and safer cities: The case of Curitiba
Despite a sevenfold population increase Land use and mobility were planned trash. In low-income areas where conven-
between 1950 and 1990, Curitiba, Brazil, in an integrated fashion, and the city’s tional waste management is difficult, the
has proven itself to be a clean and efficient radial (or axial) layout was designed to “Garbage Purchase” program exchanges
city, thanks to good governance and social divert traffic from the downtown area garbage for bus tokens, surplus food, and
cooperation. The cornerstone of Curitiba’s (three-fourths of the city’s people use a school notebooks.
success lies in its innovative Plano Director, highly efficient bus system). The industrial Replications are under way. In Juarez,
adopted in 1968 and implemented by the center is built close to the city center Mexico, for example, the Municipal Plan-
Instituto de Pesquisa Planejamento Urbano to minimize the commute for workers. ning Institute is building new homes and
de Curitiba (IPPUC). Rather than use high- Numerous natural preservation areas are transforming the previously inhabited
tech solutions for urban infrastructure, like situated around the industrial area to buf- flood zone into a city park.
subways and expensive mechanical gar- fer flooding.
bage separation plants, the IPPUC pursued Another part of the city’s success is its
appropriate technology that is effective waste management; 90 percent of its resi-
both in cost and application. dents recycle at least two-thirds of their Source: Roman 2008.
rarely a problem because surface drainage is Many Andean cities are reengineering
built into the urban fabric to accommodate their water supplies to accommodate the
floodwaters from extreme events that exceed shrinking and eventual disappearance of
the capacity of protective infrastructure (see glaciers. Melting means that dry-season
box 2.3). Inadequate solid waste manage- water supply is no longer reliable, and res-
ment and drain maintenance, by contrast, ervoirs will need to compensate for the lost
can quickly clog drainage channels and water storage and regulation function of
cause local flooding with even light rainfall; glaciers.44 In the deltas in Southeast Asia,
in Georgetown, Guyana, such a situation led the rapidly spreading suburbs of cities
to 29 local floods between 1990 and 1996.43 such as Bangkok and Ho Chi Minh City
Cities also have to look beyond their are encroaching on rice fields, reducing
borders to prepare for climate change. water retention capacity and increasing
the risk of floods.45 The risk can get worse Local city governments can promote risk
when upstream storage areas reach their reduction and risk-based planning. Creat-
capacity and have to discharge water. Peak ing a risk information database, developed
river discharges in South and Southeast jointly with citizens, businesses, and offi-
Asian river basins are projected to increase cials, is the fi rst step in setting priorities
with climate change, requiring greater for intervention and identifying hotspots.
upstream efforts to protect urban centers And establishing a city mandate through
downstream (map 2.2).46 executive orders and council legislation can
Map 2.2 A complex challenge: managing urban growth and flood risk in a changing climate in South and
Southeast Asia
Brahmaputra
Ganges
Sources: WDR team analysis. Flood data: Dartmouth Flood Observatory 2009. Population data: CIESIN 2005.
Note: Living with floods is engrained in the economic activities and culture of people in South and Southeast Asia. The floodplains
of some of the major river basins (Ganges, top; Mekong, bottom) concentrate a large number of people and expose agriculture and
growing urban centers to seasonal flood risk. Climate change is likely to bring more intense flooding, partly caused by the melting of
glaciers in the upper catchment of the Himalaya region and partly by the shorter and more intense monsoon rains, which will likely
change flood patterns in the region. At the same time urban centers are rapidly encroaching into agricultural areas that serve as
natural retention zones for flood waters, bringing new complexity to managing flood water and urban expansion in the future.
Reducing Human Vulnerability: Helping People Help Themselves 95
facilitate mainstreaming, as in storm- and particularly Africa and South Asia. Climate
flood-prone Makati City, Philippines, where change will increase that burden and will be
the Disaster Coordination Council plans most consequential for the poor (see chap-
the city’s disaster risk management.47 ter 1).51 The estimated additional 150,000
Many municipal actions to promote deaths a year attributable to climate change
local development and resilience to extreme in recent decades may be just the tip of the
events and disasters overlap with the mea- iceberg.52 The indirect effects of climate
sures for adaptation, including water change mediated by water and sanitation,
supply and sanitation, drainage, prevention- ecosystems, food production, and human
focused health care, and disaster prepared- habitation could be far higher. Children are
ness (box 2.4). Such interventions are likely especially susceptible, with malnutrition
to be in the immediate interest of decision and infectious diseases (mostly diarrheal
makers in urban contexts (see chapter 8).48 It diseases) part of a vicious cycle causing cog-
is evidently easier to cast adaptation-oriented nitive and learning disabilities that perma-
initiatives as being in the city’s immediate nently affect future productivity. In Ghana
interests, in order to break political logjams and Pakistan the costs associated with
for climate action.49 malnutrition and diarrheal diseases are
Building climate-smart cities will involve estimated to be as high as 9 percent of gross
considerable use of emerging technologies. domestic product (GDP) when accounting
However, much of the available technical for long-term productivity losses in later
expertise in developing countries is concen- years. These costs will only increase with
trated in the central government, with local climate change, if adaptation to these con-
authorities often left to draw from a small ditions is slow.53
pool of expertise.50 Urban universities can The recent heat waves, such as the one
play a key role in supporting efforts by cit- that killed about 70,000 people in Europe in
ies to adopt and implement climate-smart 2003, showed that even high-income coun-
practices through changes in curriculum tries can be vulnerable.54 Heat waves are
and teaching methods that enable students likely to increase in frequency and inten-
to spend more time in the practical world sity (map 2.3), 55 with urban heat islands
solving local problems. producing temperatures up to 3.5–4.5°C
higher than in surrounding rural areas.56
Keep people healthy For better preparedness several countries
Diseases linked to climate, namely malnu- and metropolitan areas now have heat-
trition, diarrheal diseases, and vector-borne health warning systems (box 2.5).
illnesses (especially malaria), already repre- Vector-borne diseases are increasing
sent a huge health burden in some regions, their geographic spread and are reappearing
Berlin
London
Sandomierz
Paris
Ternopol
Rome
Soria Istanbul
Barcelona
Vila Real
Teruel
Badajoz
Karaman
Chlef
Ouezzane Nicosia
Source: WDR team, reproduced from Kopf, Ha-Duong, and Hallegatte 2008.
Note: With increasing global temperatures, climate zones will shift north, and by the middle of the 21st century many central and
northern European cities will “feel” Mediterranean. This is not good news and has major implications: water utilities will need to
adjust management plans, and health services will need to be prepared for more extreme heat episodes (similar to the 2003 Euro-
pean heat wave). While a few degrees of warming may seem appealing on a cold winter day in Oslo (the scenario shown in the
map corresponds approximately to a global temperature increase of 1.2°C relative to today), the necessary changes in planning,
public health management, and urban infrastructure are substantial. Buildings that were designed and engineered for cold harsh
winters will need to function in a drier and hotter climate, and heritage buildings may suffer irreparable damages. Even more
challenging is the construction of new buildings today as their design needs to be highly flexible to gradually adjust to drastically
different conditions over the coming decades.
in Eastern Europe and Central Asia. 57 early warning systems.61 Today, surveillance
Malaria already strains economies in tropi- in many parts of the world fails to antici-
cal areas,58 killing almost 1 million people a pate new disease pressure, for example, in
year (mostly children), and climate change is Africa, where malaria is reaching urban
projected to expose 90 million more people dwellers with the expansion of urban settle-
(a 14 percent increase) to the disease by 2030 ments into areas of transmission.62 Satellite
in Africa alone.59 Dengue has been expand- remote-sensing and biosensors can improve
ing its geographic range (map 2.4), and cli- the accuracy and precision of surveillance
mate change is expected to double the rate systems and prevent disease outbreaks
of people at risk from 30 percent to up to 60 through early detection of changes in cli-
percent of the world population (or 5 billion mate factors.63 Advanced seasonal climate
to 6 billion people) by 2070.60 To detect and forecast models can now predict peak times
monitor epidemic-prone diseases, national for malaria transmission and give regional
health systems need better surveillance and authorities in Africa information to operate
Map 2.4 Climate change accelerates the comeback of dengue in the Americas
JAMAICA DOMINICAN
REPUBLIC
THE BAHAMAS
MEXICO COLOMBIA
R.B. DE VENEZUELA
CUBA
BELIZE
HONDURAS
GUATEMALA
EL SALVADOR
NICARAGUA R.B. DE GUYANA
COSTA RICA VENEZUELA SURINAME
French Guiana (Fr.)
PANAMA COLOMBIA
ECUADOR
PERU
BRAZIL
BOLIVIA
PARAGUAY
CHILE
an early warning system and longer lead- Such interventions require coordi-
times to respond more effectively.64 nated intersectoral action and public
Most measures to prevent these diseases expenditures. For water-borne diseases,
are not new, but climate change makes the inter ventions should include the health
better implementation of well-established agency, public works, and utilities.67 Jointly
public health approaches even more managed water, sanitation, hygiene, and
urgent.65 Breaking the transmission path- food security—combined with health and
ways requires better management of water disaster management—can yield high
(urban drainage), improved sanitation and returns. So can engaging the private sec-
hygiene (sewerage systems, sanitation facili- tor, if it improves performance. Privatizing
ties, hand-washing behaviors), and effective water services in Argentina in the 1990s
vector control to limit or eradicate insects dramatically reduced the child mortality
that transmit disease pathogens.66 linked to water-borne diseases.68
Monitoring and managing the health
impacts of climate change will require
Figure 2.1 The number of people affected by climate-related disasters is increasing greater use of new diagnostic tools. Advances
Number of people killed per five-year period (millions)
in genomics and information technology are
1.00 accelerating the design of a wide range of
diagnostic tools that can help in monitoring
0.75
the spread of diseases and the emergence of
0.50 new ones. New communications tools will
0.25
make it easier to collect, analyze, and share
health information in a timely manner.69
0 But having such tools will not be sufficient
1971–75 1976–80 1981–85 1986–90 1991–95 1996–2000 2001–05
without extensive programs to train health
Number of people affected per five-year period (billions) care workers. Similarly, major institutional
2.00 reforms will need to be introduced to inte-
1.50 grate health care into other activities. Schools,
for example, can be major centers for the pro-
1.00
vision of basic health care as well as sources
0.50 of medical information and education.
0
1971–75 1976–80 1981–85 1986–90 1991–95 1996–2000 2001–05 Prepare for extreme events
Natural disasters are taking an increas-
People affected as a share of population (%) ing economic toll, and managing them
8
better is essential for adapting to climate
7
change. While deaths from weather-related
6
natural disasters are on the decline,70 eco-
5 nomic losses caused by storms, floods, and
4 droughts are all rising (from about $20 bil-
3 lion a year in the early 1980s to $70 billion
2 in the early 2000s for high-income countries
1 and from $10 billion a year to $15 billion for
0 low- and middle-income countries).71 But
1971–75 1976–80 1981–85 1986–90 1991–95 1996–2000 2001–05
this increase is largely explained by higher
low-income countries upper-middle-income countries exposure of economic value per area rather
lower-middle-income countries high-income countries
than changes in climate.72 The number of
Sources: WDR team; CRED 2009. affected people (people requiring humani-
Note: Over the past 40 years the death toll has fallen but the number of people affected has doubled every decade. tarian assistance after disasters) continues
(People affected are those requiring immediate assistance during a period of emergency and can also include
displaced or evacuated people.) In lower-middle-income countries almost 8 percent of the population is affected
to increase, with the largest share in lower-
each year. The increase cannot be attributed only to climate change; much results from population increase, middle-income countries characterized by
greater exposure of infrastructure and improved reporting of disasters. However, the impacts on people are just
as real and show why it is so essential to begin focusing on the current adaptation deficit while looking ahead to a
rapid urban growth (figure 2.1).73 About 90
more climatically stressful future. percent of the economic losses in developing
Reducing Human Vulnerability: Helping People Help Themselves 99
countries are borne by households, busi- designed to reduce risks of future disas-
nesses, and governments with the rest cov- ters, bridging the humanitarian and devel-
ered by insurance or donor funds. opment agendas.74 The private sector is
Unless disaster impacts are systemati- instrumental in this framework, providing
cally reduced, past development gains will financial (insurance, risk assessments) and
be at risk. So the focus is shifting from cop- technical (communication, construction,
ing with disaster events to forward-looking service provision) solutions.75
disaster risk management and toward pre- Climate change greatly increases the need
ventive rather than reactive measures. In for effective management of extreme weather
line with the Hyogo Framework of Action events and for disaster risk management
for reducing disaster risks (the 2005 policy that increases preparedness and prevents
framework defined by the United Nations), losses (box 2.6).76 In many places previ-
recovery and reconstruction are being ously uncommon risks are becoming more
BOX 2.6 Beating the odds and getting ahead of impacts: Managing the risk of extreme events
before they become disasters
Recurrent extreme climate events— capacity to observe, record, research, flood control designed according to cur-
storms, floods, droughts, wildfires— analyze, forecast, model, and map natural rent probabilities could add to future
characterize many parts of the world and hazards and vulnerabilities. Geographic losses by encouraging development in
are part of the climate system. Climate information systems can integrate these flood-prone areas today but leaving them
change is likely to change patterns of sources of information and give decision more prone to future major damages. So
extreme events, but negative impacts can makers a powerful tool to understand climate-change predictions have to be
be reduced through systematic risk man- risk—both at the national agencies and taken into account in current decision
agement. The basic steps are assessing the local level. Many low- and middle- making and longer-term planning.
risk, reducing risk, and mitigating risk.a income countries are now performing Mitigating risk entails actions to mini-
Assessing risk, a prerequisite for risk man- risk assessments and are systematically mize impacts during an event and its
agement, is the basis for informed decision strengthening their capacity to manage immediate aftermath. Early warning and
making. It focuses action and resources. disasters better.b surveillance systems harness informa-
Identifying pertinent risk is the first step Reducing risk requires mainstreaming tion technology and communication
and generally does not require sophis- risk in the overall strategic framework of systems to provide advance warnings of
ticated techniques. Rice farmers in Asia development, a task more important than extreme events. For such information to
readily point out their most flood-prone ever as the density of people and infra- save lives, disaster management agencies
fields. Water reservoir managers know the structure increases. Since the late 1990s need mechanisms in place to receive and
difficulties of managing the competing there has been increasing recognition of communicate information to communi-
demands for electricity and water supply the need to address risks emanating from ties well ahead of the event. This requires
when water levels are low. And communi- natural hazards in medium-term strategic systematic preparedness training; capacity
ties can identify social groups and indi- development frameworks, in legislation building and awareness raising; and coor-
viduals who tend to be affected first when and institutional structures, in sectoral dination between national, regional, and
adverse weather events occur. strategies and policies, in budgetary pro- local entities. Taking swift and targeted
Quantifying risk is the next step, and a cesses, in individual projects, and in mon- action after a disaster is equally important,
variety of approaches exist depending on itoring and evaluation. Mainstreaming including social protection for the most
the scope of a risk assessment. Communi- requires analysis of how potential hazard vulnerable and a strategy for recovery and
ties use simple participatory techniques events could affect policies, programs, reconstruction.
based on readily observable indicators and projects and vice versa.
(such as the market price for staple crops Development initiatives do not neces- Sources: WDR team; Ranger, Muir-Wood,
during droughts) to trigger action at the sarily reduce vulnerability to natural haz- and Priya 2009; United Nations 2007; United
household and community level, or they ards, and they can unwittingly create new Nations 2009; NRC 2006; Benson and Twigg
use community-based mapping to deter- vulnerabilities or heighten existing ones. 2007.
mine flood-prone areas. Risk assessments Solutions for jointly sustaining develop- a. Here the term mitigation refers to avoid-
at the sector level (agriculture or hydro- ment, reducing poverty, and strengthen- ance of losses from extreme weather events,
power) or for a country generally require ing resilience to hazards thus need to be for example, by evacuating people from a
flood plain, through short-term measures in
more systematic and quantitative data explicitly sought. Disaster risk reduction anticipation of an immediate threat.
analysis (mapping agricultural extent or should promote resilience and help com-
b. Global Facility for Disaster Reduction and
regional hydrology). munities adapt to new and increased Recovery, www.gfdrr.org (accessed May 15,
Understanding risk requires investment risks. But even this cannot be guaranteed. 2009); Prevention, www.proventionconsor-
in scientific, technical, and institutional For instance, investments in structural tium.org (accessed May 15, 2009).
100 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
widespread, as in Africa, where the number changes in land use and demographics.
of floods is increasing rapidly (figure 2.2), Satellite and geographic information tech-
and in Brazil, which experienced the first nology provide powerful means to generate
South Atlantic hurricane ever in 2004.77 physical and socioeconomic information
Generating information about where rapidly and cost-effectively (box 2.7; see
extreme weather impacts are likely and the also chapters 3 and 7).
consequences they may have requires socio- Many developed countries provide
economic data (maps showing population detailed flood-risk maps as a public ser-
density or land values) as well as physical vice to homeowners, businesses, and local
information (records of precipitation or authorities.79 In China the government has
extreme events).78 But in a changing cli- drawn such maps since 1976 and publishes
mate the past is no longer prologue (once- flood-risk maps that delineate high-risk
rare events may become more frequent), zones for the most populated river basins.
and uncertainty about the future climate With such tools, residents can have infor-
is an important element in assessing risk mation on when, how, and where to evacu-
and evaluating planning decisions. Equally ate. The maps can also be used for land-use
important are monitoring and periodic planning and building design.80 Put in the
updates in socioeconomic data to reflect hands of local communities, such services
foster local action, as in Bogota, where sim-
Figure 2.2 Floods are increasing, even in drought-prone Africa
ilar risk-based information for earthquake-
prone zones strengthens the resilience of
Events per five-year period communities.81
700
Risk can never be eliminated, and being
600 Africa
Rest of the world
prepared to cope with extreme events is
500 vital for protecting people. Warning sys-
400 tems and response plans (say, for evacua-
300 tion in an emergency) save lives and prevent
200 avoidable losses. Engaging communities in
100 preparedness and emergency communica-
tion protects their livelihoods. For example,
0
1971–75 1976–80 1981–85 1986–90 1991–95 1996–2000 2001–05 in Mozambique communities along the
Búzi River use radios to warn communities
Source: WDR team analysis from CRED 2009.
Note: Flood events are increasing everywhere but particularly in Africa, with new regions being exposed to downstream of flooding.82 Even in remote,
flooding and with less recovery time between events. Reporting of events may have improved since the 1970s, isolated communities local action can
but this is not the main cause of rising numbers of reported floods, because the frequency of other disaster
events in Africa, such as droughts and earthquakes, has not shown a similar increase. reduce risk, create jobs, and address poverty
BOX 2.7 Satellite data and geo-information are instrumental in managing risk—and inexpensive
Satellite data and geo-information tech- empower indigenous forest dwellers places where such data and knowledge
nology are often available for free or at with information. High-resolution sen- are currently limited.
moderate cost, and the software and sors identify urban encroachment into The use of such services and technol-
tools to use such technology operate on hazardous zones. Geographic position- ogy broadly and effectively in developing
desktop computers. ing devices used in surveys can reveal countries does not require hard invest-
Satellites monitor moisture and veg- new information about how households ments—investments in higher education,
etation and provide invaluable informa- interact with the natural environment. institutional capacity building, mission-
tion to agricultural extension services. Geo-information systems streamline data focused regional research centers, and
They track tropical storms and provide management, ensure information is avail- promoting private enterprise are the
early warning to coastal communities. able when it is needed, and provide a main elements.
By mapping flood impacts they support cost-effective and rapid tool to build the
recovery and reconstruction opera- knowledge base for informed policy mak-
tions. They map forests and biomass and ing and for understanding risk patterns in Sources: ESA 2002; NRC 2007a, 2007b.
Reducing Human Vulnerability: Helping People Help Themselves 101
BOX 2.9 Public-private partnerships for sharing climate risks: Mongolia livestock insurance
An important concept of climate-risk commercial livestock insurance provided to offer commercial insurance to herders,
management is risk-sharing by commu- by Mongolian insurers. A social insurance which they had been reluctant to do.
nities, governments, and businesses. In program through the government bears The scheme provides advantages for
Mongolia livestock herders, the national the losses associated with catastrophic all. Herders can buy insurance against
government, and insurance companies livestock mortality that would overwhelm unavoidable losses. Insurers can expand
developed a scheme to manage the herders and insurers alike. This tiered their business in rural areas, strengthening
financial risks arising from severe winter- approach defines a clear framework for the rural financial service infrastructure.
spring cold episodes (dzuds) that peri- self-insurance by herders, commercial The government, by providing a well-
odically result in widespread livestock insurance, and social insurance. structured social insurance, can better
mortality. Such episodes killed 17 percent An important innovation is the use of manage its fiscal risk. Even though a cata-
of livestock in 2002 (in some areas up index insurance rather than individual live- strophic event exposes the government to
to 100 percent), amounting to losses of stock insurance, which had been ineffec- significant potential risk, the government
$200 million (16 percent of GDP). tive because the verification of individual had been compelled politically to absorb
In this scheme herders retain the losses tends to be fraught with moral haz- even greater risk in the past. Because the
responsibility for smaller losses that do ard and often prohibitively high costs. With government covers catastrophic out-
not affect the viability of their business or this new type of insurance, herders are comes, the commercial insurance, limited
household, and they often use arrange- compensated based on the average live- to moderate levels of mortality, can be
ments with community members to buf- stock mortality rate in their district, and an offered at affordable rates.
fer against smaller losses. Larger losses individual loss assessment is not required.
(of 10–30 percent) are covered through This gives Mongolian insurers incentives Sources: Mahul and Skees 2007; Mearns 2004.
weaker in developing countries (figure 2.3), insurance markets.91 And diversifying risk
a fact reflected in the generally lower penetra- will be more difficult as climate change
tion of financial services in rural areas. The leads to more synchronized, widespread,
Philippines Crop Insurance Corporation, and systemic effects globally and region-
for example, reaches only about 2 percent of ally—effects that are difficult to offset in
farmers, largely in the more productive and other regions or market segments.
richer zones.88 Providing financial services The erosion of market-based insurability
to rural populations is challenging and risky, implies a strong reliance on governments
because many rural households are not part as insurers of last resort, a role that many
of the monetized economy and have weather- governments have implicitly taken. But the
sensitive livelihoods. In urban settings people track record of governments has not been
are more concentrated, but it is still difficult stellar, in either the developing world or the
to reach the poor in the informal economy. developed. For instance, Hurricane Katrina
Climate change could further erode in 2005 bankrupted the U.S. flood insur-
the insurability of climate-related risk. ance program 10 times over, with more
Unchecked climate change could make claims in one year than in its 37-year his-
many climate risks uninsurable or the pre- tory. And few government-sponsored crop
miums unaffordable. Insurability requires insurance programs are financially sustain-
the ability to identify and quantify (or at able without major subsidies.92 At the same
least estimate partially) the likelihood of time, if the magnitude of losses associated
an event and the associated losses, to set with recent catastrophic events is any indi-
premiums, and to diversify risk among cation of the insurability of future losses
individuals or collectives.89 Meeting all from climate change, it suggests a more
three conditions makes a risk insurable but explicit role of the public sector to absorb
not necessarily profitable (as reflected in the damages that are beyond the private
the low premium-to-claims ratio of many sector’s capacity.93
agricultural insurance programs) and the Insurance is no panacea for adapting to cli-
transaction costs of operating an insurance mate risks and is only one strategy to address
program can be considerable.90 The uncer- some of the impacts of climate change. It
tainties arising from climate change con- generally is not appropriate for long-term
found the actuarial processes that underlie and irreversible impacts, such as sea-level
Reducing Human Vulnerability: Helping People Help Themselves 103
rise and desertification, trends that would for example, the winds of Hurricane Ivan
lead to massive losses for insurers and thus caused losses equivalent to more than 200
be uninsurable. Insurance must also be con- percent of GDP.97 Because outside aid is not
sidered within an overall risk-management always immediately available, 16 Caribbean
and adaptation strategy, including sound countries have developed a well-structured
regulation of land-use and building codes, to financial risk-management scheme to
avoid counterproductive behavior—or mal- streamline emergency funding and mini-
adaptation (such as continued settlement on mize service interruptions. Operating since
a storm-prone coast)—because of the secu- 2007, it provides rapid liquidity to govern-
rity in an insurance contract.94 ments following destructive hurricanes
and earthquakes, using innovative access
Keep governments liquid to international reinsurance markets that
Financial planning prepares governments can diversify and offset risk globally (box
for catastrophic climate impacts and main- 2.10).
tains essential government services in the Even poor economies can manage cli-
immediate aftermath of disasters.95 Prear- mate risks more effectively by harness-
ranged fi nancing arrangements—such as ing information, markets, good planning,
catastrophe reserve funds, contingent lines and technical assistance. By forming part-
of credit, and catastrophe bonds—allow gov- nerships with insurers and international
ernments to respond swiftly, scale up social financial institutions, governments can
protection programs, and avoid longer-term overcome the private sector’s reluctance to
losses that accrue to households and com- commit capital and expertise to the low-
munities while people are homeless, out of income market. In 2008 Malawi pioneered
work, and experience basic deprivations.96 a weather-based risk management contract
Having immediate funds available to jump- to protect itself against droughts that would
start the rehabilitation and recovery process lead to national maize production shortfalls
reduces the derailing effect of disasters on (often accompanied by high volatility in
development. regional commodity prices and food inse-
Many small countries are fi nancially curity). In exchange for a premium an inter-
more vulnerable to catastrophic events national reinsurance company committed
because of the magnitude of disaster- to pay an agreed amount to the govern-
related losses relative to the size of their ment in case of predefi ned severe drought
economy (map 2.5); in Grenada in 2004, conditions, as measured and reported by
104 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
Map 2.5 Small and poor countries are financially vulnerable to extreme weather events
High 11–50
Critical event
Financial
Medium 51–250 return period
vulnerability
(years)
Low > 250
Not applicable
wildlife distributions, have adjusted the tim- and introducing individual transferable
ing of subsistence activities and are hunting catch quotas with local enforcement.114
a greater variety of species. They are increas- Active participation of local communities
ing the resilience of their communities by and primary stakeholders in comanage-
sharing food, trading more with one another, ment of fisheries is a key to success.115
and by developing new local institutions.112 Beyond resilience-enhancing benefits,
Similarly, indigenous communities in devel- decentralized resource management can
oping countries are adapting to climate have synergistic benefits for mitigation
change—for instance, through rainwater and adaptation. For example, forest com-
harvesting, crop and livelihood diversifica- mons management in tropical regions has
tion, and changes in seasonal migration—to produced simultaneous livelihood ben-
alleviate adverse impacts and take advantage efits (adaptation) and carbon storage gains
of new opportunities.113 (mitigation) when local communities own
In general, communities have better their forests, have greater decision-making
time-, place-, and event-specific knowledge autonomy, and ability to manage larger for-
of local climate hazards and of how such est patches.116 In many developing countries
hazards affect their assets and productive decentralized governance of forests based
activities. Communities also have greater on principles of common-pool resources
capacity to manage local social and ecologi- has given local populations the authority to
cal relationships that will be affected by cli- manage forests, use their time- and place-
mate change. And they typically incur lower specific knowledge to create appropriate
costs than external actors in implementing rules and institutions, and work with gov-
development and environmental projects ernment agencies to implement the rules
(figure 2.4). A recent review of more than they have created.117 Enhancing indigenous
11,000 fisheries found that the likelihood of peoples’ land rights and ensuring their
stock collapse can be dramatically reduced role in management has resulted in more
by moving away from overall harvest limits sustained and cost-effective management
Figure 2.4 Turning back the desert with indigenous knowledge, farmer action, and social learning
NIGER Libya
Algeria
Mali Ni ger
Chad
Burkina
Faso Nigeria
Sources: WRI and others 2008; Botoni and Reij 2009; Herrmann, Anyamba, and Tucker 2005.
Note: In Niger farmers have turned back the encroaching desert; landscapes that were denuded in the 1980s are now densely studded with trees, shrubs, and crops. This trans-
formation, so vast that its effects can be observed from satellites, has affected 5 million hectares of land (about the size of Costa Rica), which amounts to almost half of the culti-
vated land in Niger. The new economic opportunities created by the regreening have benefited millions of people through increased food security and resilience to drought. Key
to this success was a low-cost technique known as farmer-managed natural regeneration that adapts a centuries-old technique of woodland management. After some earlier
success with the reintroduction of this indigenous technique in the 1980s, farmers saw the benefits and spread the word. The social learning effect was enhanced by donors sup-
porting farmer study tours and farmer-to-farmer exchanges. The central government’s role was pivotal in reforming land tenure and forest policies.
Reducing Human Vulnerability: Helping People Help Themselves 107
BOX 2.11 Workfare in India under the Indian National Rural Employment Guarantee Act
India over time has developed an employ- kilometers of the household where pos- plantations. It provides funds for tools
ment guarantee program built on an sible. The operation is transparent with and other items necessary to complete
earlier successful scheme in the state of lists of works and contractors publicly activities and technical support for
Maharashtra. The program establishes, available and on the program’s Web site, designing and implementing the proj-
through self-selection, the right of up to allowing public oversight against corrup- ects. It can thus become a core part of
100 days of employment at the statutory tion and inefficiency. Since the program’s village development through produc-
minimum wage for every household that inception in 2005, 45 million households tive, climate-resilient asset creation and
volunteers. Households do not have to have contributed 2 billion days of labor maintenance.b
demonstrate need, and some wages are and undertaken 3 million tasks.a
Sources:
paid even if work cannot be provided. With appropriate guidance, the pro-
a. National Rural Employment Guarantee
The program makes provision for at gram can support climate-smart develop- Act—2005, http://nrega.nic.in/ (accessed May
least a third of the work to be available to ment. It operates at scale and can direct 2009).
women, on-site child care, and medical significant labor toward appropriate b. CSE India, http://www.cseindia.org/
insurance for work injuries; work must adaptive works, including water con- programme/nrml/update_january08.htm
be provided promptly and within five servation, catchment protection, and (accessed May 15, 2009); CSE 2007.
analyses of whether exposure will lead them The negative portrayal of migration can
to migrate.139) Adaptation, such as coastal foster policies that seek to reduce and con-
protection, will offset climate impacts and trol its incidence and do little to address the
reduce migration.140 needs of those who migrate, when migration
Today’s movements are a crude guide may be the only option for those affected by
to the geography of movements in the near climate hazards. Indeed, policies designed
future (box 2.12). Migration related to cli- to restrict migration rarely succeed, are
mate change is likely to be predominantly often self-defeating, and increase the costs
from rural areas in developing countries to to migrants and to communities of origin
towns and cities. Policies to facilitate migra- and destination.146 In facilitating migra-
tion should consider that most of the world’s tion as a response to climate impacts, it is
migrants move within their own countries better to formulate integrated migration
and that the migration routes used by eco- and development policies that address the
nomic and involuntary migrants overlap needs of voluntary migrants and support
significantly. their entrepreneurial abilities and techni-
Little evidence suggests that migra- cal skills.
tion caused by climate change provokes or To the extent possible, policies should
exaggerates conflict, but that could change. discourage settlement of migrants in areas
People migrating because of environmen- with high exposure to persistent climate
tal changes are likely disempowered, with hazards (map 2.6). Between 1995 and 2005,
little capacity to wage confl ict.141 Where 3 million people were displaced by civil
migration coincides with conflict, the rela- unrest in Colombia, mostly to small or mid-
tionship may not be causal.142 Similarly, the sized cities. Many have moved to marginal
link between violent conflict and resource city areas prone to flooding or landslides or
scarcity (water wars)143 or degradation has near waste dumps, while their lack of edu-
rarely been substantiated (poverty and dys- cation and job skills leaves them earning
functional institutions have more explana- only 40 percent of the minimum salary.147
tory power).144 But uncertainty about the Anticipating involuntary migration and
causal chains does not imply that future cli- resettlement, forward-looking plans should
mate-induced migration would not increase identify alternative sites, apply compensa-
the potential for confl ict when coinciding tion formulas that allow migrants to relo-
with pressure on resources, food insecurity, cate and develop new sources of livelihoods,
catastrophic events, and lack of governance and build public and social infrastructure
in the receiving region.145 for community life. Again, such policies
110 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
19.1 18.6
12.5 25.9
23.0
2.0 0.7
11.8 7.2 0.5
8.7 13.5
5.1
11.3
8.4
3.5 10.0
15.2
2.7
0.6
stand in sharp contrast to many ongoing in planning the move and in reconstruc-
efforts to address the needs of involuntary tion—and to rely as little as possible on
migrants and refugees—whether they are outside contractors and agencies. Those
internally displaced or cross international being resettled must receive compensation
borders. at the standards and prices in the receiving
Recent experience has suggested some region, and they should be involved in the
lessons for resettling migrants. The first is design and construction of infrastructure
to involve the communities to be resettled in the new location. Where possible, the
Reducing Human Vulnerability: Helping People Help Themselves 111
Map 2.6 Senegalese migrants settle in flood-prone areas around urban Dakar
Guediawaye Guediawaye
Pikine Pikine
Dakar Dakar
Dakar,
SENEGAL
68. Galiani, Gertler, and Schargrodsky 2005. 98. World Bank to Offer Index-based Weather
69. Richmond 2008. Derivative Contracts, http://go.worldbank.org/
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that existing disaster loss data miss most of the 99. Government of Bangladesh 2008.
small events that may account for as much as a 100. Bankoff, Frerks, and Hilhorst 2004.
quarter of deaths attributed to natural hazards, 101. Dercon 2004.
and that decision makers in many municipali- 102. Alderman, Hoddinott, and Kinsey 2006;
ties have relatively low awareness of the risks Bartlett 2008; UNICEF 2008; del Ninno and
climate change poses for their cities’ popula- Lundberg 2005.
tions and infrastructure; see Awuor, Orindi, 103. Francis and Amuyunzu-Nyamongo 2008;
and Adwera 2008; Bull-Kamanga and others Nelson and others 2002.
2003; Roberts 2008. 104. Ensor and Berger 2009; Goulden and
71. Hoeppe and Gurenko 2006. others 2009; Gaillard 2007.
72. United Nations 2009. 105. Adger and others 2005; Orlove, Chiang,
73. United Nations 2008a. and Cane 2000; Srinivasan 2004; Wilbanks and
74. International Strategy for Disaster Reduc- Kates 1999.
tion, http://www.unisdr.org/eng/hfa/hfa.htm 106. Stringer and others, forthcoming; Twom-
(accessed March 12, 2009). low and others 2008.
75. World Economic Forum 2008. 107. Nelson, Adger, and Brown 2007.
76. Milly and others 2002. 108. Walker and others 2006.
77. The Nameless Hurricane, http://science. 109. Gaiha, Imai, and Kaushik 2001; Martin
nasa.gov/headlines/y2004/02apr_hurricane.htm and Prichard 2009.
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78. Ranger, Muir-Wood, and Priya 2009. 111. Adger 2003.
79. An example is the information services 112. Berkes and Jolly 2002.
provided by the Scottish Environment Protec- 113. Macchi 2008; Tebtebba Foundation 2008.
tion Agency, www.sepa.org.uk/flooding (accessed 114. Costello, Gaines, and Lynham 2008.
March 12, 2009). 115. Pomeroy and Pido 1995.
80. Lin 2008. 116. Chhatre and Agrawal, forthcoming.
81. Ghesquiere, Jamin, and Mahul 2006. 117. Ostrom 1990; Berkes 2007; Agrawal and
82. Ferguson 2005. Ostrom 2001; Larson and Soto 2008.
83. Linnerooth-Bayer and Mechler 2006. 118. Sobrevila 2008; White and Martin 2002.
84. Mills 2007. 119. Bandura 1977; Levitt and March 1988;
85. Manuamorn 2007; Giné, Townsend, and Ellison and Fudenberg 1993; Ellison and Fuden-
Vickery 2008; World Bank 2008e. berg 1995.
86. Hochrainer and others 2008. 120. Granovetter 1978; Kanaiaupuni 2000;
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90. World Bank 2005. 123. Gillespie 2004.
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92. Skees 2001. 125. Ivanic and Martin 2008.
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regulation and codes are required and need to be 127. Lobell and others 2008.
enforced. Mandatory insurance may be required 128. Kanbur 2009; Ravallion 2008.
by law in high-risk areas. There are also equity 129. Grosh and others 2008.
concerns: what to do with people who have lived 130. Grosh and others 2008; Alderman and
in high-risk areas all along but cannot afford Haque 2006.
true risk-based premiums? 131. Famine Early Warning Systems Network,
94. Kunreuther and Michel-Kerjan 2007. www.fews.net (accessed May 15, 2009).
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sovereign financial risk management for natural 135. IEG 2008; Komives and others 2005.
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focus B Biodiversity and ecosystem services
in a changing climate
Earth supports a complex web of 3 million to 10 million species of plants and animals1 and an even greater number of micro-
organisms. For the first time a single species, humankind, is in a position to preserve or destroy the very functioning of that
web.2 In people’s daily lives only a few species appear to matter. A few dozen species provide most basic nutrition—20 percent
of human calorie intake comes from rice,3 20 percent comes from wheat;4 a few species of cattle, poultry, and pigs supply 70
percent of animal protein. Only among the 20 percent of animal protein from fish and shell fish is a diversity of dietary species
found.5 Humans are estimated to appropriate a third of the Sun’s energy that is converted to plant material.6
But human well-being depends on ately affected because they depend most have biodiversity protection programs
a multitude of species whose complex directly on ecosystem services.7 of varying degrees of effectiveness, and
interactions within well-functioning several international treaties and agree-
ecosystems purify water, pollinate flow- Threats to biodiversity and ments coordinate measures to slow or
ers, decompose wastes, maintain soil ecosystem services halt the loss of biodiversity.
fertility, buffer water flows and weather In the past two centuries or so, human- Climate change imposes an additional
extremes, and fulfill social and cultural kind has become the driver of one of threat. Earth’s biodiversity has adjusted
needs, among many others (box FB.1). the major extinction events on Earth. to past changes in climate—even to
The Millennium Ecosystem Assessment Appropriating major parts of the energy rapid changes—through a mix of spe-
concluded that of 24 ecosystem services flow through the food web and altering cies migration, extinctions, and oppor-
examined, 15 are being degraded or the fabric of the land cover to favor the tunities for new species. But the rate of
used unsustainably (table FB.1). The species of greatest value have increased change that will continue over the next
main drivers of degradation are land- the rate of species extinction 100 to century or so, whatever the mitigation
use conversion, most often to agricul- 1,000 times the rate before human efforts, far exceeds past rates, other than
ture or aquaculture; excess nutrients; dominance of Earth.8 In the past few catastrophic extinctions such as after
and climate change. Many consequences decades people have become aware of major meteorite events. For example, the
of degradation are focused in particular their impacts on biodiversity and the rates of tree species migration during the
regions, with the poor disproportion- threats of those impacts. Most countries waxing and waning of the most recent
ice age about 10,000 years ago were esti-
mated to be about 0.3–0.5 kilometers
a year. This is only a tenth the rate of
change in climate zones that will occur
BOX F B.1 What is biodiversity? What are ecosystem services? over the coming century.9 Some species
Biodiversity is the variety of all forms States and Canada, along with more will migrate fast enough to thrive in a
of life, including genes, populations, than half the number of mammal and new location, but many will not keep up,
species, and ecosystems. Biodiversity bird species in those two countries. especially in the fragmented landscapes
underpins the services that ecosystems Ecosystem services are the ecosystem of today, and many more will not survive
provide and has value for current uses, processes or functions that have value the dramatic reshuffling of ecosystem
possible future uses (option values), and to individuals or society. The Millennium composition that will accompany cli-
intrinsic worth. Ecosystem Assessment described five
mate change (map FB.1). Best estimates
The number of species is often used major categories of ecosystem services:
as an indicator of the diversity of an provisioning, such as the production of of species losses suggest that about 10
area, though it only crudely captures food and water; regulating, such as the percent of species will be condemned
the genetic diversity and the complex- control of climate and disease; support- to extinction for each 1°C temperature
ity of ecosystem interactions. There are ing, such as nutrient cycles and crop rise,10 with even greater numbers at risk
5 million to 30 million distinct species pollination; cultural, such as spiritual and of significant decline.11
on Earth; most are microorganisms and recreational benefits; and preserving, Efforts to mitigate climate change
only about 1.75 million have been for- such as the maintenance of diversity.
through land-based activities may sup-
mally described. Two-thirds of the diver-
sity is in the tropics; a 25 hectare plot in port the maintenance of biodiversity
Sources: Millennium Ecosystem Assess-
Ecuador was found to have more tree ment 2005; Kraft, Valencia, and Ackerly and ecosystem services or threaten them
species than exist in all of the United 2008; Gitay and others 2002. further. Carbon stocks in and on the
land can be increased through reforesta-
Biodiversity and ecosystem services in a changing climate 125
Table FB.1 Assessment of the current trend in the global state of major services provided by ecosystems
tion and revegetation and through such What can be done? change and in the context of compet-
agricultural practices as reduced soil till- Changes in priorities and active and ing uses for land or sea.
age. These activities can create complex adaptive management will be needed This requires an ongoing process to
and diverse landscapes supportive of to maintain biodiversity under a anticipate how ecosystems will respond
biodiversity. But poorly planned mitiga- changing climate. In some places, to a changing climate while interacting
tion actions, such as clearing forest or active management will take the form with other environmental modifiers.
woodland to produce biofuels, can be of further improving protection from Some species will die out, others will
counterproductive to both goals. Large human interference, while in others persist, and some will migrate, form-
dams can provide multiple benefits conservation may need to include ing new combinations of species. The
through irrigation and energy produc- interventions in species and ecosystem ability to anticipate such change will
tion but also can threaten biodiversity processes that are stronger and more always be incomplete and far from per-
through direct inundation and dramatic hands- on than today’s. In all cases fect, so any management actions must
changes in downstream river flows and biodiversity values must be actively be within a framework that is flexible
the dependent ecosystems. considered—in the face of climate and adaptive.
126 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
Map FB.1 While many of the projected ecosystem changes are in boreal or desert areas that are not biodiversity hotspots, there are still substantial
areas of overlap and concern
Source: WDR team based on Myers and others (2000) and Fischlin and others (2007).
Note: The map shows the overlap between biodiversity hotspots—regions with exceptional concentrations of endemic species undergoing exceptional loss of habitat (Conservation
International and Myers and others 2000)—and the projected changes in terrestrial ecosystems by 2100 relative to the year 2000, as presented by the Intergovernmental Panel on
Climate Change in Fischlin and others (2007), figure 4.3 (a), p. 238. The changes should be taken as only indicative of the range of possible ecosystem changes and include gains or
losses of forest cover, grassland, shrub- and woodland, herbaceous cover, and desert amelioration.
Some species loss is inevitable, and tudinal, moisture, and soil gradients. Pro- are not likely to grow significantly. This
some species may need to be protected posals to expand or modify conservation means that the lands that surround and
in botanical and zoological gardens or reserves could lead to clashes over priori- connect areas with high conservation
in seed banks. It is essential that key spe- ties for land allocation and for resources values and priorities (the environmen-
cies in the delivery of ecosystem services within biodiversity management (such tal matrix), and the people who man-
are identified and, if necessary, actively as money for land acquisition versus that age or depend on these lands will be of
managed. Proactive management of for active habitat manipulation). Power- increasing importance for the fate of
land and the seas under a changing ful tools exist for selecting the optimal species in a changing climate.
climate is a fairly new and ill-defined allocation of lands to achieve particular There will be a greater need for more
process. Relatively little knowledge has conservation goals that could balance flexible biodiversity conservation strat-
been developed on identifying realistic competing demands.12 egies that take the interests of different
management responses, so significant But protected areas alone are not the social groups into account in biodiver-
sharing of learning, best practices, and solution to climate change. The current sity management strategies. So far the
capacity building will be necessary. reserve network has increased rapidly principal actors in creating protected
over the past decade to cover about areas have been nongovernmental orga-
Conservation reserves 12 percent of Earth’s land area,13 but it nizations and central governments. To
Any extensions or modifications to the is still inadequate to conserve biodiver- ensure the flexibility needed to main-
conservation priority areas (conservation sity. Given demographic pressures and tain biodiversity, a wide range of man-
reserves) need to capture altitudinal, lati- competing land uses, protected areas agers, owners, and stakeholders of these
Biodiversity and ecosystem services in a changing climate 127
matrix lands and waters will need to be oping countries were adequately man- the framework of the Law of the Sea.25
engaged in management partnerships. aged and that more than 10 percent of Fisheries are seen as being in crisis, and
Incentives and compensation for these protected areas were already thoroughly fisheries mismanagement is blamed. But
actors may be required to maintain a degraded.18 the fundamental requirements for fish-
matrix that provides refugia and cor- Community-based conservation eries management are known.26 Climate
ridors for species. Some of the options Community-based conservation pro- change may provide an additional impe-
include extending payments for envi- grams could be adopted on a much tus to implement reforms, primarily by
ronmental services, “habitat banking,”14 larger scale. These programs attempt to reducing fishing fleet overcapacity and
and further exploration of “rights-based enhance local user rights and steward- fishing effort to sustainable levels.27 A
approaches to resources access,” as used ship over natural resources, allowing sustainable, long-term harvesting strat-
in some fisheries. those nearest to natural resources, who egy must be implemented—one that
already share in the costs of conserva- assesses stock exploitation in relation
Biodiversity planning and management
tion (such as wildlife depredation of to reference points that take uncertainty
A plan for actively managing the viabil-
crops) to share in its benefits as well. and climate change into account.28 The
ity of ecosystems as the climate changes
But such programs are not panaceas, key challenge is to translate high-level
should be developed for all conserva-
and more effort needs to go into design- policy goals into operational actions for
tion lands and waters and significant
ing effective programs. sustainable fisheries.29
areas of habitat. Elements include:
Community participation is the sine Payment for ecosystem services
• Climate-smart management plans qua non of successful biodiversity con-
for coping with major stressors, such Payment for ecosystem services has for
servation in the developing world, but
as fire, pests, and nutrient loads. some time been considered an efficient
long-term success stories (such as har-
• Decision procedures and triggers for and equitable way to achieve many out-
vesting sea turtle eggs in Costa Rica and
comes related to conservation and the
changing management priorities in Brazil) are rare.19 Certain elements clearly
the face of climate change. For exam- provision of ecosystem services. Exam-
contribute to the success that some pro-
ple, if a conservation area is affected ples include paying upstream land man-
grams have had regionally, such as the
by two fires within a short period, agers to manage the watershed in ways
wildlife-focused programs in southern
making the reestablishment of the that protect ecosystem services such
Africa. These elements include stable
previous habitat and values unlikely, as flows of clean water, sharing profits
governments, high resource value (iconic
then a program to actively manage the from game reserves with surrounding
wildlife), strong economies that support
transition to an alternative ecosystem landholders whose property is damaged
export-oriented resource use (including
structure should be implemented. by the game, and most recently paying
tourism and safari hunting), low human
landholders to increase or maintain the
• Integration into the plans of the rights, population densities, good local gov-
carbon stocks on their land. Box FB.2
interests, and contributions of indig- ernance, and government policies that
provides examples of the provision of
enous peoples and others directly offer a social safety net to buffer against
multiple services of conservation and
dependent on these lands or waters. lean years. Even when these conditions
carbon sequestration.
are met, the benefits in some countries
Such proactive planning is rare even Experience suggests that, because
typically do not accrue to the poor.20
in the developed world.15 Canada has a payments are provided only if a ser-
proactive management approach to cli- Managing marine ecosystems vice is rendered, user-financed schemes
mate change in the face of rapid warming Effective land management also has tend to be better tailored to local needs,
in its northern regions.16 Other countries benefits for marine ecosystems. Sedi- better monitored, and better enforced
are outlining some of the core principles mentation and eutrophication caused than similar government- financed
of proactive management: forecasting by land-based runoff reduce the resil- programs.30
changes; managing regional biodiversity, ience of marine ecosystems such as coral A significant opportunity for addi-
including conservation areas and their reefs.21 The economic value of coral reefs tional payments for conservation and
surrounding landscape; and setting pri- is often greater than the value of the agri- improved land management may flow
orities to support decision making in the culture on the land that affects them.22 from the scheme for Reduced Emissions
face of inevitable change.17 But in many For fisheries the main tools for man- from Deforestation and forest Degrada-
parts of the world, basic biodiversity aging biodiversity are ecosystem-based tion (REDD) under consideration by the
management is still inadequate. In 1999 fisheries management,23 integrated United Nations Framework Convention
the International Union for Conserva- coastal zone management including on Climate Change. REDD seeks to
tion of Nature determined that less than protected marine areas,24 and bind- lower emissions by paying countries for
a quarter of protected areas in 10 devel- ing international cooperation within reducing deforestation and degrada-
128 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
Map FB.2 Unprotected areas at high risk of deforestation and with high carbon stocks should be based adaptation builds effectively on
priority areas to benefit from a REDD mechanism. local knowledge and needs.
Ecosystem-based adaptation may
require giving priority to some ecosys-
tem services at the expense of others.
Using wetlands for coastal protection
Kalimantan Timur,
may require emphasis on silt accumu-
INDONESIA
lation and stabilization, for example,
possibly at some expense to wildlife
and recreation. Slope stabilization
with dense shrubbery is an effective
ecosystem-based adaptation to increas-
ing rainfall intensity under climate
change. However, in the dry periods
often associated with the increasingly
variable rainfall patterns under climate
change the slopes may be exposed to
wildfires that destroy the shrubs and
lead to disastrous reversals of the adap-
tation goals. So, ecosystem-based adap-
tation must be assessed for risk and
cost-effectiveness.
Notes
1. McGinley 2007.
2. Vitousek and others 1999.
3. Fitzgerald, McCouch, and Hall 2009.
4. Brown 2002.
5. WHO and FAO 2009.
6. Haberl 1997.
7. Millennium Ecosystem Assessment 2005.
8. Lawton and May 1995.
9. England and others (2004) estimated
the average rate of glacial retreat to be 0.1 kilo-
meter a year about 8,000 years ago during the
last ice age, which ultimately placed a con-
straint on how fast species could migrate
Province boundary
International boundary poleward.
10. Convention on Biological Diversity
Deforestation threat class/Carbon category 2009; Fischlin and others 2007.
Low threat / Medium carbon Moderate threat / Medium carbon High threat / Medium carbon
11. Foden and others 2008.
12. Bode and others 2008; Joseph, Malo-
Low threat / High carbon Moderate threat / High carbon High threat / High carbon
ney, and Possingham 2008; McCarthy and
Protected area Non-forest in 2003 No data Possingham 2007.
13. UNEP-WCMC 2008.
Sources: Brown and others 1993; Harris and others 2009. 14. This is a form of trading high-
Note: A recent study for the East Kalimantan region of Indonesia used GEOMOD and a database of carbon stocks conservation-value lands. Some holders
in Indonesia’s tropical forests to identify the best areas for REDD activities. The resulting map identifies areas with
high deforestation threat that also have high carbon stocks. The overlay of the existing or proposed protected areas of such lands will choose to place them in
allows decision makers to see where to direct financial resources and focus the protection efforts to get the most a habitat bank. If a need arises to damage
benefits under a REDD mechanism (namely, the dark red areas—high threat/high carbon—not included within the
boundaries of already existing protected areas).
similar land elsewhere, such as for highway
easements, the project proponents must
can also increase fishery opportunities other vulnerable groups than options buy the rights to land of equivalent conser-
and sequester carbon. Ecosystem-based based on infrastructure and engineer- vation value from the bank.
adaptation options are often more ing. Consistent with community-based 15. Heller and Zavaleta 2009.
accessible to the rural poor, women, and approaches to adaptation, ecosystem- 16. Welch 2005.
130 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
17. Hannah and others 2002; Hannah, Years Later.” Environmental Conservation 2008. “Species Susceptibility to Climate
Midgley, and Miller 2002. 34 (2): 122–31. Change Impacts.” In The 2008 Review of
18. Dudley and Stolton 1999. Convention on Biological Diversity. 2009. the IUCN Red List of Threatened Species,
19. Campbell, Haalboom, and Trow 2007. Draft Findings of the Ad Hoc Technical ed. J.-C. Vie, C. Hilton-Taylor, and S. N.
20. Bandyopadhyay and Tembo 2009. Expert Group on Biodiversity and Climate Stuart. Gland, Switzerland: International
21. Smith, Gilmour, and Heyward 2008. Change. Montreal: Convention on Bio- Union for Conservation of Nature.
22. Gordon 2007. logical Diversity. Gitay, H., A. Suarez, R. T. Watson, and D.
23. FAO 2003; FAO 2005; Stiansen and Cunningham, S., and T. Bostock. 2005. Suc- J. Dokken, eds. 2002. Climate Change
others 2005. cessful Fisheries Management. Issues, Case and Biodiversity. Technical Paper of the
24. Halpern 2003; Harmelin-Vivien and Studies and Perspectives. Delft, The Neth- Intergovernmental Panel on Climate
others 2008. erlands: Eburon Academic Publishers. Change, IPCC Secretariat, Geneva.
25. Lodge and others 2007.
Dudley, N., and S. Stolton. 1999. “Conver- Gordon, I. J. 2007. “Linking Land to Ocean:
26. Cunningham and Bostock 2005.
sion of Paper Parks to Effective Man- Feedbacks in the Management of Socio-
27. OECD 2008; World Bank 2008.
agement: Developing a Target.” Paper Ecological Systems in the Great Barrier
28. Beddington, Agnew, and Clark 2007.
presented at the Joint Workshop of Reef Catchments.” Hydrobiologia 591
29. FAO 2003; FAO 2005; ICES 2008a;
the IUCN/WWF Forest Innovations (1): 25–33.
ICES 2008b.
Project and the World Commission on Haberl, H. 1997. “Human Appropriation of
30. Wunder, Engel, and Pagiola 2008.
Protected Areas in association with the Net Primary Production as an Environ-
31. Brown and others 1993; Harris and
WWF-World Bank Alliance and the mental Indicator: Implications for Sustain-
others 2009.
Forests for Life Campaign. June 14. able Development.” Ambio 26 (3): 143–46.
32. This section draws upon material being
Turrialba, Costa Rica. Halpern, B. S. 2003. “The Impact of Marine
prepared by the Ad Hoc Technical Expert
Group on Biodiversity and Climate Change England, J. H., N. Atkinson, A. S. Dyke, Reserves: Do Reserves Work and Does
2009 for the Convention on Biological Diver- D. J. A. Evans, and M. Zreda. 2004. “Late Reserve Size Matter?” Ecological Applica-
sity and the UN Framework Convention on Wisconsinan Buildup and Wastage of tions 13 (1): S117–37.
Climate Change. the Innuitian Ice Sheet across Southern Hannah, L., T. Lovejoy, G. Midgley, W.
Ellesmere Island, Nunavut.” Canadian Bond, M. Bush, J. Lovett, D. Scott, and
Journal of Earth Sciences 41 (1): 39–61. F. I. Woodward. 2002. “Conservation
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CHAPTER
3
Managing Land and Water
to Feed Nine Billion People
and Protect Natural Systems
C
limate change is already affect- water, land, forests, fisheries, and biodiver-
ing the natural and managed sity more efficiently to obtain the services
systems—forests, wetlands, coral and products societies need without further
reefs, agriculture, fisheries—that damaging these resources through overuse,
societies depend on to provide food, fuel, pollution, or encroachment.
and fiber, and for many other services. It will Water will have to be used more effi-
depress agricultural yields in many regions, ciently. To do that, managers need to think
making it harder to meet the world’s grow- on basin-wide scales and to devise efficient
ing food needs. It comes as the world faces and flexible ways to allocate water among
intensified competition for land, water, bio- competing quantity and quality demands
diversity, fish, and other natural resources. At for human use (such as energy, agriculture,
the same time, societies will be under pres- fisheries, and urban consumption) and for
sure to reduce the 30 percent of greenhouse healthy ecosystems (such as forests, wet-
gas emissions that come from agriculture, lands, and oceans).
deforestation, land-use change, and forest Countries also need to get more from
degradation. their agriculture. The rate of increase in
To meet the competing demands and yields for key agricultural commodities has
reduce vulnerability to climate change, soci- been declining since the 1960s. Countries
eties will need to balance producing more will have to reverse that trend if the world is
from their natural resources with protect- to meet its food needs in the face of climate
ing these resources. That means managing change. Models vary, but all show the need
for a marked increase in productivity.1 That
increase in productivity cannot come at the
Key messages expense of soil, water, or biodiversity as it has
Climate change will make it harder to produce enough food for the world’s growing population, so often in the past. So countries will need
and will alter the timing, availability, and quality of water resources. To avoid encroaching into to accelerate research, enhance extension
already-stressed ecosystems, societies will have to almost double the existing rate of agricul- services, and improve market infrastructure
tural productivity growth while minimizing the associated environmental damage. This requires to get crops to market. But they also need
dedicated efforts to deploy known but neglected practices, identify crop varieties able to
to give farmers incentives to reduce carbon
withstand climate shocks, diversify rural livelihoods, improve management of forests, and invest
emissions from soil and deforestation. And
in information systems. Countries will need to cooperate to manage shared water resources and
fisheries and to improve food trade. Getting basic policies right matters, but new technologies
they need to help farmers hedge against an
and practices are also emerging. Financial incentives will help. Some countries are redirecting uncertain climate by diversifying income
their agricultural subsidies to support environmental actions, and future credits for carbon stored sources and genetic traits of crops, and bet-
in trees and soils could benefit emission reductions and conservation goals. ter integrate biodiversity into the agricultural
landscape.
134 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
• Research and development that produce new systems. The irrigation agency, used
new technologies and adapt them to to providing advice to farmers, is moving
local conditions can improve resource toward contracting advisory services out to
management, as can advisory services private firms. It will have to find, contract,
that help users learn about the options and supervise these firms—tasks that require
available to them. a very different set of skills. And the farmers
• Property rights give users incentives to will need to trust these new advisors as well.
protect or invest in their resources. Farmers’ choices of crops are deter-
• Pricing resources in a way that reflects mined in part by government price sup-
their full value gives incentives to use ports for sugar and wheat, which reduce the
them efficiently. incentives to switch to other crops such as
higher-value fruits and vegetables. If inter-
• Well-regulated markets are important for
national trade agreements make it easier to
many agricultural and natural resource
functions; infrastructure is also critical ensure a reliable market for new crops, the
so that producers can access those mar- farmers might make the switch. But with-
kets effectively. out good roads, refrigerated transport, and
state- of-the-art packaging facilities, the
• Strong institutions are important for set-
fruit and vegetables will rot before reach-
ting and enforcing rules.
ing their destination.
• Information, at all levels, permits users If the new advisory services are good,
and managers to make better choices. farmers will learn how they can get higher
These fundamentals apply to water, agri- incomes by switching to growing fruit
culture, and fisheries, as discussed in this and vegetables for export. The extension
chapter. services will also help them to organize
To understand how these drivers affect and interact with European buyers. New
the incentives of a particular community, infrastructure (a reliable weigh station, a
consider farmers on the plains of the Oum cold-storage facility) will make it feasible
Er Rbia river basin in Morocco. Engineers to assume the risk of switching crops. If
have designed a feasible drip irrigation sys- the farmers can get information they trust
tem that would allow these farmers to gen- about the impacts of their actions on their
erate higher revenue from the water they aquifer, they may determine as a group
receive (by increasing yields or switching to to use water more responsibly. If the river
higher-value crops). Economists have fig- basin agency has new planning tools, it can
ured out that it will be profitable. Hydrolo- allocate water more effectively across differ-
gists have calculated how much water they ent users’ priorities, including the environ-
can safely allocate to these farmers without ment. In the long term new initiatives that
neglecting environmental needs. Sociolo- set a price on soil carbon or change water
gists have talked to the farmers and found allocation may provide the incentives for
that 80 percent of them want to invest in farmers to grow crops using different soil
this technology. Marketing specialists have management techniques. Each step in the
talked to agroprocessors who want to buy process is feasible, and in the long run will
the new crops. And the government is benefit every player. The challenge comes in
willing to pay for a large share. But even coordinating all the efforts across multiple
here, getting things moving is fiendishly institutions and in persisting to see things
difficult. through over a long time.
It is not worth investing in new, improved Natural resources cannot be managed
pipes between the dam and the field unless separately, especially with climate change.
most farmers will install the drip irrigation New ways are needed to put water, agricul-
on their fields. Yet the farmers will not put ture, forests, and fisheries into a broader
down a deposit on the drip systems until they context with a web of related outcomes. In
are convinced that the new pipes will really some communities, farmers have begun
be laid and the water will really flow. They to moderate their fertilizer use to protect
also need information about how to use the aquatic ecosystems, and fisheries managers
136 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
are considering how setting catch limits responses less predictable; resource manag-
for one species will affect others. These ers will need to cope with that uncertainty
management tools appear under a wide with robust plans that consider the poten-
variety of names: ecosystem-based man- tial outcomes of multiple actions under
agement, integrated soil-fertility manage- multiple conditions.
ment, adaptive management, to name a few. Adaptive management (as described
But all share key features: they coordinate in chapter 2) will need to be applied at all
a broader range of variables (wider land- levels of resource management. Individual
scapes, longer time frames, and learning by farmers can monitor their soil to tailor
experience) than do traditional approaches. fertilizer use to local soil, water, climate,
And they stress the need for reliable infor- and crop conditions without harming
mation about the managed resource to ecosystems. Rural communities can tai-
ensure that recommendations are accurate, lor their cropping choices to the amount
site specific, and adaptable to changing of water they can safely extract from their
conditions. By increasing climate variabil- groundwater year after year, and go back to
ity, climate change will make ecosystems’ using the aquifer only as insurance against
Figure 3.1 Climate change in a typical river basin will be felt across the hydrological cycle
AQUI
FER
Increased temperature causes
more evaporative losses,
increases crop water demand.
Growing seasons alter. Less frequent and heavier rainfall
Droughts more frequent. reduce aquifer recharge.
Increased competition for
water concentrates pollution.
Coastal aquifers vulnerable Increased competition for
to salt-water intrusion. water risks drying up wetlands.
Changes in temperature, water
availability, and pollution
concentrations affect aquatic
ecosystems.
Sources: WDR team based on World Bank, forthcoming d; Bates and others 2008.
Managing Land and Water to Feed Nine Billion People and Protect Natural Systems 137
drought. And policy makers can use robust speeds up the hydrological cycle, increased
decision-making tools to forge more resil- evaporation will make drought conditions
ient international agreements for sharing more prevalent (map 3.1). Most places will
resources. This chapter offers specifics on experience more intense and variable pre-
applying new tools and technologies to cipitation, often with longer dry periods in
manage water, agriculture, and fi sheries between (map 3.2).4 The effects on human
and advocates a systemwide approach for activity and natural systems will be wide-
coping with climate change across all three spread. Areas that now depend on glaciers
sectors. and snowmelt will have more fresh water
initially, but supply will then decline over
Produce more from water and time.5 The shifts may be so rapid and unpre-
protect it better dictable that traditional agricultural and
water management practices are no longer
Climate change will make it harder to useful. This is already the case for the indig-
manage the world’s water enous communities in the Cordillera Blanca
in Peru, where farmers are facing such rapid
People will feel many of the effects of climate changes that their traditional practices are
change through water. The entire water failing. The government and scientists are
cycle will be affected (figure 3.1). While the starting to work with them to try to find new
world as a whole will get wetter as warming solutions.6
Map 3.1 Water availability is projected to change dramatically by the middle of the 21st century in many parts of the world
Sources: Milly and others 2008; Milly, Dunne, and Vecchia 2005.
Note: The colors indicate percentage changes in annual runoff values (based on the median of 12 global climate models using the IPCC SRES A1B scenario) from 2041–2060 com-
pared with 1900–1970. The white denotes areas where less than two-thirds of the models agree on whether runoff will increase or decrease. Runoff is equal to precipitation minus
evaporation, but the values shown here are annual averages, which could mask seasonal variability in precipitation such as an increase in both floods and droughts.
Map 3.2 The world will experience both longer dry spells and more intense rainfall events
a. Longer dry spells
Change in rainfall intensity (percent change in simple daily intensity index, SDII)
< –15 –15 – –10 –10– –5 –5–0 < 2/3 models agree
0–5 5 – 10 10–15 > 15
Source: The World Climate Research Program CMIP3 Multi-model Database (http://www-pcmdi.llnl.gov/ipcc/about_ipcc.php). Analysis by the World Bank.
Note: The maps show the median change (based on 8 climate models using SRES A1B) in annual values in 2030–2049, compared with 1980–1999. A “dry” day is defined as one with
precipitation less than 1millimeter whereas a “rainy” day has more than 1 millimeter. Precipitation intensity (SDII, or simple daily intensity index) is the total projected annual precipi-
tation divided by the number of “rainy” days. White areas show areas of high model disagreement (fewer than two-thirds of the models agree on the sign of change).
Managing Land and Water to Feed Nine Billion People and Protect Natural Systems 139
Figure 3.2 Freshwater in rivers makes up a very small share of the water available on the planet—and agriculture dominates water use
Glaciers Freshwater
68.7% lakes
67.4%
Water abstraction by sector Consumptive use of
(rivers, lakes, and groundwater) abstracted water by sector
Power Industrial and
10 – 11% domestic
7%
Evaporation from
reservoirs 3 – 4%
Agriculture
67 – 68%
Source: Shiklomanov 1999; Shiklomanov and Rodda 2003; Vassolo and Döll 2005.
Note: When humans use water, they affect the quantity, timing, or quality of water available for other users. Water for human use typically involves withdrawing water from lakes,
rivers, or groundwater and either consuming it so that it reenters the atmospheric part of the hydrological cycle or returning it to the hydrological basin. When irrigated crops use
water, it is a consumptive use—it becomes unavailable for use elsewhere in the basin. In contrast, releasing water from a dam to drive hydroelectric turbines is a nonconsump-
tive use because the water is available for downstream users but not necessarily at the appropriate time. Withdrawals by a city for municipal supplies are mainly nonconsump-
tive, but if the returning water is inadequately treated, the quality of water downstream is affected.
140 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
not realizing that agriculture dominates protocols, from data collection technolo-
human water use. Each day, a person gies to new infrastructure design.
drinks 2–4 liters of water but eats food that The effects of climate change on hydro-
requires 2,000–5,000 liters of water in its logical patterns mean that the past can no
production.11 These averages mask consid- longer be used as a guide for future hydro-
erable variation. In some basins, industrial logical conditions. So, like other natural
and urban use dominates, and more and resource managers, water engineers are
more basins will be in that situation given developing new tools that consider impacts
the pace of urban growth.12 across a number of scales and time frames
Climate change will reduce the natural to help evaluate tradeoffs and make choices
water storage of snow and glaciers, which robust to an uncertain future (box 3.1).13
will in turn affect aquifer storage and
require water managers to design and oper- Climate change will make applying
ate reservoirs differently. Water managers and enforcing sound water policies
will have to manage the entire water cycle. even more important
They can no longer afford to concentrate on
the small share of water in rivers and lakes Allocating water efficiently and limiting
and leave groundwater and soil moisture to water consumption to safe levels will become
be managed by landowners. Many basins increasingly important with climate change.
will experience increased demand, reduced When water is scarce, individual users can
availability, and increased variability all at take too much, making water unavailable to
the same time. Water managers in those others or harming ecosystems and the ser-
places will have less room to maneuver if vices they provide. When consumption in a
their decisions are not robust to a variety of basin exceeds the amount of water available,
outcomes. Tools are available to help soci- users must use less, and the water must be
eties cope with these changes. They range shared according to some process or prin-
from policy reform to decision-making ciples. Policy makers have two options: they
BOX 3.1 Robust decision making: Changing how water managers do business
Traditional decision making under uncer- Southern California’s Inland Empire precipitation declines, large changes in
tainty uses probability distributions to Utilities Agency has used this technique the price of water imports, and reduc-
rank different options for action, based to respond to the effects of climate tions of natural percolation into the
on the envelope of risk from the past. But change on its long-term urban water groundwater basin.
this approach is inadequate when deci- management plan First, the agency The goal of the process is to reduce
sion makers do not know or cannot agree derived probable regional climate pro- the agency’s vulnerability if those three
on how actions relate to consequences, jections by combining outputs from 21 things happen at the same time. The
how likely different events are, or how dif- climate models. Coupled with a water agency identified new management
ferent outcomes should be evaluated. As management simulation model, hun- responses including increasing water-use
chapter 2 shows, robust decision making is dreds of scenarios explored assump- efficiency, capturing more storm water for
an alternative. Robust strategies are those tions about future climate change, the groundwater replenishment, water recy-
that perform better than the alternatives quantity and availability of groundwater, cling, and importing more water in wet
across a wide range of plausible future urban development, program costs, and years so that in dry years more groundwa-
circumstances. They are derived from com- the cost of importing water. Then the ter can be extracted. The agency found
puter simulation models that do not pre- agency calculated the present value of that, if all these actions were undertaken,
dict the future but create large ensembles costs of different ways to supply water the costs would almost never exceed the
of plausible futures to identify candidate under 200 scenarios. They rejected threshold of $3.75 billion.
robust strategies and systematically assess any strategy that gave costs above
their performance. The process does not $3.75 billion over 35 years. Scenario
choose an optimal solution; instead, it discovery analysis concluded that the Source: Groves and others 2008; Groves and
finds the strategy that minimizes vulner- costs would be unacceptable if three Lempert 2007; Groves, Yates, and Tebaldi
ability to a range of possible risks. things happened at the same time: large 2008.
Managing Land and Water to Feed Nine Billion People and Protect Natural Systems 141
can either set and enforce fi xed quantities For irrigation, a consumptive use, pric-
for specific users, or they can use prices to ing is more complex. First, the amount
encourage users to cut back and even trade of water actually consumed is difficult to
among themselves. Either way, designing measure. Second, experience shows that
and enforcing good policies require accurate farmers do not reduce consumption until
information and strong institutions. the price is several multiples of the cost of
Quantitative allocations are most com- providing the service. Yet most countries
mon, and it is difficult to do them well. South fi nd it politically unacceptable to charge
Africa has one of the most sophisticated much more than is required to recover
schemes, though it is still a work in progress. the operational costs. Third, too steep
Its 1998 National Water Act stipulates that an increase in the price of surface water
water is public property and cannot be pri- will encourage any farmer who can drill
vately owned.14 All users must register and into an aquifer to switch to groundwater,
license their water use and pay for it, includ- shifting but not eliminating the problem
ing river or groundwater extracted at their of overuse.20
own expense. Streamflow reduction activity In most countries the state or another
is a category of water use, which means that owner of the water charges the city utility
owners of plantation forests must apply for or irrigation agency for the water extracted
a license just like an irrigator or a town’s from the river or aquifer. This is known
water utility. Only plantation forestry has so as bulk water. For a host of technical and
far been categorized as a streamflow reduc- political reasons few countries charge
tion activity, but rainfed agriculture or water enough for bulk water to affect the way
harvesting techniques could follow. Count- resources are allocated between competing
ing forestry as a water user makes land use uses.21 Indeed, no country allocates surface
compete squarely with other water users. water by price,22 although Australia is mov-
The only guaranteed rights to water are for ing toward such a system.23 Although far
ecological reserves and to ensure that each from straightforward, fi xed quotas on the
person has at least 25 liters daily for basic combined quantity of surface and ground-
human needs.15 water allocated to irrigation, or, better,
Water is almost always priced below its the amount of water actually consumed
value, giving users little incentive to use (evapotranspiration), seem to be politically
it efficiently.16 The literature is virtually and administratively more realistic than
unanimous in calling for economic instru- pricing to limit overall consumptive use.24
ments to reduce demand.17 Charging for
water services (irrigation, drinking water, Tradable water rights could improve water
wastewater collection and treatment) can management in the long term but are not
also recover the cost of providing the ser- realistic short-term options in most develop-
vice and maintaining infrastructure.18 ing countries. Tradable rights have great
The role of pricing to influence demand potential for making water allocation more
varies for different types of water use. For efficient and for compensating people who
municipal water, pricing tends to be effec- forgo their water use.25 Formal tradable
tive at reducing demand, especially when water rights schemes are in place in Aus-
combined with user outreach. When the tralia, Chile, South Africa, and the western
price is high, many utilities and users fi x United States. In Australia, evaluations indi-
leaks and use only what they need.19 But cate that trading rights has helped farmers
because urban consumption accounts on withstand droughts and spurred innova-
average for only 20 percent of water abstrac- tion and investment without government
tions, the effects on overall use are limited intervention.
(figure 3.2). And because municipal use is But the details of the design greatly affect
basically nonconsumptive, the impact of the success of the venture, and establish-
reduced use in cities does little to increase ing the necessary institutions is a lengthy
availability elsewhere in the basin. process. It took decades to develop this
142 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
capacity in Australia, a country with a long of crucial interim steps before adopting such
history of good governance, where custom- a system.30
ers were educated and accustomed to fol-
lowing rules, and where allocation rules Climate change will require investing
were broadly in place and enforced before in new technologies and improving the
the rights system was established.26 Coun- application of existing technologies
tries that allow water trading when they do
not have the institutional ability to enforce Water storage can help with increased vari-
the quotas assigned to each user tend to ability. Storage in rivers, lakes, soil, and
increase overextraction considerably (box aquifers is a key aspect of any strategy to
3.2). manage variability—both for droughts
Climate change, which makes future (storing water for use in dry periods) and
water resources less predictable, complicates for floods (keeping storage capacity avail-
the already challenging task of establish- able for excess f lows). Because climate
ing tradable water rights.27 Even in a stable change will reduce natural storage in the
climate, sophisticated agencies fi nd it dif- form of ice and snow and in aquifers (by
ficult to determine in advance how much reducing recharge), many countries will
water can safely be allocated to different need increased artificial storage.
users, and how much should be set aside for Water planners will need to consider
environmental purposes.28 By not properly storage options across the entire landscape.
accounting for certain uses (such as planta- Water stored in soil can be used more effi-
tion forestry and natural vegetation) or for ciently by managing land cover, particularly
changes in user behavior, the schemes in by improving the productivity of rain-
Australia and Chile assigned rights for more fed agriculture. Managing groundwater,
water than was actually available. They had already challenging, will be more impor-
to undergo the painful process of reassign- tant as surface water becomes less reliable.
ing or reducing the allocations.29 Properly Groundwater is a cushion for coping with
regulated markets for fi xed quantities of unreliable public supplies and rainfall. For
water are a good long-term goal, but most example, it supplies 60 percent of irrigated
developing countries need to take a number agriculture and 85 percent of rural drinking
BOX 3.2 The dangers of establishing a market for water rights before the institutional structures
are in place
A review based on the Australian experi- rules and agencies to define entitlements, Schemes that allow trading in the
ence concludes that “with the benefit of manage allocations, and control the use absence of established and enforced
hindsight and emerging experience, it is of water; developing accurate registers water rights can worsen overexploita-
becoming clearer that . . . it is necessary early in the process; allowing unused tion. Farmers near the city of Ta’iz, in the
to attend to many design issues. Water water to be carried over from year to year; Republic of Yemen, sell their groundwater
trading is likely to be successful unam- developing a private brokerage industry; to tankers to supply the city. Before this
biguously if and only if allocation and and ensuring timely flow of information market existed, the farmer withdrew
use management regimes are designed to all parties). only as much water from the aquifer as
for trading and associated governance Some countries have long-standing his crops needed. By increasing the price
arrangements prevent over-allocation informal water-trading arrangements. of a unit of water, the trading increases
from occurring. Opposition to the devel- The ones that work are often based on the benefits of using groundwater. And
opment of markets without attention to customary practices. Farmers in Bitit, because the farmer’s extraction from his
design detail is justified.” Morocco, for example, have traded water well is not controlled, there is no limit to
Design concerns include accounting for decades, based on rules established the amount he can extract. As a result,
(proper assessment of the interconnected by customary practices. The system the unregulated market accelerates the
surface- and groundwater, planning for operates from a detailed list available depletion of the aquifer.
climatic shifts to drier conditions, and to the entire community, which identi-
expanded consumption by plantation fies each shareholder and specifies the
forestry because of public subsidies), and amount of water each is entitled to, Sources: CEDARE 2006; World Bank 2007b;
institutional issues (designing separate expressed as hours of flow. Young and McColl, forthcoming.
Managing Land and Water to Feed Nine Billion People and Protect Natural Systems 143
water in India as well as half the drinking effects, with the poor sometimes benefit-
water received by households in Delhi. Well ing disproportionately.34 The High Dam at
managed, groundwater can continue to act Aswan in Egypt, for example, has generated
as a natural buffer. But it is far from well net annual economic benefits equivalent to
managed. In arid regions across the world, 2 percent of Egypt’s gross domestic product
aquifers are overexploited. Up to a quarter (GDP).35 It has generated 8 billion kilowatt-
of India’s annual agricultural harvest is hours of energy, enough to electrify all of the
estimated to be at risk because of ground- country’s towns and villages. It has allowed
water depletion.31 the expansion of agriculture and year-round
Improving groundwater management navigation (stimulating investments in Nile
requires actions to enhance both supply cruises) and has saved the country’s crops
(artificial recharge, accelerated natural and infrastructure from droughts and floods.
recharge, barriers within aquifers to retard But dams have well-known negative effects as
underground f lows) and demand. And well,36 and the tradeoffs need to be weighed
groundwater cannot be managed alone—it carefully. Climate change puts a premium on
must be integrated with regulation of sur- identifying robust designs: where countries
face water.32 Supply enhancing techniques face uncertainty about even whether their
are not straightforward. For example, arti- rainfall will increase or decrease, it can be
ficial recharge is of limited use when water cost-effective to build structures that are spe-
and suitable aquifer storage sites are not in cifically designed to be changed in the future.
the same places as the overstressed aquifers; As hydraulic systems increase in complexity,
43 percent of the funds allocated for India’s countries need solid hydrological, opera-
$6 billion artificial recharge program is tional, economic, and financial analyses and
likely to be spent recharging aquifers that capable institutions all the more (box 3.3).
are not overexploited.33
Dams will be an important part of the Nonconventional technologies can increase
story of climate change and water. And they water availability in some water-scarce
will need to be designed with built-in flex- regions. Water supplies can be enhanced
ibility to deal with potential precipitation by desalinating seawater or brackish water
and runoff changes in their basins. Many of and reusing treated wastewater. Desalina-
the best sites for dams are already exploited, tion, which accounted for less than 0.5 per-
yet the potential for new dams does exist, cent of all water use in 2004, 37 is set to
particularly in Africa. Managed well, dams become more widely used.
provide hydropower and protect against Technical developments, including
droughts and floods. Comprehensive analy- energy-efficient fi lters, are causing desali-
ses of the economic impacts of dams are nation prices to fall, and pilot schemes are
rare, but four case studies indicate positive beginning to power desalination plants
direct economic effects and large indirect with renewable energy.38 Depending on the
BOX 3.3 Managing water resources within the margin of error: Tunisia
Tunisia is a good example of the demands dams with conduits to connect them and and dilutes the salinity in the area where
on water managers in countries that are to transfer water between different areas water demand is highest. In addition, Tuni-
approaching the limits of their resources. of the country. sia treats and reuses one-third of its urban
With only 400 cubic meters of renew- As the most promising schemes were wastewater for agriculture and wetlands,
able resources per capita, which are developed, the government built addi- and recharges aquifers artificially. Tunisian
highly variable and distributed unevenly tional infrastructure in more marginal water managers now face a complex set
over time and space, Tunisia has a huge areas. Rivers that flowed to the sea have of decisions: they must optimize water
challenge managing its water. Yet in been dammed even when water demand quantity, timing, quality, and energy costs,
contrast to its Maghreb neighbors, it has in those basins is not intense. The stored showing the importance of human capac-
withstood consecutive droughts without water can be pumped across the mountain ity to manage resources so intensively.
rationing water to farmers or resorting to range into the country’s principal river
supplying cities from barges. It has built basin. The new water both increases supply Source: Louati 2009.
144 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
scale of the plant and the technology, desal- total area under irrigation. Indeed, irrigated
inated water can be produced and delivered land is expected to increase by just 9 percent
to the utility for as little as $0.50 per cubic between 2000 and 2050.45 And water produc-
meter. This remains more expensive than tivity (in this case, agricultural output per
conventional sources when freshwater is unit of water allocated to irrigation) will also
available. 39 Therefore, desalinated water have to improve, given the increasing water
usually makes sense only for the highest- demands of cities, industries, and hydro-
value uses, such as urban water supply or power. New technologies have the potential
tourist resorts.40 It also tends to be limited to increase water productivity when com-
to coastal areas, because inland distribution bined with strong policies and institutions.46
of desalinated water adds to the costs.41 Getting more “crop per drop” involves
a complex combination of investments
Producing more food without more water and institutional changes. Countries from
will not be easy, but some new approaches Armenia to Zambia are investing in new
will help. Managing water to meet future infrastructure that delivers the water effi-
needs will also involve making water use ciently from the reservoir to the crops,
more efficient, particularly in agriculture, reducing evaporative losses. However, as the
which accounts for 70 percent of freshwater example of the Moroccan farmers described
withdrawals from rivers and groundwater earlier indicates, the investments can work
(figure 3.2).42 only if local institutions deliver the water
There appears to be scope for increasing reliably, farmers have a voice in decision
the productivity of water in rainfed agri- making, and they can get the advice they
culture, which provides livelihoods for the need on how to make the most of the new
majority of the world’s poor, generates more infrastructure or technological develop-
than half of the gross value of the world’s ments. New infrastructure will help water
crops, and accounts for 80 percent of the management only if combined with strong
world’s crop water use.43 Options, described quantitative limits on each individual’s
in the next section, include mulching, con- water consumption, covering both ground
servation tillage, and similar techniques that and surface water. Otherwise, the increased
retain water in the soil so that less is lost to profitability of irrigation will tempt farmers
evaporation and more is available to plants. to expand their cultivated area or double- or
Other options involve small-scale rainwater triple-crop their fields, drawing ever more
storage, sometimes called water harvesting. water from their wells. This is good for the
Of the various interventions to increase individual farmer, certainly, but not for the
rainfed production, some (mulching, conser- other water users in the basin.47
vation tillage) divert some water that would Good crop management can increase
otherwise evaporate unproductively. Oth- water productivity by developing varieties
ers (water harvesting, groundwater pumps) resistant to cold so that crops can be grown
divert some water that would otherwise have in the winter, when less water is required.48
been available to users downstream. When Growing crops in greenhouses or under
water is plentiful, impacts on other users are shade screens also can reduce the evapora-
imperceptible, but as water becomes scarcer, tive demand of open fields, though it does
the impacts become more important. Once increase production costs.49 When crops die
again, comprehensive accounting for water before they produce their yields, the water
and integrated planning of land and water at they have consumed is wasted. Therefore
local, watershed, and regional scales can make more widespread adoption of drought- and
these interventions productive, by ensuring heat-tolerant varieties will increase water as
that the tradeoffs are properly evaluated. well as agricultural productivity.50
Irrigated agriculture is expected to pro- Well-timed applications of irrigation
duce a greater share of the world’s food in the water can also help. If farmers do not know
future, as it is more resilient to climate change exactly how much water is needed, they
in all but the most water-scarce basins.44 Crop often overirrigate because a little extra
productivity per hectare will have to increase, water is less harmful to yields than too
because there is little scope for increasing the little water. By monitoring water intake
Managing Land and Water to Feed Nine Billion People and Protect Natural Systems 145
and growth throughout the growing sea- farmers’ cell phones telling them how many
son, farmers can deliver the exact amount hours they should irrigate that day. Acting
of water that their crops need and irrigate on this information will allow them to avoid
only when really necessary. Remote-sensing overirrigating.53
systems are beginning to allow farmers to
see the water needs of plants with great Producing more in agriculture
accuracy even before the plants show signs while protecting the environment
of stress.51 But because of the technological
requirements, precision agriculture of this
Climate change will push societies to
type is limited to a small number of the
accelerate agricultural productivity
world’s farmers.52
growth
Even before this technology becomes Climate change will depress agricultural
widely available, it is possible to apply simple yields. Climate change adds several
automated systems to help poorer farmers confl icting pressures to agricultural pro-
increase the precision of applying irrigation duction. It will affect agriculture directly
water. The Moroccan farmers who convert through higher temperatures, greater crop
to drip irrigation under the government water demand, more variable rainfall, and
scheme discussed earlier will benefit from extreme climate events such as floods and
a simple technology that uses a standard droughts. It will increase yields in some
irrigation formula adapted to local growing countries but lower them in most of the
conditions. Depending on the weather in developing world, reducing global average
the area, the system will deliver a message to yields (map 3.3).
Map 3.3 Climate change will depress agricultural yields in most countries by 2050 given current agricultural practices and crop varieties
No data
–50 –20 0 20 50 100
In mid to high latitudes, local increases impact: models that project the effect of cli-
in temperature of only 1–3°C, along with mate change on agriculture typically look at
associated carbon fertilization54 and rainfall average changes and exclude the effects of
changes, may have small beneficial impacts extreme events, variability, and agricultural
on crop yields.55 Kazakhstan, the Russian pests, all of which are likely to increase.
Federation, and Ukraine are all geographi- Climate change will also make some land
cally positioned to benefit from these tem- less suitable for agriculture, particularly in
perature increases, but they may not be Africa.62 One study projects that by 2080
able to capitalize fully on the opportuni- land with severe climate or soil constraints
ties. Since the breakup of the Soviet Union, in Sub-Saharan Africa will increase by 26
together they have removed 23 million hect- million to 61 million hectares.63 That is
ares of arable land from production, almost 9–20 percent of the region’s arable land.64
90 percent of which was used for grain pro-
duction.56 Although world grain yields have Efforts to mitigate climate change will put
been rising on average by about 1.5 percent more pressure on land. In addition to
a year since 1991, yields in Kazakhstan and reducing yields, climate change will put pres-
Ukraine have fallen, and Russia’s yields have sure on farmers and other land managers to
risen only slightly. If these countries are to reduce greenhouse gas emissions. In 2004
take advantage of the warming temperatures about 14 percent of global greenhouse gas
to increase agricultural production, they will emissions came from agricultural practices.
have to build stronger institutions and bet- This includes nitrous oxide from fertilizers;
ter infrastructure.57 Even if they do, extreme methane from livestock, rice production,
climate events may wipe out the improved and manure storage; and carbon dioxide
average conditions: when the increased like- (CO2) from burning biomass, but excludes
lihood of extreme climate events is taken CO2 emissions from soil management prac-
into consideration for Russia, the years with tices, savannah burning, and deforestation.65
food production shortfalls are projected to Developing regions produce the largest share
triple by the 2070s.58 of these greenhouse gas emissions, with Asia,
In most developing countries, climate Africa, and Latin America accounting for 80
change is projected to have an adverse percent of the total.
effect on current agriculture. In low- Forestry, land use, and land-use change
latitude regions even moderate tempera- account for another 17 percent of greenhouse
ture increases of another 1–2°C will reduce gas emissions each year, three-quarters of
yields of major cereals.59 One assessment of which come from tropical deforestation.66
multiple studies estimates that by the 2080s The remainder is largely from draining
world agricultural productivity will decline and burning tropical peatland. About the
3 percent under a high-carbon-emission same amount of carbon is stored in the
scenario with carbon fertilization or 16 per- world’s peatlands as is stored in the Ama-
cent without it.60 For the developing world, zon rainforest. Both are the equivalent of
the decline is projected to be even larger, about 9 years of global fossil fuel emissions.
with a 9 percent decline with carbon fertil- In equatorial Asia (Indonesia, Malaysia,
ization, and 21 percent without. Papua New Guinea), emissions from fires
An analysis of 12 food-insecure regions associated with peat draining and defores-
using crop models and outputs from 20 tation are comparable to those from fossil
global climate models indicates that with- fuels in those countries.67 Emissions related
out adaptation Asia and Africa will suffer to livestock production are counted across
particularly severe drops in yields by 2030. several emissions categories (agriculture,
These losses will include some of the crops forestry, waste), and overall they are esti-
critical for regional food security, includ- mated to contribute up to 18 percent of the
ing wheat in South Asia, rice in Southeast global total, mostly through methane emis-
Asia, and maize in southern Africa.61 These sions from the animals, manure waste, and
projections are likely to underestimate the clearing for pasture.68
Managing Land and Water to Feed Nine Billion People and Protect Natural Systems 147
–12.5
Grassland/arable Rubber plantation Forest Forest on peat Sources: Butler, Koh, and Ghazoul, forth-
Prior land use coming; Henson 2008; Koh, Levang, and
Ghazoul, forthcoming; Koh and Wilcove
Source: Henson 2008. 2009; Venter and others 2009.
meat will be beneficial for poor consum- other essential services. Obtaining more
ers who need the protein and micronutri- land suitable for agricultural production
ents.77 But by 2050 the production of beef, is unlikely. Studies indicate that globally
poultry, pork, and milk is expected to at the amount of land suitable for agricul-
least double from 2000 levels to respond to ture will remain the same in 2080 as it is
the demand of larger, wealthier, and more today,79 because increases in suitable land
urban populations.78 in the higher latitudes will be largely offset
The world will have to meet the grow- by losses in the lower latitudes.
ing demand for food, fiber, and biofuel in Therefore agriculture productivity (tons
a changing climate that reduces yields— per hectare) will need to increase. Models
while at the same time conserving eco- vary but one study indicates that annual
systems that store carbon and provide increases of 1.8 percent a year will be needed
Managing Land and Water to Feed Nine Billion People and Protect Natural Systems 149
Figure 3.3 Meat is much more water intensive than major crops
(liters of water per kilogram of product)
15,500
up to 2055—almost twice the 1 percent a gation often causes salt to build up in soils,
year that would be needed under business as reducing fertility and limiting food produc-
usual (figure 3.5).80 This means that yields tion. Salinization currently affects between
will have to more than double over 50 years. 20 million and 30 million of the world’s 260
Many of the world’s breadbaskets, such as million hectares of irrigated land.84
North America, are approaching maxi- Less environmentally deleterious agri-
mum feasible yields for major cereals,81 so cultural intensification is essential, par-
a significant portion of this yield growth ticularly considering the environmental
will need to occur in developing countries. problems associated with further extensi-
This means not just an acceleration of yield fication of agriculture. Without increased
growth but a reversal of recent slowing: the crop and livestock yields per hectare, pres-
yield growth rate for all cereals in develop- sure on land resources will accelerate as crop
ing countries slipped from 3.9 percent a and pasture areas expand under extensive
year between 1961 and 1990 to 1.4 percent production. Since the middle of the 20th
a year between 1990 and 2007.82 century, 680 million hectares, or 20 per-
cent of the world’s grazing lands, have been
Climate change will require highly
productive and diverse agricultural
landscapes Figure 3.4 Intensive beef production is a heavy producer of greenhouse gas emissions
Figure 3.5 Agricultural productivity will have to increase even more rapidly because of climate degraded.85 Converting land for agriculture
change has already significantly reduced the area of
Agricultural productivity index (2005 = 100) many ecosystems (figure 3.6).
300 The Green Revolution illustrates both
Need without climate change
Need with climate change
the immense benefits from increasing agri-
250
Past observations cultural productivity and the shortcom-
200 ings when technology is not supported by
appropriate policies and investments to
150
protect natural resources. New technol-
100 ogy, coupled with investments in irrigation
and rural infrastructure, drove a doubling
50
of cereal production in Asia between 1970
0 and 1995. The agricultural growth and the
1960 1980 2000 2020 2040 2060 associated decline in food prices during this
Year time led to a near doubling of real per cap-
Source: Lotze-Campen and others 2009. ita income, and the number of poor people
Note: The figure shows the required annual growth in an agricultural productivity index under two scenarios. In fell from about 60 percent of the popula-
this index, 100 indicates productivity in 2005. The projections include all major food and feed crops. The green
line represents a scenario without climate change of global population increasing to 9 billion in 2055; total tion to 30 percent, even as the population
calorie consumption per capita and the dietary share of animal calories increasing in proportion to rising per increased 60 percent.86 Latin America also
capita income from economic growth; further trade liberalization (doubling the share of agricultural trade in total
production over the next 50 years); cropland continuing to grow at historical rates of 0.8 percent a year; and no experienced significant gains. But in Africa,
climate change impacts. The orange line represents a scenario of climate change impacts and associated soci- poor infrastructure, high transport costs,
etal responses (IPCC SRES A2): no CO2 fertilization, and agricultural trade reduced to 1995 levels (about 7 percent
of total production) on the assumption that climate change-related price volatility triggers protectionism and low investment in irrigation, and pric-
that mitigation policy curbs the expansion of cropland (because of forest conservation activities) and increases ing and marketing policies that penalized
demand for bioenergy (reaching 100 EJ [1018 joules] globally in 2055).
farmers all impeded adoption of the new
technologies.87 Despite its overall success,
Map 3.4 Intensive agriculture in the developed world has contributed to the proliferation of dead zones
Dead zones
the Green Revolution in many parts of Asia Figure 3.6 Ecosystems have already been extensively converted for agriculture
was accompanied by environmental dam-
ages stemming from overuse of fertilizer, Mediterranean forests,
pesticides, and water. Perverse subsidies and woodlands, and scrub
pricing and trade policies that encouraged Temperate forest,
monoculture of rice and wheat and heavy steppe, and woodland
use of inputs contributed to these environ- Temperate broadleaf
mental problems.88 and mixed forests
BOX 3.5 Product and market diversification: An economic and ecological alternative for marginal
farmers in the tropics
Tropical areas face great challenges: the the “designation of origin of Veracruz” passion fruit, alongside coffee. All trees,
persistent poverty of rural populations, and by providing subsidies only to farm- herbs, and produce were locally familiar,
including indigenous peoples; the deg- ers cultivating high- quality coffee in areas except the cinnamon tree. There is a
radation of natural resources; the loss of more than 600 meters above sea level. potentially large market for cinnamon,
biodiversity; and the consequences of Because this policy would hurt thousands which is usually imported. The farmers
climate change. The volatility of prices of producers living in the low- quality are now learning which practices and
for tropical products on the international production area below 600 meters, the configurations hold the best production
markets also affects local economies. government invited the Veracruzana potential in this innovative diversified
Many farmers around the world have their University to find alternatives to coffee system.
own survival mechanisms, but efforts monoculture. A cooperative company pooled differ-
to improve livelihoods and address the The diversification of productive low- ent agricultural products in groups with
anticipated impacts from climate change land coffee lands found financial sup- similar market values but with different
will require innovative institutions and port through the UN Common Fund for exposures to climate, pests, and mar-
creative methods for income generation Commodities, with the sponsorship and ket risks. Early results indicate that this
and security. supervision of the International Coffee bundling seems to work well, improving
One strategy that shows great potential Organization. It started in two municipali- livelihoods and increasing the resilience
for climate-smart development is agricul- ties with a pilot group of 1,500 farmers, of the communities. The company has
tural and agroforestry product diversifica- living in remote communities with 25–100 been able to sell all product types, several
tion. This strategy allows farmers to feed households. of them at a better price than before the
themselves and maintain a flow of prod- Many of the farmers had traditionally project started. And in the first two years
ucts to sell or barter at the local market produced coffee in a multicrop system, the project introduced a million native
despite droughts, pests, or low prices on providing the opportunity to test in each timber trees.
international markets. plot different configurations of alterna- Locals report that the practices have
Consider small coffee farms in Mexico. tive woody and herbaceous species of reduced erosion and improved soils, ben-
In 2001 and 2002 a dramatic drop in the economic and cultural value: Spanish efiting the surrounding ecosystem while
international price of coffee pushed cof- cedar and Honduras mahogany trees (for buffering against potential future flood-
fee prices in Mexico below production wood and furniture), the Panama rubber ing associated with climate change.
costs. To rescue farmers, the Veracruz tree, cinnamon, guava (as food and phy-
state government raised the price of cof- tomedicine), jatropha (for food and bio-
fee produced in the area by establishing fuel), allspice, cocoa, maize, vanilla, chile, Source: Contributed by Arturo Gomez-Pompa.
some weeds than on their cultivated rela- rent protection.97 Geographically fixed
tives.94 The genetic material of the weeds and often isolated by habitat destruction,
could therefore be used to enhance culti- reserves are ill-equipped to accommodate
vars of commercial crops to produce more species range shifts due to climate change.
resilient varieties.95 One study of protected areas in South
Africa, Mexico, and Western Europe esti-
Productive landscapes can integrate bio- mates that between 6 and 20 percent of
diversity. While protected areas may be species may be lost by 2050.98 Moreover,
the cornerstones of conservation, they will existing land reserves remain under threat
never be enough to conserve biodiversity in given future economic pressures and fre-
the face of climate change (see focus B on quently weak regulatory and enforcement
biodiversity). The world’s reserve network systems. In 1999 the International Union
roughly quadrupled between 1970 and 2007 for the Conservation of Nature determined
to cover about 12 percent of Earth’s land,96 that less than a quarter of protected areas
but even that is inadequate to conserve bio- in 10 developing countries were adequately
diversity. To adequately represent the conti- managed and that more than 10 percent of
nent’s species in reserves, while capturing a protected areas were already thoroughly
large proportion of their geographic ranges, degraded.99 At least 75 percent of protected
Africa would have to protect an additional forest areas surveyed in Africa lacked long-
10 percent of its land, almost twice its cur- term funding, even though international
Managing Land and Water to Feed Nine Billion People and Protect Natural Systems 153
Source: Photograph by Walter Galindo, from the files of Fundación CIPAV (Centro para Investigación en Sistemas Sostenibles de
Producción Agropecuaria), Colombia. The photograph represents the Finca “La Sirena,” in the Cordillera Central, Valle del Cauca.
Arango 2003.
Note: The first photo is the real landscape. The second figure is computer generated and shows what the area would look like if
farm productivity were increased by using ecoagricultural principles. The increased productivity would reduce grazing pressure
on hillsides, protecting watersheds, sequester carbon through afforestation, and increase habitat for biodiversity between fields.
154 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
BOX 3.6 Biotech crops could help farmers adapt to climate change
Conventional selection and plant breed- Genes affecting crop yield directly with wild relatives, creating aggressive
ing have produced modern varieties and and those associated with adaptation to weeds with higher disease resistance and
major productivity gains. In the future a various types of stress have been identi- the rapid evolution of new pest biotypes
combination of plant breeding and selec- fied and are being evaluated in the field. adapted to GM plants. However, scientific
tion of preferred traits through genetic New varieties could improve the way evidence and 10 years of commercial use
techniques (genetic modification, or GM) crops cope with unreliable water sup- show that safeguards, when appropri-
is likely to contribute most to producing plies and potentially improve how they ate, can prevent the development of
crops better adapted to pests, droughts, convert water. Breeding plants that can resistance in the targeted pests and the
and other environmental stresses accom- survive longer periods of drought will be environmental harm from commercial
panying climate change. even more critical in adapting to climate cultivation of transgenic crops, such as
A number of crops with genetically change. Initial experiments and field test- gene flow to wild relatives. Crop biodi-
modified traits have been broadly com- ing with GM crops suggest that progress versity may decrease if a small number of
mercialized in the last 12 years. In 2007 may be possible without interfering with GM cultivars displace traditional cultivars,
an estimated 114 million hectares were yields during nondrought periods, a but this risk also exists with convention-
planted with transgenic crop varieties, problematic tradeoff for drought-tolerant ally bred crop varieties. Impacts on bio-
mostly with insect-resistant or herbicide- varieties developed through conventional diversity can be reduced by introducing
tolerant traits. More than 90 percent of breeding. Drought-tolerant maize is several varieties of a GM crop, as in India,
this acreage was planted in only four nearing commercialization in the United where there are more than 110 varieties of
countries (Argentina, Brazil, Canada, and States and is under development for Afri- Bt (Bacillus thuringiensis) cotton. Although
the United States). These technologies can and Asian conditions. the track record with GM crops is good,
will significantly reduce environmental Nevertheless, GM crops are con- establishing science-based biosafety reg-
pollution, increase crop productivity, troversial, and public acceptance and ulatory systems is essential so that risks
cut production costs, and reduce nitrous safety must be addressed. The public is and benefits can be evaluated on a case-
oxide emissions. To date successful breed- concerned about the ethics of deliber- by- case basis, comparing the potential
ing programs have produced crop variet- ately altering genetic material as well as risks with alternative technologies and
ies, including cassava and maize, that about potential risks to food safety and taking into account the specific trait and
resist a number of pests and diseases, and the environment, and ethical concerns. the agroecological context for using it.
herbicide-tolerant varieties of soybean, After more than 10 years of experience,
Source: Benbrook 2001; FAO 2005; Gruere,
rapeseed, cotton, and maize are available. there has been no documented case of
Mehta-Bhatt, and Sengupta 2008; James
Farmers using insect-resistant GM crops negative human health impacts from GM 2000; James 2007; James 2008; Normile
have reduced the amount of pesticides food crops, yet popular acceptance is still 2006; Phipps and Park 2002; Rosegrant,
they use and the number of active ingre- limited. Environmental risks include the Cline, and Valmonte-Santos 2007; World
dients in the herbicides they apply. possibility of GM plants cross-pollinating Bank 2007c.
156 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
BOX 3.7 Biochar could sequester carbon and increase yields on a vast scale
Scientists investigating some unusually of years, while others suggest that in the need for artificial fertilizers and thus
fertile soils in the Amazon basin found some soils the benefits are far less. Nev- the pollution of rivers and streams. The
that the soil was altered by ancient ertheless, biochar can sequester carbon potential is there. But there are two chal-
charcoal-making processes. The indig- that would otherwise be released into lenges: to demonstrate the chemical
enous people burned wet biomass (crop the atmosphere through burning or properties and to develop mechanisms
residues and manure) at low tempera- decomposition. for application on a large scale.
tures in the almost complete absence of So biochar could have great carbon Research is needed in a number of
oxygen. The product was a charcoal-type mitigation potential. To give an idea of areas, including methodologies to mea-
solid with a very high carbon content, scale, in the United States waste bio- sure biochar’s potential for long-term
called biochar. Scientists have repro- mass from forestry and agriculture, plus carbon sequestration; environmental
duced this process in modern industrial biomass that could be grown on land risk assessment; biochar’s behavior in
settings in several countries. that is currently idle, would provide different soil types; economic viability;
Biochar appears to be highly stable enough material for the United States and the potential benefits in developing
in soil. Studies on the technical and to sequester 30 percent of its fossil fuel countries.
economic viability of the technique are emissions using this technique. Biochar
continuing, with some results indicat- can also increases soil fertility. It binds to Sources: Lehmann 2007a; Lehmann 2007b;
ing that biochar may lock carbon into nutrients and could thus help regener- Sohi and others 2009; Wardle, Nilsson, and
the soil for hundreds or even thousands ate degraded lands as well as reduce Zackrisson 2008; Wolf 2008.
and Latin America may reduce fertilizer use information services necessary for effec-
to reduce both greenhouse gas emissions and tive implementation—a recurring theme
the nutrient runoff that harms aquatic eco- of this chapter.
systems. Changing the rate and timing of fer- Part of achieving the necessary increase
tilizer applications reduces the emissions of in agricultural productivity in the develop-
nitrous oxide from soil microbes. Controlled- ing world, sound fertilizer policy includes
release nitrogen134 improves efficiency (yield measures to make fertilizers affordable to
per unit of nitrogen), but so far it has proved the poor.137 It also includes broader pro-
too expensive for many farmers in develop- grams, such as the Farm Inputs Promo-
ing countries.135 New biological inhibitors tion program in Kenya that works with
that reduce the volatilization of nitrogen local companies and subsidiaries of inter-
could achieve many of the same goals more national seed companies to improve agri-
cheaply. They are likely to be popular with cultural inputs (by formulating fertilizers
farmers because they involve no extra farm using locally available minerals, providing
labor and little change in management.136 improved seed varieties, and distributing
If producers and farmers have incentives to fertilizer in rural areas) and to promote
apply new fertilizer technology and to use sound agronomic practices (correct fer-
fertilizers efficiently, many countries could tilizer placement, soil management, and
maintain agricultural growth even as they effective weed and pest control).
reduce emissions and water pollution.
In Sub- Saharan Africa, by contrast, Produce more and protect better in
natural soil fertility is low, and coun- fisheries and aquaculture
tries cannot avoid using more inorganic Marine ecosystems will have to cope with
fertilizer. Integrated adaptive manage- stresses as least as great as those on land
ment programs with site-specific testing The oceans have absorbed about half the
and monitoring can reduce the risk of anthropogenic emissions released since
overfertilizing. But such programs are 1800,138 and more than 80 percent of the
still rare in most developing countries heat of global warming.139 The result is a
because there has not been enough public warming, acidifying ocean, changing at an
investment in the research, extension, and unprecedented pace with impacts across the
Managing Land and Water to Feed Nine Billion People and Protect Natural Systems 157
aquatic realm (see focus A on the science of Climate change will create new pres-
climate change).140 sures—an expected increase in food prices,
increased demand for fish protein, and the
Ecosystem-based management can help need to protect marine ecosystems—that
coordinate an effective response to fisheries could prompt governments to implement
in crisis. Even without climate change, long-advocated reforms. These include
between 25 and 30 percent of marine fish reducing catch to sustainable levels, and get-
stocks are overexploited, depleted, or ting rid of perverse subsidies, which fuel the
recovering from depletion—and are thus overcapacity of fishing fleets.149 The annual
yielding less than their maximum poten- number of newly built fishing vessels is less
tial. About 50 percent of stocks are fully than 10 percent of the level in the late 1980s,
exploited and producing catches at or close but overcapacity is still a problem.150 The
to their maximum sustainable limits, with global cost of poor governance of marine
no room for further expansion. The pro- capture fisheries is an estimated $50 billion
portion of underexploited or moderately a year.151 Rights-based catch shares can pro-
exploited stocks declined from 40 percent vide individual and community incentives
in the mid-1970s to 20 percent in 2007.141 for sustainable harvests. These schemes can
It may be possible to get more value from grant rights to various forms of dedicated
the fish caught—for example, by reducing access, including community-based fish-
the fish caught unintentionally, estimated ing, as well as impose individual fishing
at one-quarter of the world fish catch.142 quotas.152
It is likely that the maximum potential of
fi sheries in the world’s oceans has been Aquaculture will help meet growing
reached, and only more sustainable prac- demand for food
tices can maintain the productivity of the Fish and shellfish currently supply about
sector.143 8 percent of the world animal protein con-
Ecosystem-based management, which sumed.153 With the world population grow-
considers an entire ecosystem rather than ing by about 78 million people a year,154
a particular species or site and recognizes fish and shellfish production must grow by
humans as integral elements in the sys- about 2.2 million metric tons every year to
tem, can effectively protect the structure, maintain current consumption of 29 kilo-
functioning, and key processes of coastal grams per person each year.155 If capture
and marine ecosystems.144 Policies include fish stocks fail to recover, only aquaculture
coastal management, area-based manage- will be able to fill the future demand.156
ment, marine protected areas, limits on Aquaculture contributed 46 percent of
fishing effort and gear, licensing, zoning, the world’s fish food supply in 2006,157 with
and coastal law enforcement. Managing average annual growth (7 percent) outpac-
marine ecosystems effectively also involves ing population growth over the last decades.
managing activities on land to minimize the Productivity has increased by an order of
eutrophication episodes that stress marine magnitude for some species, driving down
ecosystems, such as coral reefs, in many prices and expanding product markets.158
parts of the world.145 The economic value Developing countries, mostly in the Asia-
of coral reefs can be many times that of the Pacific region, dominate production. Of the
agriculture that caused the problems.146 fish eaten in China, 90 percent comes from
The developing world already has some aquaculture.159
success stories. A program at Danajon Bank Demand for fi sh from aquaculture is
reef in the central Philippines has begun projected to increase (figure 3.8), but cli-
increasing fish biomass over the historical mate change will affect aquaculture opera-
level.147 Indeed, some developing countries tions worldwide. Rising seas, more severe
implement ecosystem-based management storms, and saltwater intrusion in the main
more effectively than many developed river deltas of the tropics will damage aqua-
countries.148 culture, which is based on species with lim-
ited saline tolerance, such as catfish in the
158 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
Figure 3.8 Demand for fish from aquaculture will increase, particularly in Asia and Africa Second, aquaculture can cause environ-
Million tons mental problems. Coastal aquaculture has
35 been responsible for 20 to 50 percent of the
loss of mangroves worldwide;168 further
Aquaculture production in 2003
30
Aquaculture demand in 2020
losses compromise climate resiliency of the
ecosystems and make coastal populations
25
more vulnerable to tropical storms. Aqua-
20 culture also can result in the discharge of
wastes into marine ecosystems that in some
15 areas contributes to eutrophication. New
effluent management techniques—such as
10
recirculation of water,169 better calibration
5 of feed, and integrated and polyculturing in
which complementary organisms are raised
0 together to reduce wastes170 —can lessen the
China Asia and Pacific Europe Latin America and North Africa
the Caribbean America environmental impacts. So can appropriate
aquaculture development in underexploited
Source: De Silva and Soto 2009.
bodies of water, such as rice paddies, irriga-
tion canals, and seasonal ponds. Integrated
Mekong Delta. Higher water temperatures
agriculture-aquaculture schemes promote
in temperate zones may exceed the optimal
recycling of nutrients, so that wastes from
temperature range of cultivated organisms.
aquaculture can become an input (fertil-
And as temperatures rise, diseases affecting
izer) for agriculture and vice-versa, thereby
aquaculture are expected to increase both
optimizing resource use and reducing pol-
in incidence and impact.160
Aquaculture is expected to grow at a lution.171 These systems have diversified
rate of 4.5 percent a year between 2010 and income and provided protein for house-
2030.161 But sustainable growth for the sec- holds in many parts of Asia, Latin America,
tor entails overcoming two major obstacles. and Sub-Saharan Africa.172
First is the extensive use of fish proteins
and oils as fishmeal, which keeps the pres- Building flexible international
sure on capture fisheries.162 The growth in agreements
aquaculture will have to come from spe- Managing natural resources in order to cope
cies not dependent on feed derived from with climate change entails better interna-
fishmeal; today, 40 percent of aquaculture tional collaboration. It also demands more
depends on industrial feeds, much from reliable international food trade so that
marine and coastal ecosystems, which are countries are better placed to cope with
already stressed.163 Plant-based aquacul- climate shocks and reduced agricultural
ture feeds (such as oil-seed-based feed) are potential.
promising,164 and some operations have
completely replaced fishmeal with plant- Countries that share watercourses will
based feeds in the diets of herbivorous and need to agree on how to manage them
omnivorous fish, without compromis- About one-fi fth of the world’s renewable
ing growth or yields.165 The emphasis on freshwater resources cross or form interna-
cultivating herbivorous and omnivorous tional borders, and in some regions, partic-
species—currently about 7 percent of total ularly in developing countries, the share is
production—makes sense for resource far higher. However, only 1 percent of such
efficiency.166 For example, production of waters is covered by any kind of treaty.173
one kilogram of salmon, marine fi nfi sh, Moreover, few of the existing treaties on
or shrimp in aquaculture systems is highly international watercourses encompass all
resource-intensive, requiring between the countries touching the watercourse in
2.5–5 kilograms of wild fish as feed for one question.174 The United Nations Conven-
kilogram of food produced.167 tion on the Law of the Non-Navigational
Managing Land and Water to Feed Nine Billion People and Protect Natural Systems 159
BOX 3.8 Policy makers in Morocco face stark tradeoffs on cereal imports
Morocco, with severe water constraints in rainfed areas, or any combination in had to without climate change. Reduc-
and a growing population, imports half between (orange line). In other words, a ing net imports could only be achieved
its cereals. Even without climate change, robust response to climate change could if Morocco made much higher efficiency
if it wishes to maintain cereal imports at require Morocco to implement technical gains domestically.
no more than 50 percent of demand with- improvements between 100 percent and
out increasing water use, Morocco would 140 percent faster than it would have Source: World Bank, forthcoming a.
have to make technical improvements to
achieve a combination of two options:
either 2 percent more output per unit of
Achieving cereal self-sufficiency without increasing water use in Morocco
water allocated to irrigated cereals or 1
percent more output per unit of land in Technological progress in irrigation efficiency (annual % change)
rainfed areas (blue line in figure). 4.5
Adding in the effects of higher temper- No climate change–50% of
4.0 cereals produced domestically
atures and reduced precipitation makes
the task more challenging: technological 3.5 With climate change–50% of
cereals produced domestically
progress will need to be 22–33 percent
3.0 With climate change–60% of
faster than without climate change cereals produced domestically
(depending on the policy instruments 2.5
selected) (green line in figure). But if the 2.0
country wants more protection against
domestic climate shocks to agriculture 1.5
and against market price shocks and 1.0
decides to increase the share of its con-
sumption produced domestically from 50 0.5
percent to 60 percent, it has to increase 0.0
water efficiency every year by 4 percent 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4
in irrigated agriculture, or by 2.2 percent Technological progress in rainfed yields (annual % change)
for failure of domestic crops.184 Climate exported. The rest is consumed where it is
change will make today’s arid countries grown.188 And only a few countries export
drier, compounding the increased demand grain (map 3.5). In thin markets, small
from growing income and populations. shifts in either supply or demand can make
Therefore, more people will live in regions a big difference in price. Second, per capita
that consistently import a large share of global food stocks were at one of the lowest
their food every year. In addition, more levels on record. Third, as the market for
people will live in countries that experience biofuel increased, some farmers shifted out
shocks to domestic agriculture, as climate of food production, contributing signifi-
change increases the likelihood and sever- cantly to increases in world food prices.
ity of extreme climate events. Several global When countries do not trust interna-
scenarios project a 10–40 percent increase tional markets, they respond to price hikes
in net imports by developing countries as in ways that can make things worse. In 2008
a result of climate change.185 Trade in cere- many countries restricted exports or con-
als is projected to more than double in vol- trolled prices to try to minimize the effects
ume by 2050, and trade in meat products to of higher prices on their own populations,
more than quadruple.186 And most of the including Argentina, India, Kazakhstan,
increased dependence on food imports will Pakistan, Russia, Ukraine, and Vietnam.
come in developing countries.187 India banned exports of rice and pulses,
As the sharp rise of food prices in 2008 and Argentina raised export taxes on beef,
illustrated, the global food market is vola- maize, soybeans, and wheat.189
tile. Why did the prices spike? First, grain Export bans or high export tariffs make
markets are thin: only 18 percent of world the international market smaller and more
wheat and 6 percent of world rice are volatile. For example, export restrictions on
Managing Land and Water to Feed Nine Billion People and Protect Natural Systems 161
Map 3.5 World grain trade depends on exports from a few countries
7.6
33.9
55.5
7.9 56.9
102.2
30.7 52.7
4.3 12.2
4.8
0.1 27.3
17.6 1.1
0.7 20.2
7.92 13.6
11.0
19.7 1.2
27.7 19.4
markets, particularly in countries such as flood warnings can reduce flood damage by
Ethiopia, with high variability in regional up to 35 percent.197 Much of the develop-
rainfall. Increased investments in improv- ing world, particularly in Africa, urgently
ing logistics in the supply chain—roads, needs better monitoring and forecasting
ports, customs facilities, wholesale mar- systems for both weather and hydrological
kets, weighbridges, and warehouses— change (map 3.6). According to the World
would help get more food to consumers at a Meteorological Organization, Africa has
lower price. But institutional infrastructure only one weather station per 26,000 square
is also needed. Transparency, predictability, kilometers—one-eighth the recommended
and honesty in customs and warehousing minimum.198 Data rescue and archiving
are as important as the facilities. will also be important because long records
Importing countries can also invest in of high-quality data are necessary to fully
various parts of the supply chain in pro- understand climate variability. Many of
ducing countries. It may also be possible, the world’s climate datasets contain digital
and indeed less risky, to focus on sup- data back to the 1940s, but only a few have
ply chain infrastructure or agricultural digital archives of all available data before
research and development in the produc- then.199
ing countries.
Better forecasts would improve
International rules to regulate trade will decision making
remain an important part of the picture In Bangladesh the forecasts for precipita-
The World Trade Organization’s Doha tion extend only to one to three days; lon-
Development Agenda sought to eliminate ger forecasts would allow farmers time to
trade barriers and improve market access modify planting, harvesting, and fertilizer
for developing countries. But negotiations applications, especially in rainfed crop-
were suspended in 2008. One study con- ping areas where food crises can last for
cludes there would be a potential loss of many months. There have been significant
at least $1.1 trillion in world trade if world improvements in seasonal climate fore-
leaders fail to conclude the Doha Round.193 casts (how precipitation and temperature
Completing this agreement would be a key over the course of a few months will vary
fi rst step in improving international food from the norm), particularly in the trop-
trade. Key measures include pulling down ics and in areas affected by the El Niño
effective tariff rates and reducing agricul- Southern Oscillation (ENSO).200 The onset
tural subsidies and protection by developed of monsoon rainfall in Indonesia and the
countries.194 Philippines and the number of rainy days
in a season in parts of Africa, Brazil, India,
Reliable information is and Southeast Asia can now be predicted
fundamental for good natural with greater precision.201 ENSO-based sea-
resource management sonal forecasts in South America, South
Asia, and Africa have good potential for
Investments in weather and climate improving agricultural production and
services pay for themselves many times food security.202 For example, in Zimbabwe
over, yet these services are sorely lacking subsistence farmers increased yields (rang-
in the developing world ing from 17 percent in good rainfall years to
Typically the ratio of the economic benefits 3 percent in poor rainfall years) when they
to the costs of national meteorological ser- used seasonal forecasts to modify the tim-
vices is in the range of 5–10 to 1,195 and a ing or variety of the crops planted.203
2006 estimate suggests it could be 69 to 1 in
China.196 Weather and climate services can New remote-sensing and monitoring
ameliorate the impacts of extreme events to technologies hold great promise for
some degree (see chapters 2 and 7). Accord- sustainability
ing to the United Nations International One reason that policy makers have found
Strategy for Disaster Reduction, advance it so difficult to curb the overexploitation of
Managing Land and Water to Feed Nine Billion People and Protect Natural Systems 163
Map 3.6 Developed countries have more data collection points and longer time series of water monitoring data
Coverage period
(in years)
0–25
26–50
51–75
76–100
>100
Source: Dataset for global distribution and time series coverage was provided by the Global Runoff Data Center.
Note: The map shows the discharge monitoring stations that provide information on river runoff.
land and water and their related ecosystems ments in irrigation water-saving techniques,
is that neither the managers nor the users difficult in the past (figure 3.9).
of the resources have accurate and timely Until recently, measuring groundwa-
information. They don’t know how much of ter consumption was difficult and expen-
the resource is present, how much is being sive in all countries, and it simply was
used, or how their actions will affect quan- not done in many developing countries.
tities in the future. But new remote-sensing Taking inventories of hundreds of thou-
technologies are beginning to fi ll some of sands of private wells and installing and
that gap, informing decisions about more reading meters was too costly. But new
efficient allocations of water and helping remote-sensing technology can measure
with enforcement of water limits. total evaporation and transpiration from
One of the most promising applications a geographic area. If the surface water
of remote sensing measures water’s pro- applied to that area through precipitation
ductivity.204 When thermal images from and surface-water irrigation deliveries is
satellites are combined with field data on known, the net consumption of ground-
crop types and linked to maps from geo- water can be imputed.205 Various countries
graphic information systems, scientists can are experimenting with using information
measure yields on any geographic scale from new remote-sensing technologies to
(the farm, the basin, or the country). That enforce groundwater limits, including
allows water managers to make better deci- those Moroccan farmers who are consider-
sions about water allocations and to target ing converting to drip irrigation (discussed
advisory services to the farmers with low- at the beginning of the chapter). Options
est water productivity. It also guides impor- for enforcement include pumps that shut
tant investment decisions—say, between off automatically when the farmer exceeds
increasing the productivity of rainfed or the evapotranspiration limit and systems
irrigated agriculture. And it can help man- that simultaneously send text messages
agers measure the actual results of invest- to farmers’ cell phones, warning them
164 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
Figure 3.9 Remote-sensing techniques are used in the vineyards of Worcester (West Cape, primary productivity. They can even map
South Africa) to gauge water productivity
the spread of individual invasive plant spe-
cies.208 The scales vary, as does the tim-
ing of updates. But rapid advances allow
Liters of
managers to measure with a precision and
water per regularity undreamed of only a few years
liter of ago. Depending on the satellite and weather
wine
conditions, the data can be available daily
or even every 15 minutes.
150
procurement cost and improve the quality government agencies and overcome broader
of soybeans that it received from farmers. governance issues. They can also be tools for
The eChoupals are village Internet kiosks governments, working with communities,
run by local entrepreneurs who provide to change user behavior. The Hai basin, the
price information on soybean futures to most water-scarce in China, is extremely
farmers and enable them to sell their pro- important for agriculture. Together with
duce directly to ITC, bypassing the middle- two neighboring basins, it produces half
men and wholesale market yards (mandis). of China’s wheat. Water resources in the
Through the eChoupals ITC spends less per Hai basin are polluted, wetland ecosystems
ton of produce, and farmers immediately threatened, and groundwater severely over-
know the price they will receive, reducing exploited. Every year the basin uses 25 per-
waste and inefficiency. The payback period cent more groundwater than it receives as
for the initial capital cost of developing the precipitation.215
kiosks is about four to six years.212 In this same basin, the Chinese gov-
A project sponsored by the UN’s Food ernment worked with 300,000 farmers to
and Agriculture Organization in Andhra innovate in water management. This ini-
Pradesh, India, has dramatically reduced tiative focused on reducing overall water
the overexploitation of aquifers. It used consumption rather than simply increas-
low-tech and low-cost approaches to enable ing water productivity. It combined invest-
communities to assess the state of their ments in irrigation infrastructure with
own resources. Rather than use expensive advisory services to help optimize soil
equipment and specialist hydrogeologists, water. It limited the use of aquifer water.
the project brought in sociologists and psy- It introduced new institutional arrange-
chologists to assess how best to motivate ments, such as transferring responsibility
the villagers to cut current water consump- for managing irrigation services to groups
tion. It created “barefoot hydrogeologists,” of farmers and improving cost-recovery for
to teach local people about the aquifer that surface water irrigation. And it used the lat-
sustained their livelihoods (figure 3.10). est monitoring techniques, by measuring
These non-specialist, often illiterate, farm- water productivity and groundwater con-
ers are generating such good data that they sumption at the plot level with satellite data,
even sell it to the government hydrogeologi- combined with more traditional agronomic
cal services. Through this project, aware- services. The monitoring provides real-time
ness of the impacts of their actions, social
regulation, and information about new Figure 3.10 In Andhra Pradesh, India, farmers
crop varieties and techniques led the vil- generate their own hydrological data, using very
lagers to agree to change crops and adopt simple devices and tools, to regulate withdrawals
from aquifers
practices to reduce evaporative losses.
With almost 1 million farmers, the proj-
ect is entirely self-regulating, and there
are no financial incentives or penalties for
noncompliance. Participating villages have
reduced withdrawals, while withdraw-
als from neighboring villages continue to
increase. For an undertaking of this scale,
the cost is remarkably low—$2,000 a year
for each of the 65 villages.213 It has great
potential for replication, but principally in
the hard-rock aquifers that empty and refill
quickly and that do not have vast lower layers
Source: Bank staff.
common in other geological formations.214 Note: Armed with information, each farmer sets his or her
These initiatives to encourage users to own limit for how much water to safely extract each growing
season. Technical assistance helps them get higher returns
reduce overexploitation of natural resources for the water they use by managing soil water better, switch-
can reduce dependence on overstretched ing crops, and adopting different crop varieties.
166 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
information to policy makers and farmers have frustrated societies for decades in the
so that they can adjust their practices, and past. But circumstances are changing in
detect noncompliance.216 ways that might accelerate progress.
The results have been impressive. Farm-
ers increased their incomes while reducing Pricing carbon, food, and energy
water consumption by switching to higher- could be the springboard
value crops. Cash crop production tripled, This chapter suggests many new approaches
farm incomes increased up to fivefold in to help developing countries cope with the
many areas, and agricultural production additional stress that climate change will
per unit of water consumed increased put on efforts to manage land and water
60–80 percent. Total water use in the area resources well. It emphasizes repeatedly
fell by 17 percent, with the rate of ground- that new technologies and new invest-
water depletion at 0.02 meters a year, com- ments will bear fruit only in a context of
pared with 0.41 meters a year outside the strong institutions and sensible policies—
project areas. when the “fundamentals” are right. Yet
In summary, technologies and tools the fundamentals are not right in many of
exist or are being developed to help farm- the world’s poorest countries. And getting
ers and other resource managers manage them right—building strong institutions,
water, land, farms, and fisheries. In an ideal changing subsidy regimes, changing the
world the right people would have access to way valuable commodities are allocated—
these technologies and tools. But they will is a long-term process even in the best of
be effective only with the right policies and circumstances.
infrastructure. This ideal world is repre- To compound the problems, many of
sented pictorially in figures 3.11 and 3.12. the responses this chapter proposes to
Many of the steps toward this ideal world help countries improve land and water
Figure 3.11 An ideal climate-smart agricultural landscape of the future would enable farmers to use new technologies and techniques to maximize
yields and allow land managers to protect natural systems, with natural habitats integrated into agriculturally productive landscapes
Rangeland Remote sensing systems
with hardy varieties of livestock • measure species movement
• monitor safe extraction of water
• provide early warning for floods,
Physical monitoring systems droughts and landslides
• measure available water • detect deforestation
• provide flood and other natural
disaster warnings Original forest ecosystem
• investors receive income based on
Traditional communities carbon stored in soil and biomass
self regulate groundwater and grazing • indigenous communities receive
in response to carbon credit income for verifying that deforestation
incentives: farmers use soil and water Commercial is avoided and biodiversity preserved
conservation techniques; plant natural forestry • planned reserves to allow species
windbreaks; establish buffer zones movement in response to changing
and fallow land to provide habitats for climate
biodiversity
Farmer receives SMS messages from
Conveyance remote sensing system with alerts
to direct stormwater to recharge aquifers about excess water consumption,
crop water stress, etc.
Research station
finds new ways to adapt crops and Tea plantation
management techniques to new pays forest conservation fund for
climatic conditions pollination and soil preservation
services provided by the forest
Conservation tillage and
intercropping Private and public advisory services
used to grow rain-fed crops help farmers adopt new agronomic
Biochar made from crop residue developments
sequesters carbon and fertilizes the soil Skilled employees
store, process and pack products
Pump accesses groundwater for dry for direct contracts with markets
years and automatically shuts off when
safe extraction is exceeded Carbon credits encourage farmers
to intersperse crops with trees
Planned reserves that provide habitat biodiversity
to allow species movement in response Drip irrigation
to climate change Water monitors
measure soil moisture
Figure 3.12 An ideal climate-smart landscape of the future would use flexible technology to buffer against climate shocks through natural
infrastructure, built infrastructure, and market mechanisms
City Dam
built away from the flood plain • provides energy, irrigation, and
• distributed energy system drought and flood protection
including renewables • re-engineered to cope with
• planned for low-carbon transport extreme rainfall and minimize
• buildings use low environmental- environmental damage
impact materials
• road materials and drainage
designed for increased Upgraded port and customs facility
temperatures and severe storms to facilitate international trade
management in the face of climate change encroach on natural habitats. Second, a car-
require farmers, many of them among the bon price applied to carbon in the landscape,
world’s poorest, to change their practices. may encourage landowners to conserve natu-
It also requires people operating beyond ral resources. If implementation difficulties
the law (illegal loggers, illegal miners) and could be overcome, this would buy down the
wealthy, influential people (including prop- risk to farmers of adopting new practices. It
erty developers) to stop practices that have might also give landowners the right incen-
brought them extreme profits. This chapter tives to protect natural systems. Third, if the
is proposing accelerating actions that have world’s $258 billion a year in agricultural
at best seen slow progress in the past few subsidies were even partially redirected to
decades. Is it realistic to expect change on a carbon sequestration and biodiversity conser-
sufficient scale to really tackle the challenge vation, it would demonstrate the techniques
climate change confronts us with? and approaches outlined in this chapter on
Three new factors might provide the stim- the necessary scale.
ulus for change and overcome some of the
barriers that have hampered these improve- Rising energy, water, and agricultural
ments in the past. First, climate change is prices could spur innovation and
expected to increase the price of energy, investment in increasing productivity
water, and land and thus of food and other A combination of factors will drive up food
agricultural commodities. That will increase prices in the next few decades. They include
the pace of innovation and accelerate the increased demand for food from growing
adoption of practices that increase produc- and increasingly rich populations. They
tivity. Of course higher prices will also make also include increased production of bio-
it more profitable to overexploit resources or fuels, which could result in competition for
168 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
agricultural land and water. Furthermore, Food prices are expected to be higher
it will become more difficult to grow food and more volatile in the long run. Modeling
because of climate change. And as chapter 4 for the IAASTD projected that maize, rice,
shows, climate change policies are likely to soybean, and wheat prices will increase by
drive up energy prices.217 60–97 percent between 2000 and 2050 under
Higher electricity prices mean higher business as usual, and prices for beef, pork,
water prices when water is pumped. In those and poultry, by 31–39 percent.219 Other sim-
cases, efficient water allocation mechanisms ulations of the world food system also show
will become more important, as will efforts that climate-induced shortfalls of cereals
to reduce leaks from any poorly maintained increase food prices.220 In most estimates,
water transfer and distribution networks. cereal prices are projected to increase, even
Higher energy prices also increase the cost if farmers adapt.221 By 2080 different scenar-
to the government of subsidizing water ios project that world food prices will have
services. This could increase incentives for increased by around 7–20 percent with CO2
long-needed reform of water management fertilization and by around 40–350 percent
policies and investments.218 And because without (figure 3.13).222
fertilizers are a petroleum-based product, Poor people, who spend up to 80 percent
higher oil prices will encourage more judi- of their money on food, probably will be
cious use. hardest hit by the higher food prices. The
higher prices associated with climate change
risk reversing progress in food security in
Figure 3.13 Global cereal prices are expected to several low-income countries. Although
increase 50 to 100 percent by 2050 scenario results differ, nearly all agree that
Cereal price increase without CO2 climate change will put more people at risk
fertilization (percentage change) of hunger in poorer nations, with the largest
400 increases in South Asia and Africa.223
2020 Like energy prices, high food prices
2050 have profound effects on the potential
350 2080
adjustments in land and water use stem-
ming from climate change. Investments in
300
agriculture, land, and water become more
profitable for farmers as well as the public
250 and private sectors. Private agricultural
companies, international aid donors, inter-
200
national development banks, and national
governments can see and act on the higher
international prices fairly quickly. But the
150 transmission of increases in international
food prices to farmers is imperfect, as
100 shown in the 2007–08 food price crisis. For
example, farmers in most of Sub-Saharan
Africa saw higher food prices only after
50
some lag, and the transmission of higher
prices was slower and less complete than in
0 most of Asia and Latin America.224
A2a B2a The better the quality of rural infra-
Scenario
structure, the more farmers benefit from
Source: Parry and others 2004.
higher international prices. High food
Note: The IPCC SRES A2 family of emission scenarios
describes a world where population continues to grow, and prices can spur land conversion to crops
the trends of per capita income growth and technological and livestock, with negative impacts on
change vary between regions and are slower than in other
story lines. The B2 scenario family describes a world where ecosystems. But they can also induce sig-
global population grows at a rate lower than in A2, economic nificant new investments in agricultural
development is intermediate, and technological change is
moderate. research, irrigation development, and rural
Managing Land and Water to Feed Nine Billion People and Protect Natural Systems 169
Figure 3.14 A carbon tax applied to emissions from agriculture and land-use change would encourage protection of natural resources.
a. Share of global land area if carbon tax applied to emissions b. Share of global land area if carbon
from both energy and land-use change tax applied only to energy
Share of total (%) Share of total (%)
Urban land Urban land
100 100
Desert Desert
Bioenergy crops
Managed forests Managed forests
40 Grassland 40 Grassland
annual changes are usually small relative to In the meantime, programs could use con-
existing stocks. And the sequestration pla- servative estimates of sequestration across
teaus quickly. Carbon accumulation in soil soil types and focus on regions where there is
saturates after about 15–30 years, depend- more certainty about soil carbon stocks and
ing on the type of agriculture, and few flows (such as the more productive agricul-
emission reductions would occur after that tural areas). Moreover, no carbon sequestra-
time.232 Furthermore, no-till agriculture tion technique (such as conservation tillage)
in heavy clay soils can result in releases of is a panacea in every cropping system and
nitrous oxide—a powerful greenhouse gas. across every soil type.
These emissions would more than outweigh A model for such a system may be the
the carbon storage benefits of adopting the Conservation Reserve Program adminis-
new techniques over the first five years. No- tered by the U.S. Department of Agricul-
till may therefore not be a good greenhouse ture on nearly 14 million hectares of land
gas emission reduction technique in some since 1986.235 This voluntary program was
soils.233 But it is possible, based on existing initially established to reduce soil erosion,
data and modeling, to broadly estimate car- with landowners and agricultural pro-
bon sequestration per agricultural practice ducers entering contracts to retire highly
for agroecological and climatic zones. More- erodible and environmentally sensitive
over, cost-effective techniques for measuring cropland and pasture from production for
soil carbon in the field (using lasers, ground- 10–15 years in return for payments. Over
penetrating radar, and gamma ray spectros- time the program expanded its objective to
copy) now allow for faster measurement of include the conservation of wildlife habi-
carbon sequestration and the updating of tat and water quality, and the payments
model estimates at smaller spatial scales.234 are based on an aggregate Environmental
Managing Land and Water to Feed Nine Billion People and Protect Natural Systems 171
Benefits Index of the parcel and of the management. For agricultural carbon
specific activity (such as riparian buffers trading, the exchange requires that mem-
and shelterbelts). The actual environmen- bers place 20 percent of all earned offsets in
tal benefits of each parcel are not directly a reserve to insure against possible future
measured but rather estimated based on reversals. The Exchange shows that simpli-
activities, and a similar activity-based fied rules and modern monitoring tech-
system could apply to agricultural carbon niques can overcome technical barriers.
sequestration.236 However, some critics claim that “addi-
The second practical step involves devel- tionality” has not been fully assessed: the
oping “aggregators”—typically private net emission reductions may not be greater
or nongovernmental organizations that than they would have been in the absence
reduce transaction costs of the activities by of a market.
integrating them over multiple smallholder In the near term the voluntary market
farmers, forest dwellers, and pastoralists. incubates methods for agricultural and
Without them the market will tend to favor landscape-level sequestration. But for these
large reforestation projects, because the measures to really expand in this direction,
land of the average individual smallholder the market for them will need to be linked
farmer in the developing world cannot to the future global compliance market.
sequester very large amounts. Scaling up The economies of scale that landscape-level
spatially will also reduce concerns related sequestration promises will be more readily
to the uncertainty and impermanence of accessed if there are no divisions separating
the carbon stock. Adopting an actuarial sequestration in agriculture and forestry.
approach, pooling across a portfolio of Because carbon sequestration activities
projects, and applying conservative esti- tend to have a positive impact on soil and
mates could make soil carbon sequestration water management as well as on yields,241
fully equivalent to CO2 reductions in other the most important aspect of carbon
sectors.237 finance applied to soil management may be
Third, the up-front costs for carbon- to serve as a “lever” to execute the sustain-
sequestering management practices must able agricultural practices that also have
be addressed. Adopting new practices is many other benefits. From 1945 to 1990
risky, especially for poor farmers.238 Car- soil degradation in Africa reduced agricul-
bon finance is typically delivered only after tural productivity by an estimated 25 per-
the farmers have actually reduced emissions cent.242 And about 86 percent of the land in
(as in pilot projects in Kenya described in Sub-Saharan Africa is moisture-stressed.243
box 3.9). But the promise of future carbon Effective carbon finance mechanisms would
finance can be used to make up-front pay- help reduce the rate of land degradation. A
ments to buy down farmers’ risks either as soil compliance carbon market holds great
collateral for loans, or by having investors potential for helping to achieve the neces-
make some of the payments up front. sary balance between intensifying produc-
Fourth, farmers need to know about tivity, protecting natural resources, and
their options. This will involve better agri- simultaneously helping rural development
cultural advisory services in the develop- in some of the world’s poorest communi-
ing world. Agricultural extension services ties. Such a market is not yet ready. Techni-
are good investments: the average rate of cal issues regarding verification, scale, and
return globally is 85 percent.239 Companies time frame remain to be solved. The United
or organizations that can measure or verify Nations Framework Convention on Cli-
results will also be required. mate Change proposes a phased approach
The Chicago Climate Exchange, one starting with capacity building and finan-
subset of the voluntary market, shows cial support. The first phase would demon-
the possible benefits of trading the car- strate techniques, monitoring approaches,
bon sequestration from landscape-related and fi nancing mechanisms. In the second
activities.240 It allows emitters to receive phase soil carbon techniques would be
carbon credits for continuous conservation incorporated into the broader compliance
tillage, grassland planting, and rangeland carbon market.244
172 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
strengthening policies and institutions, and how the new techniques can be adopted on
investing in infrastructure. The expected a large scale, and they can be used to make
increase in prices of agricultural produc- individual actions fit better with the needs
tion will give farmers and other resource of the landscape as a whole. Finally, they can
users an incentive to innovate and invest. attract the ingenuity and creativity needed
But the increased profitability will also to achieve the delicate balancing act of feed-
increase incentives to overexploit resources. ing the world of nine billion people, reducing
Protection needs the same increase in effort greenhouse gas emissions, and protecting
as production. the natural resource base.
A number of tools, techniques, and
approaches exist that can help users protect Notes
natural resources better. But users often 1. See for example Lotze-Campen and others
do not have the right incentives to apply 2009.
them. There are disparities in space and in 2. IPCC 2007b.
time. What is best for a farmer is not best 3. OECD 2008.
for the whole landscape or watershed. What 4. Burke and Brown 2008; Burke, Brown, and
is optimal over a short time period is not Christidis 2006.
optimal over decades. Doing things differ- 5. Milly and others 2008; Barnett, Adam, and
ently also involves asking poor farmers and Lettenmaier 2005.
rural dwellers to take risks they may not be 6. de la Torre, Fajnzylber, and Nash 2008.
7. World Water Assessment Programme 2009.
willing to take.
8. Perry and others, forthcoming.
Governments and public organizations 9. World Water Assessment Programme 2009.
can take three types of actions to make the 10. World Bank, forthcoming d.
incentives for resource users more climate- 11. World Bank, forthcoming d.
smart. First, they can provide information 12. Molden 2007.
so that people can make informed choices 13. Milly and others 2008; Ritchie 2008; Young
and can enforce cooperative agreements. and McColl 2005.
This can be high-tech information. It can 14. As the public trustee of the nation’s water
also be information that communities them- resources, the national government, acting through
selves gather. Second, they can set a price for the minister of water affairs, must ensure that water
retaining or storing carbon in the soil. Done is protected, used, developed, conserved, managed,
and controlled in a sustainable and equitable man-
right, this will reduce the risks to farm-
ner, for the benefit of all persons and in accordance
ers of adopting new practices. It will also with its constitutional mandate. Salman M. A. Sal-
help resource users consider a longer time man, World Bank Staff, personal communication,
horizon in their decisions. Third, they can July 2009.
redirect agricultural subsidies, particularly 15. Dye and Versfeld 2007.
in rich countries, so that they encourage 16. Bates and others 2008.
climate-smart rural development practices. 17. Molle and Berkoff 2007.
These subsidies can be transformed to show 18. Molle and Berkoff 2007; OECD 2009.
19. Olmstead, Hanemann, and Stavins 2007. as well as trees, should benefit more than the
20. Molle and Berkoff 2007. C4 crops, such as maize, millet, and sorghum.
21. Asad and others 1999. However, recent field experiments indicate that
22. Bosworth and others 2002. past laboratory tests have overstated the posi-
23. See Murray Darling Basin Agreement tive effect. For example, one study indicates
Schedule E, http://www.mdbc.gov.au/about/the_ that at CO2 concentrations of 550 parts per mil-
mdbc_agreement. lion, yield increases amounted to 13 percent for
24. Molle and Berkoff 2007. wheat, not 31 percent; 14 percent for soybeans,
25. Rosegrant and Binswanger 1994. not 32 percent; and 0 percent, not 18 percent, for
26. World Bank 2007b. C4 crops. Cline 2007. For this reason, the graph-
27. Bates and others 2008; Molden 2007. ics in this chapter show only yields without CO2
28. Young and McColl 2005. fertilization.
29. http://www.environment.gov.au/water/mdb/ 55. Easterling and others 2007.
overallocation.html (accessed May 7, 2009). 56. EBRD and FAO 2008.
30. Molden 2007. 57. Fay, Block, and Ebinger 2010.
31. World Bank, forthcoming b. 58. A food production shortfall is a situa-
32. World Bank, forthcoming b. tion in which the weather makes annual poten-
33. World Bank, forthcoming b. tial production of the most important crops in
34. Bhatia and others 2008. an administrative region less than 50 percent
35. Strzepek and others 2004. of the region’s average production level during
36. World Commission on Dams 2000. For 1961–1990. The greater likelihood of shortfalls
discussion of the impacts of the High Dam at occurring in more than one region in a given
Aswan on soil fertility and coastlines in the Nile year may reduce the potential for exports from
Delta, see Ritchie 2008. other regions to compensate for food produc-
37. World Water Assessment Programme 2009. tion deficiencies, thus leading to food security
38. Danfoss Group Global. http://www.danfoss concerns. Alcamo and others 2007.
.com/Solutions/Reverse+Osmosis/Case+stories 59. Easterling and others 2007.
.htm (accessed May 9, 2009). 60. Cline 2007. The high-emission scenario is
39. FAO 2004b. the IPCC’s SRES A2 scenario, which, over a range
40. Desalination is also viable for high-value of models, leads to a mean temperature increase
agriculture in some parts of the world, such as of 3.13°C from 2080 to 2099 relative to 1980–99.
Spain. Gobierno de España 2009. Meehl and others 2007.
41. World Water Assessment Programme 2009. 61. Lobell and others 2008.
42. Molden 2007. 62. Schmidhuber and Tubiello 2007.
43. Molden 2007. 63. Based on five climate models and the high-
44. Molden 2007. emission SRES A2 scenario. Fischer and others
45. Rosegrant, Cai, and Cline 2002. 2005.
46. For example, see the reference to the 64. Calculation based on FAO 2009c.
Indian Financial Express on December 1 2008, 65. IPCC 2007a.
cited in Perry and others, forthcoming. 66. Emissions come from converting unman-
47. De Fraiture and Perry 2007; Molden 2007; aged land to agriculture, and from soil erosion.
Ward and Pulido-Velazquez 2008. 67. van der Werf and others 2008.
48. Perry and others, forthcoming. 68. Steinfeld and others 2006.
49. Moller and others 2004; Perry and others, 69. This 18 percent sums the estimated contri-
forthcoming. bution of livestock production to emissions across
50. Perry and others, forthcoming. several categories, such as land use, land-use
51. www.fieldlook.com (accessed May 5, 2009). change, and forestry, to get the total contribution
52. Perry and others, forthcoming. of livestock. It comprises livestock greenhouse
53. World Bank, forthcoming c. gas emissions from land-use change (36 percent);
54. Carbon dioxide (CO2) is an input in manure management (31 percent); direct emis-
photosynthesis, the process by which plants use sion by animals (25 percent); feed production
sunlight to produce carbohydrates. Thus, higher (7 percent); and processing and transport (1 per-
CO2 concentrations will have a positive effect on cent). Steinfeld and others 2006.
many crops, enhancing biomass accumulation 70. IEA 2006. This estimate assumes that cur-
and final yield. In addition, higher CO2 concen- rent trade restrictions are maintained. If those
trations reduce plant stomatal openings—the restrictions change, particularly those that restrict
pores through which plants transpire, or release imports of biofuels into the United States, there
water—and thus reduce water loss. The so-called could be a large regional shift in production.
C3 crops, such as rice, wheat, soybeans, legumes, 71. Gurgel, Reilly, and Paltsev 2008.
Managing Land and Water to Feed Nine Billion People and Protect Natural Systems 175
72. NRC 2007; Tilman, Hill, and Lehman 95. Ziska and McClung 2008.
2006. 96. UNEP-WCMC 2008. In the oceans the
73. Beckett and Oltjen 1993. share of total area under protection is even more
74. Hoekstra and Chapagain 2007. Pimen- paltry. Approximately 2.58 million square kilo-
tel and others (2004) give an estimate of 43,000 meters, or 0.65 percent of the world’s oceans
liters per kilogram of beef. and 1.6 percent of the total marine area within
75. Peden, Tadesse, and Mammo 2004. In this Exclusive Economic Zones, are marine protected
system one head of cattle consumes 25 liters of areas. Laffoley 2008.
water a day over a two-year period to produce 125 97. Gaston and others 2008.
kilograms of dressed weight and consumes crop 98. Hannah and others 2007.
residues for which no additional water input is 99. Dudley and Stolton 1999.
required. 100. Struhsaker, Struhsaker, and Siex 2005.
76. Williams, Audsley, and Sandars 2006. 101. Scherr and McNeely 2008; McNeely and
Moreover, some sources give higher emission Scherr 2003.
estimates for meat production—up to 30 kilo- 102. van Buskirk and Willi 2004.
gram of CO2e per kilogram of beef produced, 103. McNeely and Scherr 2008.
for example (Carlsson-Kanyama and Gonzales 104. Chan and Daily 2008.
2009). 105. Leguminous trees contain symbiotic
77. Randolph and others 2007; Rivera and bacterial nodules that fix atmospheric nitro-
others 2003. gen thereby enhancing the nutrients load in the
78. Delgado and others 1999; Rosegrant and plants and in the soil.
others 2001; Rosegrant, Fernandez, and Sinha 106. McNeely and Scherr 2003.
2009; Thornton 2009; World Bank 2008e. 107. Ricketts and others 2008.
79. One study projects that total “good” and 108. Klein and others 2007.
“prime” agricultural land available will remain 119. Lin, Perfecto, and Vandermeer 2008.
virtually unchanged at 2.6 billion and 2 billion 110. World Bank 2008a.
hectares, respectively, in 2080 compared with the 111. World Bank 2008a.
average during 1961–1990 (based on the Hadley 112. Of the $6 billion spent annually on land
Centre HadCM3 climate model and assuming the trusts and conservation easements, a third is in
very high emission scenario, SRES A1F1). Fischer, the developing world. Scherr and McNeely 2008.
Shah, and van Velthuizen 2002; Parry and others 113. A typical system of zoning for conser-
2004. vation allows development in some areas and
80. Lotze-Campen and others 2009. limits it in conservation areas. Tradable develop-
81. Cassman 1999; Cassman and others 2003. ment rights are an alternative to pure zoning that
82. Calculated from FAO 2009c. allows for substitutability between areas in meet-
83. Diaz and Rosenberg 2008. ing conservation goals and provides incentives for
84. Schoups and others 2005. compliance. Some landowners agree to limits on
85. Delgado and others 1999. development—that is, restrictions on their prop-
86. Hazell 2003. erty rights—in return for payments. For instance,
87. Hazell 2003; Rosegrant and Hazell 2000. a government law may prescribe that 20 percent
88. Pingali and Rosegrant 2001. of each private property be maintained as natural
89. Reardon and others 1998. forest. Landowners would be permitted to defor-
90. Rosegrant and Hazell 2000. est beyond the 20 percent threshold only if they
91. Rosegrant and Hazell 2000. purchase from other landowners who keep more
92. One form of specialized agricultural prod- than 20 percent of their property forested and sell
ucts is known as functional foods. These are the development rights of this “surplus” forest,
products in food or drink form that influence which is irreversibly placed under forest reserve
functions in the body and thereby offer benefits status. Chomitz 2004.
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4
Energizing Development without
Compromising the Climate
W
ith the global economy requires a dramatic shift in the energy mix
set to quadruple by mid- from fossil fuels to renewable energy and pos-
century, energy- related sibly nuclear power, along with widespread
carbon dioxide (CO2) emis- use of carbon capture and storage (CCS).
sions would, on current trends, more than This, in turn, requires major cost reductions
double, putting the world onto a poten- in and widespread diffusion of renewable
tially catastrophic trajectory that could lead energy technologies, safeguards for contain-
to temperatures more than 5°C warmer ment of nuclear waste and weapons prolif-
than in preindustrial times. That trajectory eration, and breakthroughs in technologies
is not inevitable. With concerted global from batteries to carbon capture and storage.
action to adopt the right policies and low- And it also requires fundamental shifts in
carbon technologies, the means exist to economic development and lifestyles. If even
shift to a more sustainable trajectory that one of these requirements is not met, keep-
limits warming to close to 2°C. In the pro- ing temperature increases close to 2°C above
cess, there is an opportunity to produce preindustrial levels may be impossible.
enormous benefits for economic and social In order to limit warming to 2°C, global
development through energy savings, bet- emissions would have to peak no later than
ter public health, enhanced energy security, 2020 and then decline by 50–80 percent
and job creation. from today’s levels by 2050, with further
Such a sustainable energy path requires reductions continuing to 2100 and beyond.
immediate action by all countries to become Delaying actions by 10 years would make
much more energy efficient and achieve sig- it impossible to reach this goal. The inertia
nificantly lower carbon intensity. The path in energy capital stocks means that invest-
ments over the next decade will largely
determine emissions through 2050 and
beyond. Delays would lock the world into
Key messages high-carbon infrastructure, later requiring
Solving the climate change problem requires immediate action in all countries and a fundamen- costly retrofitting and premature scrapping
tal transformation of energy systems—significant improvement in energy efficiency, a dramatic of existing capital stocks.
shift toward renewable energy and possibly nuclear power, and widespread use of advanced Governments should not use the current
technologies to capture and store carbon emissions. Developed countries must lead the way and financial crisis as an excuse to delay climate
drastically cut their own emissions by as much as 80 percent by 2050, bring new technologies to change actions. The future climate crisis is
market, and help finance developing countries’ transition onto clean energy paths. But it is also likely to be far more damaging to the world
in developing countries’ interests to act now to avoid locking into high-carbon infrastructure.
economy. The economic downturn may
Many changes—such as removing distortionary price signals and increasing energy efficiency—
delay business-as-usual growth in emissions
are good both for development and the environment.
by a few years, but it is unlikely to funda-
mentally change that path over the long
190 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
term. Instead, the downturn offers oppor- low- to zero-emission fuels for power gen-
tunities for governments to direct stimu- eration—particularly renewable energy.
lus investment toward efficient and clean Many of these technologies are commer-
energy to meet the twin goals of revitalizing cially available today, have benefits for
economic growth and mitigating climate development, and can be deployed much
change (box 4.1). more widely under the right policy frame-
Governments can adopt climate-smart works. Scaling them up requires putting a
domestic policies now to deploy existing price on carbon and providing fi nancial
low-carbon technologies while a global cli- incentives to deploy low- carbon technol-
mate deal is negotiated. Energy efficiency ogies. Large-scale deployment will help
is the largest and lowest- cost source of reduce their costs and make them more
emission reductions and is fully justified competitive.
by development benefits and future energy But these win-wins, good for both devel-
savings. The potential is huge on both the opment and climate change, are simply not
energy supply side (as in the burning of coal, enough to stay on a 2°C trajectory. Not-
oil, and gas and the production, transmis- yet-proven advanced technologies, such
sion, and distribution of electricity) and on as carbon capture and storage, are needed
the demand side (use of energy in buildings, urgently and on a large scale. Accelerating
transport, and manufacturing). But the fact their widespread availability and use will
that so much efficiency potential remains require greatly enhanced research, develop-
untapped suggests that it is not easily real- ment, and demonstration as well as tech-
ized. Achieving significant energy savings nology sharing and transfer.
requires price increases and the removal of An economywide, market-based mech-
fossil-fuel subsidies as well as a concerted anism, such as a carbon cap-and-trade
strategy to tackle market failures and non- program or a carbon tax (see chapter 6),
market barriers with effective regulations, is essential to unleash robust private sec-
fi nancial incentives, institutional reforms, tor investment and innovation to achieve
and financing mechanisms. deep emission cuts at least cost. Within
The second-largest source of potential governments, coordinated and integrated
emission reductions comes from use of approaches are needed to achieve low-
carbon economies while minimizing the
risks of social and economic disruptions.
Developed countries must take the lead
BOX 4.1 The financial crisis offers an opportunity for
in committing to deep emission cuts, pric-
efficient and clean energy ing carbon, and developing advanced tech-
The financial crisis brings both chal- change action, for it offers oppor- nologies. That is the surest way to trigger
lenges and opportunities to clean tunities to shift to a low- carbon development of the needed technologies
energy. Sharply falling fossil-fuel economy (see chapter 1). First, and ensure their availability at a competi-
prices discourage energy conserva- stimulus investments in energy effi - tive price. But unless developing countries
tion and make renewable energy ciency, renewable energy, and mass also start transforming their energy systems
less competitive. The weak macro- transit can create jobs and build an
as they grow, limiting warming to close to
economic environment and tight economy’s productive capacity.b
credit have led to lower demand and Second, falling energy prices provide
2°C above preindustrial levels will not be
declining investment, and renew- a unique opportunity to implement achievable. That transformation requires
able energy is hard hit because of its programs to eliminate fossil-fuel transfers of substantial fi nancial resources
capital-intensive nature (renewable subsidies in emerging economies and low-carbon technologies from devel-
energy is characterized by high up- and adopt fuel taxes in advanced oped to developing countries.
front capital costs but low operating economies in ways that are politi- Energy mitigation paths, and the mix
and fuel costs). By the final quarter cally and socially acceptable.
of policies and technologies necessary to
of 2008 clean energy investments
dropped by more than half from their
reach them, differ among high-, middle-,
peak at the end of 2007.a Sources: WDR team based on and low-income countries, depending
Yet the financial crisis should a. World Economic Forum 2009. on their economic structures, resource
not be an excuse to delay climate- b. Bowen and others 2009. endowments, and institutional and techni-
cal capabilities. A dozen high- and middle-
Energizing Development without Compromising the Climate 191
income countries account for two-thirds of extremes accounted for 13 percent of the
global energy-related emissions, and their variation in energy productivity in devel-
emission reductions are essential to avoid oping countries in 2005.6 Unreliable or
dangerous climate change. This chapter changing precipitation patterns affect the
analyzes the mitigation paths and chal- reliability of hydropower. And droughts
lenges facing some of these countries. It also and heat waves that affect the availability
presents a portfolio of policy instruments and temperature of water hamper thermal
and clean energy technologies that can be and nuclear energy production,7 because the
used to follow the 2°C trajectory. plants require substantial quantities of water
for cooling—as in the case of power short-
Balancing competing objectives ages in France during the 2007 heat wave.
Energy policies have to balance four com- The challenge then is to provide reli-
peting objectives—sustain economic able and affordable energy services for
growth, increase energy access for the economic growth and prosperity without
world’s poor, enhance energy security, and compromising the climate. Low-income
improve the environment—tall orders. countries now account for only 3 percent of
Fossil-fuel combustion produces around 70 global energy demand and energy-related
percent of greenhouse gas emissions1 and is emissions. While their energy demand will
the primary source of harmful local air pol- increase with rising income, their emis-
lution. Many win-win options can mitigate sions are projected to remain a small share
climate change and abate local air pollution of global emissions in 2050. But middle-
through reducing fossil-fuel combustion income countries, many with expanding
(box 4.2). Other options present tradeoffs economies and a large share of heavy indus-
that need to be weighed. For example, sul- try, face huge energy needs. And developed
fates emitted when coal is burned damage countries demand enormous amounts of
human health and cause acid rain, but they energy to maintain their current lifestyles.
also have local cooling effects that offset Low-carbon energy choices can substan-
warming. tially improve energy security by reducing
Developing countries need reliable and price volatility or exposure to disruptions
affordable energy to grow and to extend in energy supplies. 8 Energy efficiency
service to the 1.6 billion people without can reduce energy demand, and renew-
electricity and the 2.6 billion without clean able energy diversifies the energy mix and
cooking fuels. Increasing access to electric- reduces exposure to fuel price shocks.9
ity services and clean cooking fuels in many But coal, the most carbon-intensive fos-
low-income developing countries, particu- sil fuel, is abundant near many high-growth
larly in South Asia and Sub-Saharan Africa, areas and provides low-cost and secure
would add less than 2 percent to global CO2 energy supplies. Recent oil price swings and
emissions.2 Replacing traditional biomass uncertainty about gas supplies are leading
fuels used for cooking and heating with to increased interest in new coal-fired power
modern energy supplies can also reduce plants in many countries (developed and
emissions of black carbon—an important developing). Reducing reliance on oil and
contributor to global warming3 —improve gas imports by turning to coal-to-liquid
the health of women and children other- and coal-to-gas production would sub-
wise exposed to high levels of indoor air stantially increase CO2 emissions. Global
pollution from traditional biomass, and coal consumption has grown faster than
reduce deforestation and land degradation consumption of any other fuel since 2000,
(see chapter 7, box 7.10).4 presenting a formidable dilemma between
Energy supplies also face adaptation economic growth, energy security, and cli-
challenges. Rising temperatures are likely mate change.
to increase demand for cooling and reduce Faced with such challenges and compet-
demand for heating.5 Higher demand for ing objectives, the market alone will not
cooling strains electricity systems, as in deliver efficient and clean energy in the
the European heat wave of 2007. Climate time and at the scale required to prevent
192 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
BOX 4.2 Efficient and clean energy can be good for development
Valuing the co-benefits of energy effi- 2006 the renewable energy industry cre- intensity from 2005 to 2010 would reduce
ciency and clean energy for develop- ated 2.3 million jobs worldwide (directly annual CO2 emissions by 1.5 billion tons
ment—more energy savings, less local air or indirectly), and energy efficiency by 2010, the most aggressive emission
pollution, greater energy security, more added 8 million jobs in the United States.c reduction target in the world, five times
employment in local industry, and greater The energy-efficiency and technology- the 300-million-ton reduction of the
competitiveness from higher productiv- innovation programs in California over European Union’s Kyoto commitment and
ity—can justify part of the mitigation cost the past 35 years have actually increased eight times the 175-million-ton reduc-
and increase the appeal of green policies. gross state product.d tion of the California emission reduction
Energy savings could offset a significant Many countries, both developed and target.e
share of mitigation costs.a The actions developing, are setting targets and poli-
needed for the 450 parts per million (ppm) cies for clean energy technologies (see Sources:
CO2e concentrations associated with table). Many of these initiatives are driven a. IEA 2008b; McKinsey & Company 2009a.
keeping warming at 2°C could reduce by domestic development benefits, b. IEA 2008c.
local air pollution (sulfur dioxide and but they can also reduce CO2 emissions c. EESI 2008;
nitrogen oxides) by 20–35 percent com- substantially. The Chinese government’s d. Roland-Holst 2008.
pared with business as usual in 2030.b In target of a 20 percent reduction in energy e. Lin 2007.
Many countries have national plans or proposals for energy and climate change
dangerous climate change. Pollution needs Figure 4.1 The story behind doubling emissions: improvements in energy and carbon intensity
to be priced. Achieving the needed progress have not been enough to offset rising energy demand boosted by rising incomes
in energy efficiency requires price incen- Index 1970 = 1
tives, regulations, and institutional reforms. 3.0
And the risks and scale of the investments 2.8
in unproven technologies call for substan- 2.6 Income
2.4 (GDP, PPP)
tial public support.
2.2 Energy (primary
2.0 energy supply)
Breaking the high-carbon habit
1.8
Carbon emissions from energy are deter- 1.6
mined by the combination of total energy CO2 emissions
1.4
consumption and its carbon intensity 1.2 Carbon intensity
(defi ned as the units of CO2 produced by 1.0 (CO2/energy)
a unit of energy consumed). Energy con- 0.8
Energy intensity
sumption increases with income and popu- 0.6 (energy/GDP, PPP)
lation but with sizable variation depending 0.4
1970 1975 1980 1985 1990 1995 2000
on economic structure (manufacturing and Year
mining are more energy intensive than agri-
Source: IPCC 2007.
culture and services), climate (which affects Note: GDP is valued using purchasing power parity (PPP) dollars.
the need for heating or cooling), and policies
(countries with higher energy prices and
more stringent regulations are more energy account for 52 percent of annual energy-
efficient). Similarly, the carbon intensity of related emissions, and their energy con-
energy varies depending on domestic energy sumption is increasing rapidly—90 percent
resources (whether a country is rich in coal of the projected increases in global energy
or hydro potential) and policies. So the consumption, coal use, and energy-related
policy levers for a low-carbon growth path CO2 emissions over the next 20 years will
include reducing energy intensity (defined likely be in developing countries.12 Projec-
as energy consumed per dollar of gross tions suggest that because such a large share
domestic product, or GDP) by increasing of global population is in developing coun-
energy efficiency and shifting to low-energy- tries, they will use 70 percent more total
consuming lifestyles—and reducing carbon
intensity of energy by shifting to low-carbon
fuels such as renewable energy. Figure 4.2 Primary energy mix 1850–2006. From 1850 to 1950 energy consumption grew
A doubling of energy consumption since 1.5 percent a year, driven mainly by coal. From 1950 to 2006 it grew 2.7 percent a year,
the 1970s combined with near-constant driven mainly by oil and natural gas.
carbon intensity has resulted in a doubling Exajoules
of emissions (figure 4.1). Energy intensity 500
has improved but far too little to offset 450 Nuclear
the tripling in world income. And carbon 400 Hydropower and
intensity has remained relatively constant 350 other renewables
Gas
as achievements in producing cleaner 300 Oil
energy have been largely offset by a massive 250 Coal
increase in the use of fossil fuels. Fossil fuels 200 Biomass
dominate global energy supplies, account- 150
ing for more than 80 percent of the primary 100
energy mix (figure 4.2).10 50
Developed countries are responsible for 0
about two-thirds of the cumulative energy- 1850 1875 1900 1925 1950 1975 2000 2006
Year
related CO2 now in the atmosphere.11 They
also consume five times more energy per Source: WDR team, based on data from Grübler 2008 (data for 1850–2000) and IEA 2008c (data in 2006).
Note: To ensure consistency of the two data sets, the substitution equivalent method is used to convert hydro-
capita, on average, than developing coun- power to primary energy equivalent—assuming the amount of energy to generate an equal amount of electric-
tries. But developing countries already ity in conventional thermal power plants with an average generating efficiency of 38.6 percent.
194 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
energy annually than developed countries use change emissions). Power will most
by 2030, even though their energy use per likely continue to be the largest source,
capita will remain low (figure 4.3). but emissions are expected to rise faster in
Globally, power is the largest single transport and industry.
source of greenhouse gas emissions (26 per- As major centers of production and con-
cent), followed by industry (19 percent), centrations of people, the world’s cities now
transport (13 percent), and buildings consume more than two-thirds of global
(8 percent),13 with land-use change, agricul- energy and produce more than 70 percent
ture, and waste accounting for the balance of CO2 emissions. The next 20 years will see
(figure 4.4). The picture varies, however, unprecedented urban growth—from 3 bil-
across income groups. High-income coun- lion people to 5 billion, mostly in the devel-
try emissions are dominated by power and oping world.14 From now to 2050 building
transport, while land-use change and agri- stocks will likely double,15 with most new
culture are the leading emission sources in construction in developing countries. If cit-
low-income countries. In middle-income ies grow through sprawl rather than densi-
countries, power, industry, and land-use fication, demand for travel will increase in
change are the largest contributors—but ways not easily served by public transport.
with land-use change emissions concen- Car ownership rates increase rapidly
trated in a handful of countries (Brazil and with rising incomes. On current trends
Indonesia account for half the global land- 2.3 billion cars will be added between 2005
and 2050, more than 80 percent of them in
developing countries.16 But if the right poli-
Figure 4.3 Despite low energy consumption and cies are in place, increased rates of owner-
emissions per capita, developing countries will
dominate much of the future growth in total energy ship do not have to translate into similar
consumption and CO2 emissions increases in car use (figure 4.5).17 Because
a. Per capita energy consumption car use drives energy demand and emis-
Toe/person sions from transport, pricing policies (such
7 as road pricing and high parking fees),
6 public transport infrastructure, and urban
5
form can make a big difference.
4
Developing countries can learn from
Europe and developed Asia to decouple
3
car ownership from car use. European
2
and Japanese drivers travel 30–60 percent
1
fewer vehicle kilometers than drivers in the
0
1980 2006 2030 United States with comparable incomes and
Year car ownership. Hong Kong, China, has one-
third the car ownership of New York, the
b. Total energy consumption
American city with the lowest ratio of cars
Toe (millions)
12,000 per capita.18 How? Through a combination of
high urban density, high fuel taxes and road-
10,000
pricing policies, and well-established public
8,000
transport infrastructure. Similarly, Europe
6,000 has four times the public transport routes
4,000 per 1,000 persons as the United States.19 But
2,000 in many developing countries, public trans-
0 port has not kept up with urban growth,
1980 2006 2030 so the move to individual car ownership is
Year causing chronic and increasing problems of
OECD countries congestion.
Non-OECD countries Transport infrastructure also affects
Source: WDR team, based on data from IEA 2008c. settlement patterns, with a high volume of
Note: Toe = tons of oil equivalent roads facilitating low-density settlements
Energizing Development without Compromising the Climate 195
Figure 4.4 Greenhouse gas emissions by sector: world and high-, middle-, and low-income countries
a. World
Waste and wastewater
3%
Land-use
Power change and
26% forestry
17%
Agriculture
14%
Transportation
13%
Transportation Industry
7% 16%
Source: WDR team, based on data from Barker and others 2007 (figure 4a) and WRI 2008 (figures 4b, c, and d).
Note: The sectoral share of global emissions in figure 4.4a is for 2004. The sectoral share of emissions in high-, middle-, and low-income countries in figures 4.4b, 4.4c, and 4.4d
are based on emissions from the energy and agriculture sectors in 2005 and from land-use changes and forestry in 2000. The size of each pie represents contributions of green-
house gas emissions, including emissions from land-use changes, from high-, middle-, and low-income countries; the respective shares are 35, 58, and 7 percent. Looking only
at CO2 emissions from energy, the respective shares are 49, 49, and 2 percent. In Figure 4.4a, emissions from electricity consumption in buildings are included with those in the
power sector. Figure 4.4b does not include emissions from land-use change and forestry, because they were negligible in high-income countries.
and an urban form that mass transit systems arrows in figure 4.6). It also depends on
cannot easily serve. Low-density settlements developing countries avoiding the carbon-
then make it more difficult to adopt energy- intensive path followed by developed coun-
efficient district heating for buildings.20 tries such as Australia or the United States,
taking instead a low-carbon growth path
Where the world needs to go: (orange arrow). It thus requires fundamen-
Transformation to a sustainable tal changes in lifestyles for developed coun-
energy future tries and a leapfrogging to new development
Achieving sustainable and equitable growth models for developing countries.
and prosperity requires that high-income Achieving these goals requires reconcil-
countries significantly reduce their emis- ing what is adequate to prevent dangerous
sions—and their emissions per capita (blue climate change with what is technically
196 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
Figure 4.5 Car ownership increases with income, but pricing, public transport, urban planning, and urban
density can contain car use
600
Germany
500
France
United States
400 United Kingdom Japan
Denmark
300
200
Russian Federation
100 South Brazil Mexico Singapore
Africa Hong Kong,
Ethiopia India China China
0
4.5 5.5 6.5 7.5 8.5 9.5 10.5
Log GDP per capita (PPP 2000 international $)
14
12
10
0
10 15 20 25 30 35 40
GDP per capita (2000 $, thousands)
Sources: Schipper 2007; World Bank 2009c.
Note: In figure 4.5b, data are from West Germany through 1992 and for all of unified Germany from 1993 onward. Notice the simi-
larity in rates of car ownership among, the United States, Japan, France, and Germany (panel a) but the large variation in distance
traveled (panel b).
Figure 4.6 Where the world needs to go: Energy-related CO2 emissions per capita
United States
20
Australia
15
Russian
Federation
Ireland
United Kingdom
Korea,
10 Rep. of
Malaysia Japan
France
Greece
5
China Mexico
India Brazil
0
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000
GDP per capita (PPP, constant 2005 international $)
Source: Adapted from NRC 2008, based on data from World Bank 2008e.
Note: Emissions and GDP per capita are from 1980 to 2005.
Figure 4.7 Only half the energy models find it possible to achieve the emission reductions necessary to stay close to 450 ppm CO2e (2°C)
Table 4.1 What it would take to achieve the 450 ppm CO2e concentration needed to keep warming close to 2°C—an illustrative scenario
black carbon, could reduce the overshoot but 4.2).30 Future energy savings would eventu-
not avoid it.24 In addition, 450 ppm CO2e tra- ally offset a substantial share of the up-front
jectories rely on biomass-based carbon cap- investment.31 But much of this investment
ture and storage25 for negative emissions.26 is needed within the next 10 years in fi nan-
But given the competition for land and water cially constrained developing countries.
for food production and carbon storage (see And removing obstacles to reform and
chapter 3), sustainable biomass supplies will directing capital to low-carbon investments
be an issue.27 Limiting warming to 2°C will where and when they are needed will be
thus require fundamental changes in the challenging.
global energy mix (box 4.3 and box 4.4; see A less challenging option would be to
endnote 28 for model details).28 aim for a higher concentration—for exam-
The mitigation costs of achieving 450 ple, 550 ppm CO2e. That concentration
ppm CO2e are estimated at 0.3–0.9 per- is associated with a 50-percent chance of
cent of global GDP in 2030, assuming that warming exceeding 3°C, and a higher risk
all mitigation actions occur whenever and of damages from climate change impacts,
wherever they are cheapest (figure 4.8).29 but it allows a little more time for emissions
This estimate compares to total expendi- to peak (2030). Emissions would need to
tures in the energy sector of 7.5 percent fall back to today’s levels by 2050 and con-
of GDP today. Moreover, the costs of tinue to fall substantially thereafter. Miti-
inaction—from the damages caused by gation costs of 550 ppm CO2e are somewhat
greater warming—may well exceed this lower, at 0.2–0.7 percent of global GDP in
mitigation cost (see chapter 1 for a discus- 2030 (figure 4.8a), and require adoption of
sion of the cost-benefit analysis of climate technologies with marginal costs up to $25
policy). to $75 a ton of CO2 in 2030 (figure 4.8b),
Achieving 450 ppm CO2e requires the for average annual additional investments
adoption of technologies with marginal of some $220 billion a year over the next
costs of $35 to $100 a ton of CO2 in 2030, 20 years. 32 Achieving this more modest
for a global annual mitigation investment goal would still require far-reaching policy
of $425 billion to $1 trillion in 2030 (table reforms.
Energizing Development without Compromising the Climate 199
Action—immediate and global Figure 4.8 Estimates of global mitigation costs and carbon prices for 450 and 550 ppm CO2e
(2°C and 3°C) in 2030 from five models
Delaying global actions for more than 10
years makes stabilization at 450 ppm CO2e a. Global mitigation costs
% GDP
impossible.33 There is little flexibility on 1.0
the time when emissions peak. To achieve 0.9 0.90
450 ppm CO2e, global energy-related CO2 0.8 0.78 0.77
emissions will need to peak at 28–32 giga- 0.7 0.70
tons in 2020 from 26 gigatons in 2005, 0.6 0.58 0.56
and then fall to 12–15 gigatons by 2050.34 0.5
This trajectory requires a 2–3 percent cut 0.4
0.33
in emissions each year from 2020 onward. 0.3
If emissions increase for 10 years beyond 0.2 0.18
2020, emissions would have to be reduced 0.1
4–5 percent a year. In contrast, emissions 0.0
MiniCAM POLES IMAGE MESSAGE REMINDa
increased 3 percent a year from 2000 to Energy-climate model
2006, so most countries are on their way to
a high-carbon path, with total global CO2 b. Carbon prices
$/t CO2
emissions outpacing the worst-case sce- 120
nario projected by the Intergovernmental 100
100
Panel on Climate Change (IPCC).35 92
86
New additions of power plants, build- 80
71
ings, roads, and railroads over the next
60
decade will lock in technology and largely 50 49
determine emissions through 2050 and 40 34 38
beyond. Why? Because the energy capital 24
20
stock has a long life—it can take decades
to turn over power plants, a century to 0
MiniCAM POLES IMAGE MESSAGE REMINDa
turn over urban infrastructure.36 Delaying Energy-climate model
action would substantially increase future
550 parts per million 450 parts per million
mitigation costs, effectively locking the
world into carbon-intensive infrastructure Sources: WDR team, based on data from Knopf and others, forthcoming; Rao and others 2008; Calvin and oth-
ers, forthcoming.
for decades to come. Even existing low-cost
Note: This graphic compares mitigation costs and carbon prices from five global energy-climate models—
clean energy technologies will take decades MiniCAM, IMAGE, MESSAGE, POLES, and REMIND (see note 28 for model assumptions and methodology).
to fully penetrate the energy sector. And MiniCAM, POLES, IMAGE, and MESSAGE report abatement costs for the transformation of energy systems
relative to the baseline as a percent of GDP in 2030, where GDP is exogenous.
given the long lead times for new technol- a. The mitigation costs from REMIND are given as macroeconomic costs expressed in GDP losses in 2030 rela-
ogy development, deploying advanced tech- tive to baseline, where GDP is endogenous.
nologies on a large scale beginning in 2030
requires aggressive action today.
Delaying action would, in addition,
lead to costly retrofitting and early retire-
ment of energy infrastructure. Building Table 4.2 Investment needs to limit warming to 2°C (450 ppm CO2e) in 2030
to current standards and then retrofitting (constant 2005$ billion)
existing capacity, whether power plants or Region IEA McKinsey MESSAGE REMIND
buildings, would be far more costly than
Global 846 1013 571 424
building new, efficient, and low- carbon
infrastructure in the first place. The same is Developing countries 565 563 264 384
true for the forced early retirement of inef- North America 175 112
ficient energy capital. Energy savings often European Union 129 92
justify the higher up-front investments in China 263 49
new capital, but they are less likely to cover
India 75 43
premature replacement of capital stock.
Sources: IEA 2008b; Knopf and others, forthcoming and additional data provided by B. Knopf; Riahi, Grübler,
Even a high CO2 price may be insufficient and Nakićenović 2007; IIASA 2009 and additional data provided by V. Krey; McKinsey & Company 2009a with
to change this picture.37 further data breakdown provided by McKinsey (J. Dinkel).
200 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
BOX 4.3 A 450 ppm CO2e (2°C warmer) world requires a fundamental change in the global
energy system
For this Report the team examined five implication is that a mix of technology Cutting energy-related emissions in half by
global energy-climate models that dif- options that varies by country and over 2050 requires deep decarbonization of the
power sector
fer in methodology, assumptions about time is needed—the least- cost strategies
baseline, technology status, learning rates, all rely on a broad portfolio of energy Estimated % of carbon that
costs, and inclusion of greenhouse gases technologies. must be removed by sector,
(in addition to CO2). Attainability of a 450 2005–2050
ppm CO2e trajectory is dependent on the Global energy mix for 450 ppm CO2e Sector IEA MiniCAM
characteristics of the baseline. Some inte- The 450 ppm CO2e trajectory requires a
grated assessment models can not reach global energy revolution—large reduc- Power –71 –87
a 450 ppm CO2e trajectory from a fossil- tions in total energy demand and major Building –41 –50
fuel-intensive and high-energy-growth changes in the energy mix. To achieve Transport –30 +47
baseline. this, global climate-energy models call for
A number of models can achieve 450 aggressive energy-efficiency measures Industry –21 –71
ppm CO2e at moderate costs, but each that dramatically reduce global energy Total –50 –50
follows different emissions pathways and demand from around 900 exajoules by Sources: WDR team based on data from IEA 2008b;
energy mitigation strategies.a Different 2050 under a business-as-usual scenario to Calvin and others, forthcoming.
emission pathways present a tradeoff 650–750 exajoules—a 17–28 percent cut.
between emission reductions in the Most models project that fossil fuels renewables and nuclear energy. The
short to medium term (2005–2050) and would need to drop from 80 percent of largest increase would be in renew-
the long term (2050–2100). A modest energy supply today to 50–60 percent by able energy, which would jump from
emission reduction before 2050 requires 2050. The future use of fossil fuels (particu- 13 percent today (mainly traditional
dramatically deeper emission cuts over larly coal and gas) in a carbon-constrained biomass fuel and hydropower) to around
the long term through widespread use world depends on widespread use of 30–40 percent by 2050, dominated
of biomass-based carbon capture and carbon capture and storage (CCS), which by modern biomass with and without
storage.b These differences in model would have to be installed in 80–90 per- carbon capture and storage, with the
methodologies and assumptions also cent of coal plants by 2050, assuming that remainder from solar, wind, hydropower,
result in varying investment needs in the capture-and-storage technology becomes and geothermal (see the figure). Nuclear
short term (2030), as shown in table 4.2. technically and economically feasible for would also need a boost—from 5 percent
The models also vary significantly on the large-scale applications in the next decade today to around 8–15 percent by 2050.d
energy mix from now to 2050 (see the or two (table below).c The magnitude of the required effort
figure on the facing page), although the This significant reduction in fossil- is substantial: it amounts to an additional
stark conclusion does not vary. The policy fuel use would need to be offset by 17,000 wind turbines (producing 4 mega-
watts each), 215 million square meters
The energy mix to achieve 450 ppm CO2e can vary, but we must make use of all options of solar photovoltaic panels, 80 concen-
Current Energy mix in 2050 trated solar power plants (producing
energy mix 250 megawatts each), and 32 nuclear
plants (producing 1,000 megawatts
United European
each) per year over the next 40 years
Global Global States Union China India
compared to the baseline.e The power
Energy type % of total sector would need to be virtually decar-
Coal without CCS 26 1–2 0–1 0–2 3–5 2–3 bonized, followed by the industrial and
building sectors (table above).
Coal with CCS 0 1–13 1–12 2–9 0–25 3–26
Oil 34 16–21 20–26 11–23 18–20 18–19 Sources:
a. Knopf and others, forthcoming; Rao and
Gas without CCS 21 19–21 20–21 20–22 9–13 5–9 others 2008.
Gas with CCS 0 8–16 6–21 7–31 1–29 3–8 b. Riahi, Grübler, and Nakićenović 2007;
IIASA 2009.
Nuclear 6 8 8–10 10–11 8–12 9–11 c. IEA 2008b; Calvin and others, forthcom-
Biomass without CCS 10 12–21 10–18 10–11 9–14 16–30 ing; Riahi, Grübler, and Nakićenović 2007;
IIASA 2009; van Vuuren and others, forth-
Biomass with CCS 0 2–8 1–7 3–9 1–12 2–12 coming; Weyant and others 2009.
Non-biomass renewables 3 8-14 7–12 7–12 10–13 5–19 d. IEA 2008b; Calvin and others, forthcom-
ing; Riahi, Grübler, and Nakićenović 2007;
Total (exajoules a year) 493 665–775 87–121 70–80 130–139 66–68 IIASA 2009; van Vuuren and others, forth-
Sources: WDR team, based on data from Riahi, Grübler, and Nakićenović 2007; IIASA 2009; Calvin and others, coming.
forthcoming; IEA 2008b. e. IEA 2008b.
(continued)
Energizing Development without Compromising the Climate 201
450 ppm CO2e requires a fundamental change in the global primary energy mix
Exajoules Exajoules
1,400 1,400
1,200 MESSAGE 1,200 MESSAGE
B2 Baseline B2 450ppm CO2e
1,000 1,000
800 800
600 600
400 400
200 200
0 0
2000 2020 2040 2060 2080 2100 2000 2020 2040 2060 2080 2100
Year Year
Exajoules Exajoules
1,400 1,400
1,200 MiniCAM 1,200 MiniCAM
Baseline 450ppm CO2e
1,000 1,000
800 800
600 600
400 400
200 200
0 0
2000 2020 2040 2060 2080 2100 2000 2020 2040 2060 2080 2100
Year Year
Exajoules Exajoules
1,400 1,400
1,200 REMIND 1,200 REMIND
Baseline B2 450ppm CO2e
1,000 1,000
800 800
600 600
400 400
200 200
0 0
2000 2020 2040 2060 2080 2100 2000 2020 2040 2060 2080 2100
Year Year
Exajoules Exajoules
1,400 1,400
1,200 IMAGE 1,200 IMAGE
Baseline 450ppm CO2e
1,000 1,000
800 800
600 600
400 400
200 200
0 0
2000 2020 2040 2060 2080 2100 2000 2020 2040 2060 2080 2100
Year Year
Nuclear Biomass Non-biomass renewables Gas Oil Coal with carbon capture and storage
202 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
BOX 4.4 Regional energy mix for 450 ppm CO2e (to limit warming to 2°C)
It is important for national policy makers capacity. But doubling the share of natu- achieve 450 ppm CO2e (see the lower
to understand the implications of a 450 ral gas in the European primary energy table of box 4.3). Renewable energy could
ppm CO2e trajectory for their energy sys- mix from 24 percent today to 50 percent meet up to 40 percent of total energy
tems. Most integrated assessment models by 2050, assumed by some 450 ppm CO2e demand in 2050. Several scenarios have
follow a “least- cost” approach, where scenarios, may pose energy security risks, extremely ambitious nuclear programs, in
emission reductions occur wherever and particularly given the recent disruption of which China would build nuclear power
whenever they are cheapest in all sec- gas supplies to Europe. The 450 ppm CO2e plants three times faster than France ever
tors and in all countries.a But the country scenario requires an additional annual achieved, and nuclear capacity in 2050
in which mitigation measures are taken investment of $110 billion to $175 billion would reach seven times France’s current
is not necessarily the one that bears the for the United States (0.8–1 percent of nuclear capacity. Given China’s limited gas
costs (see chapter 6). It is not the purpose GDP) and $90 billion to $130 billion for the reserves, increasing the percentage of gas
of this chapter to advocate any particular European Union (0.6–0.9 percent of GDP) in the primary energy mix from the cur-
approach to burden sharing or to allocate in 2030 (see table 4.2). rent 2.5 percent to 40 percent by 2050, as
emission reductions among countries; assumed by some models, is problematic.
that is a matter for negotiation. China Given the large domestic reserves,
The United States, the European Union, Significantly reducing emissions below coal will likely remain an important
and China now account for nearly 60 per- current levels is a formidable goal for energy source in China for decades.
cent of the world’s total emissions. India China, the world’s largest coal producer Carbon capture and storage is essential
currently contributes only 4 percent of and consumer. China, relies on coal to for China’s economic growth in a carbon-
global emissions despite representing 18 meet 70 percent of its commercial energy constrained world. Some 450 ppm CO2e
percent of the world’s population, but its needs (compared with 24 percent in the scenarios project that carbon capture and
share is projected to increase to 12 per- United States and 16 percent in Europe). storage would have to be installed for
cent by 2050 in the absence of mitigation To meet 450 ppm CO2e, total primary 85–95 percent of coal plants in China by
policy. So, these countries’ contributions energy demand would have to be 20–30 2050—more than can be accommodated
to global emission reductions will be percent below the projected business- by the current projections of economi-
essential to stabilize the climate. as-usual level by 2050. Energy intensity cally available CO2 storage capacity of
would have to decline by 3.1 percent a 3 gigatons a year within 100 kilometers
United States and European Union year over the next four decades. of the emission sources. But further site
Energy efficiency could reduce total Impressively, Chinese GDP quadrupled assessment, technology breakthrough,
energy demand in developed countries from 1980 to 2000 while energy con- and future carbon pricing could change
by 20 percent in 2050 relative to business sumption only doubled. After 2000, this situation. The 450 ppm CO2e scenario
as usual. This would require an annual however, the trend reversed, even though requires an additional annual investment
decline in energy intensity of 1.5–2 per- energy intensity continues to fall within for China of $30 billion to $260 billion
cent over the next four decades, continu- industrial subsectors. The main reason: a (0.5–2.6 percent of GDP) by 2030.
ing the current trend of the past two sharp rise in the share of heavy industry,
decades. To achieve 450 ppm CO2e the driven by strong demand from domestic India and other developing countries
United States and the European Union and export production.b China produces India faces tremendous challenges in
would need to cut oil consumption sig- 35 percent of the world’s steel, 50 percent substantially altering its emissions path
nificantly by 2050, a substantial challenge of its cement, and 28 percent of its alu- given its limited potential for alternative
because they now consume almost half minum. This development stage, when energy resources and for carbon storage
of global oil production. They would also energy-intensive industries dominate the sites. Like China, India heavily relies on
need to dramatically reduce coal use—a economy, presents great challenges to coal (which accounts for 53 percent of its
daunting task for the United States, the decoupling emissions from growth. commercial energy demand). Achieving
world’s second-largest coal producer and China has increased the average effi- 450 ppm CO2e would require a veritable
consumer—and widely deploy carbon ciency of coal-fired power plants by 15 energy revolution in India. Total primary
capture and storage. percent over the last decade to an aver- energy demand would have to decline
The United States and the European age of 34 percent.A policy that requires relative to the business-as-usual projec-
Union have the resources to realize these closing small-scale coal-fired power tions by around 15–20 percent by 2050
measures and overcome the challenges. plants and substituting large-scale effi- and energy intensity by 2.5 percent a year
Both have abundant renewable energy cient ones over the last two years reduces from now to 2050, doubling the efforts of
potential. Some models project that annual CO2 emissions by 60 million tons. the past decade. A large potential exists,
carbon capture and storage would have A majority of new coal-fired plants are however, for improving energy efficiency
to be installed for 80–90 percent of coal equipped with state- of-the-art supercriti- and reducing the 29 percent losses in
and gas plants and 40 percent of biomass cal and ultrasupercritical technologies.c transmission and distribution, to a level
plants in the United States by 2050 (see Despite these advances, China would closer to the world average of 9 percent.
lower table of box 4.3). This is potentially still have to reduce the share of coal in And while the efficiency of coal-fired
feasible given the estimated CO2 storage the primary energy mix dramatically to power plants in India has improved in
(continued)
Energizing Development without Compromising the Climate 203
recent years, the average efficiency is still storage by 2050, as some 450 ppm CO2e reliable hydrological cycle resulting from
low at 29 percent, and nearly all the coal- scenarios project. Additional site assess- climate change. These countries would
fired plants are subcritical. ments and technology breakthroughs also need a major boost in natural gas.
As in China, coal’s share in India’s could change this. The 450 ppm CO2e
primary energy mix would have to be scenario requires an additional annual Sources: Calvin and others, forthcoming;
reduced dramatically to achieve 450 investment of $40 billion to $75 billion for Chikkatur 2008; Dahowski and others 2009;
de la Torre, Fajnzylber, and Nash 2008;
ppm CO2e. The potential for hydropower India (1.2–2.2 percent of GDP) in 2030. Dooley and others 2006; German Advisory
(150 gigawatts) and onshore wind power Sub-Saharan Africa (excluding South Council on Global Change 2008; Govern-
(65 gigawatts) is large in absolute terms Africa) contributes 1.5 percent of global ment of India Planning Commission 2006;
but small in relation to future energy annual energy-related CO2 emissions Holloway and others 2008; IEA 2008b; IEA
needs (12 percent in the power mix by today, an amount projected to grow 2008c; IIASA 2009; Lin and others 2006;
2050 in the 450 ppm CO2e scenario). Con- to only 2–3 percent by 2050. Providing McKinsey & Company 2009a; Riahi, Grübler,
and Nakićenović 2007; Wang and Watson
siderable untapped possibilities exist for basic modern energy services to the 2009; Weber and others 2008; World Bank
importing natural gas and hydropower poor should be the top priority and will 2008c; Zhang 2008.
from neighboring countries, but difficul- only slightly increase global greenhouse a. They are based on an integrated global
ties remain in establishing transbound- gas emissions. But a global clean energy carbon market and do not consider any
ary energy trade agreements. For solar revolution is relevant to the low-income explicit burden sharing between countries.
to play a large role, costs would have to countries, which may be able to leapfrog In reality, this is unlikely. Burden sharing is
come down significantly. Some models to the next generation of technologies. discussed in chapter 1, and the implication
of delayed participation by non-Annex I
suggest that India would need to rely on Clean energy can play a large role in
countries is discussed in chapter 6. We also
biomass to supply 30 percent of its pri- increasing access to energy, and pursuing reviewed models from developing countries
mary energy by 2050 under the 450 ppm energy efficiency is a cost- effective short- (China and India), but no public information
CO2e scenario. But this may exceed India’s term solution to power outages. is available for 450 ppm CO2e scenarios.
sustainable biomass potential because According to climate-energy models, b. Lin and others 2006. Production of exports
biomass production competes with agri- under the 450 ppm CO2e scenarios, most accounted for around one-third of China’s
culture and forests for land and water. developing countries would need to boost emissions in 2005 (Weber and others 2008).
India has limited economically avail- their production of renewable energy. c. Supercritical and ultrasupercritical
able carbon storage sites, with a total Africa, Latin America, and Asia could con- plants use higher steam temperatures and
pressures to achieve higher efficiency of
storage capacity of less than 5 gigatons tribute by switching to modern biomass. 38–40 percent and 40–42 percent respec-
of CO2, enough to store only three years And Latin America and Africa have sub- tively, compared with large subcritical
of carbon if 90 percent of coal plants stantial untapped hydropower, although power plants with an average efficiency of
were equipped with carbon capture and the amount could be affected by a less 35–38 percent.
To avoid such lock-ins, the scale and the potential for reductions in heating and
rate of urbanization present an unrivaled cooling demand, which requires retrofit-
opportunity, particularly for developing ting and replacing building shells. But there
countries, to make major decisions today are abundant opportunities over the next
about building low-carbon cities with com- decade in both developed and developing
pact urban designs, good public transport, countries to build new power plants with
efficient buildings, and clean vehicles. clean energy technologies, thereby avoiding
One beneficial feature of the inertia in further lock in to carbon-intensive fuels.
energy infrastructure is that introduc- For the reasons outlined in the Bali
ing efficient low-carbon technologies into Action Plan, which is shaping the current
new infrastructure offers an opportunity negotiations under the United Nations
to lock in a low-carbon path. Developing Framework Convention on Climate Change,
countries will install at least half the long- developed countries must take the lead in
lived energy capital stocks built between cutting emissions (see chapter 5). But devel-
now and 2020.38 For example, half of Chi- oped countries alone could not put the world
na’s building stock in 2015 will have been onto a 2°C trajectory, even if they were able
built between 2000 and 2015.39 There are to reduce their emissions to zero (figure
fewer opportunities in developed countries, 4.9). By 2050, 8 billion of the world’s 9 bil-
where residential buildings tend to have lion people will live in today’s developing
slow retirements—60 percent of France’s countries, producing 70 percent of projected
expected residential building stock in 2050 global emissions.40 Developed countries can,
has already been built. This fact constrains however, provide financial assistance and
204 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
Figure 4.9 Global actions are essential to limit low-carbon technology transfers to develop-
warming to 2°C (450 ppm) or 3°C (550 ppm). Developed ing countries, while pursuing advanced low-
countries alone could not put the world onto a 2°C or
3°C trajectory, even if they were to reduce emissions carbon technologies and demonstrating that
to zero by 2050. low-carbon growth is feasible (table 4.3).
Annual CO2 emissions by 2050 (Gt/yr) Acting on all technical and policy fronts
70
What fundamental changes need to be made
in the energy system to narrow the gap
60
between where the world is headed and where
OECD it needs to go? The answer lies in a portfo-
50
lio of efficient and clean energy technolo-
40
gies to reduce energy intensity and shift to
low-carbon fuels. On current trends, global
30 energy-related CO2 emissions will increase
from 26 gigatons in 2005 to 43–62 gigatons
Non-OECD by 2050.41 But a 450 ppm CO2e trajectory
20
World requires that energy emissions be reduced
10 to 12–15 gigatons, a 28–48 gigaton mitiga-
World
tion gap by 2050 (figure 4.10). Models rely on
0 four technologies to close this gap—energy
Reference 550 ppm 450 ppm
scenario policy policy efficiency (the largest wedge), followed by
scenario scenario renewable energy, carbon capture and stor-
Sources: Adapted from IEA 2008b; Calvin and others, forthcom-
age, and nuclear.42
ing. A portfolio of these technologies is
Note: If energy-related emissions from developed countries needed to achieve the deep emission cuts
(orange) were to reduce to zero, emissions from developing
countries (green) under business as usual would still exceed required by the 450 ppm CO2e trajectory
global emission levels required to achieve 550 ppm CO2e and at least cost, because each has physical and
450 ppm CO2e scenarios (blue) by 2050.
economic constraints, although these vary
by country. Energy efficiency faces barriers
Table 4.3 Different country circumstances require tailored approaches and market failures. Wind, hydropower,
and geothermal power are limited by the
Countries Low- carbon technologies and policies
availability of suitable sites; biomass is con-
Low-income countries Expand energy access through grid and off-grid options
strained by competition for land and water
Deploy energy efficiency and renewable energy whenever they from food and forests (see chapter 3); and
are the least cost
solar is still costly (box 4.5). Nuclear power
Remove fossil-fuel subsidies
raises concerns about weapons prolifera-
Adopt cost-recovery pricing
tion, waste management, and reactor safety.
Leapfrog to distributed generation, where grid infrastructure does Carbon capture and storage technologies
not exist
for power plants are not yet commercially
Middle-income countries Scale up energy efficiency and renewable energy proven, have high costs, and may be limited
Integrate urban and transport approaches to low carbon use by the availability of storage sites in some
Remove fossil-fuel subsidies countries.
Adopt cost-recovery pricing including local externalities Sensitivity analysis incorporating these
Conduct research, development, and demonstration in new technology constraints suggests that 450
technologies ppm CO2e is not achievable without large-
High-income countries Undertake deep emission cuts at home scale deployment of energy efficiency,
Put a price on carbon: cap-and-trade or carbon tax renewable energy, and carbon capture and
Remove fossil-fuel subsidies storage; 43 and that reducing the role of
Increase research, development, and demonstration in new nuclear would require substantial increases
technologies of fossil-based carbon capture and storage
Change high-energy-consuming lifestyle and renewables.44 Critical uncertainties
Provide financing and low-carbon technologies to developing include the availability of carbon capture
countries and storage and the development of second-
Source: WDR team. generation biofuels. With today’s known
BOX 4.5 Renewable energy technologies have huge potential but face constraints
Biomass fluid that generates steam to drive a and East Asia, and Latin America.j Africa
Modern biomass as fuel for power, heat, conventional turbine. Concentrated solar exploits only 8 percent of its hydropower
and transport has the highest mitigation power is much cheaper and offers the potential.
potential of all renewable sources. a It greatest potential to produce base-load, For many countries in Africa and South
comes from agriculture and forest resi- large-scale power to replace fossil power Asia, regional hydropower trade could
dues as well as from energy crops. The plants. But this technology requires water provide the least- cost energy supply with
biggest challenge in using biomass resi- to cool the turbine—a constraint in the zero carbon emissions. But the lack of
dues is a long-term reliable supply deliv- desert, where solar plants tend to be political will and trust and concerns about
ered to the power plant at reasonable installed. So expansion is limited by geog- energy security constrain such trade. And
costs; the key problems are logistical con- raphy (because concentrated solar power greater climate variability will affect the
straints and the costs of fuel collection. can only use direct beam sunlight) as well hydrological cycle. Drought or glacial
Energy crops, if not managed properly, as by the lack of transmission infrastruc- melting could make hydropower supplies
compete with food production and may ture and large financing requirements. unreliable in some regions. Nevertheless,
have undesirable impacts on food prices Solar photovoltaics are less location- after two decades of stagnation, hydro-
(see chapter 3). Biomass production is sensitive, quicker to build, and suitable power is expanding, particularly in Asia.
also sensitive to the physical impacts of a for both distributed generation and But the current financial crisis makes it
changing climate. off- grid applications. Solar water heaters more difficult to raise financing to meet
Projections of the future role of bio- can substantially reduce the use of gas the large capital requirements.
mass are probably overestimated, given or electricity to heat water in buildings. Geothermal can provide power, heat-
the limits to the sustainable biomass China dominates the global market of ing, and cooling. It meets 26 percent of
supply, unless breakthrough technolo- solar water heaters, producing more than Iceland’s electricity needs and 87 percent
gies substantially increase productivity. 60 percent of global capacity. of its building heating demand. But this
Climate- energy models project that bio- At current costs, concentrated solar power source requires major financial
mass use could increase nearly fourfold would become cost competitive with coal commitments in up-front geological
to around 150–200 exajoules, almost a at a price of $60 to $90 a ton of CO2.e But investigations and expensive drilling of
quarter of world primary energy in 2050.b with learning and economies of scale, con- geothermal wells.
However, the maximum sustainable centrated solar power could become cost
technical potential of biomass resources competitive with coal in less than 10 years, Smart grids and meters
(both residues and energy crops) without and the global installed capacity could rise With two-way digital communications
disruption of food and forest resources to 45–50 gigawatts by 2020.f Similarly, solar between power plants and users, smart
ranges from 80–170 exajoules a year by photovoltaics have a learning rate of 15–20 grids can balance supply and demand
2050,c and only part of this is realistically percent cost reduction with each doubling in real time, smooth demand peaks, and
and economically feasible. In addition, of installed capacity.g Because global make consumers active participants in
some climate models rely on biomass- capacity is still small, potential cost reduc- the production and consumption of elec-
based carbon capture and storage, an tions through learning are substantial. tricity. As the share of generation from
unproven technology, to achieve nega- variable renewable resources such as
tive emissions and to buy some time dur- Wind, hydro, and geothermal wind and solar increases, a smart grid can
ing the first half of the century.d Wind, hydro, and geothermal power are all better handle fluctuations in power.k It
Some liquid biofuels such as corn- limited by resources and suitable sites. Wind can allow electric vehicles to store power
based ethanol, mainly for transport, may power has grown at 25 percent a year over when needed or to sell it back to the grid.
aggravate rather than ameliorate carbon the past five years, with installed capacity of Smart meters can communicate with
emissions on a life- cycle basis. Second- 120 gigawatts in 2008. In Europe more wind customers, who can then reduce costs by
generation biofuels, based on ligno- power was installed in 2008 than any other changing appliances or times of use.
cellulosic feedstocks—such as straw, type of electricity-generating technol- Sources:
bagasse, vegetative grass, and wood— ogy. But climate change could affect wind a. IEA 2008b.
hold the promise of sustainable produc- resources, with higher wind speeds but b. IEA 2008b; Riahi, Grübler, and Nakićenović
tion that is high-yielding and emits low more variable wind patterns.h 2007; IIASA 2009; Knopf and others, forth-
levels of greenhouse gas, but they are still Hydropower is the leading renewable coming.
in the R&D stage. source of electricity worldwide, accounting c. German Advisory Council on Global
for 16 percent of global power. Its potential Change 2008; Rokityanskiy and others 2006;
Solar is limited by availability of suitable sites Wise and others 2009.
Solar power, the most abundant energy (global economically exploitable potential d. Riahi, Grübler, and Nakićenović 2007;
source on Earth, is the fastest- growing of 6 million gigawatt-hours a year),i large IIASA 2009.
renewable energy industry. Solar power capital requirements, long lead times to e. IEA 2008b; Yates, Heller, and Yeung 2009.
has two major technologies—solar develop, concerns over social and envi- f. Yates, Heller, and Yeung 2009.
photovoltaic systems and concentrated ronmental impacts, and climate variability g. Neij 2007.
solar power. Solar photovoltaic systems (notably water resources). More than 90 h. Pryor, Barthelmie, and Kjellstrom 2005.
convert solar energy directly into elec- percent of the unexploited economically i. IEA 2008b.
tricity. Concentrated solar power uses feasible potential is in developing coun- j. World Bank 2008b.
mirrors to focus sunlight on a transfer tries, primarily in Sub-Saharan Africa, South k. Worldwatch Institute 2009.
206 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
technologies, there is limited room for flex- examples demonstrating that estimates of
ibility in the technology portfolio. environmental protection costs based on
Historically, however, innovation and technology extant before regulation are
technology breakthroughs have reduced dramatically overstated.45
the costs of overcoming formidable tech- Climate-smart development policies need
nical barriers, given effective and timely to be tailored to the maturity of each technol-
policy action—a key challenge facing ogy and the national context and can acceler-
the world today. Acid rain and strato- ate the development and deployment of these
spheric ozone depletion are two of many technologies (figure 4.11 and table 4.4).
Figure 4.10 The emissions gap between where the world is headed and where it needs to go is huge, but a
portfolio of clean energy technologies can help the world stay at 450 ppm CO2e (2°C)
a. CO2 emissions from the energy sector: wedge analysis for IEA Blue Scenario (450 ppm CO2e)
Annual emissions (Gt CO2)
70
Existing technologies with
We are heading to 6°C: baseline annual emissions = 62 Gt aggressive domestic policies
60
Demand-side energy
50 efficiency (38%)
Fuel switching (7%)
Nuclear (6%)
40 Non-biomass
renewables (15%)
Biomass (8%)
30 Fossil CCS (19%)
Electric and fuel cell
20 vehicles (8%)
b. CO2 emissions from the energy sector: wedge analysis for MESSAGE B2 (450 ppm CO2e)
Annual emissions (Gt CO2)
70
60
50
Demand-side energy
efficiency (26%)
40 Fuel switching (7%)
Nuclear (12%)
Non-biomass
30 renewables (6%)
Biomass (18%)
20 Fossil CCS (33%)
10
0
2000 2020 2035 2050
Year
Sources: WDR team, based on data from Riahi, Grübler, and Nakićenović 2007; IIASA 2009; IEA 2008b.
Note: Fuel switching is changing from coal to gas. Non-biomass renewables include solar, wind, hydropower, and geothermal.
Fossil CCS is fossil fuels with carbon capture and storage. While the exact mitigation potential of each wedge may vary under dif-
ferent models depending on the baseline, the overall conclusions remain the same.
Energizing Development without Compromising the Climate 207
Figure 4.11 The goal is to push low-carbon technologies from unproven concept to widespread deployment and to higher emission reductions
7 Building
energy efficiency
Transport
6 energy efficiency
5
CCS power
generation
4 CCS industry
Industry
energy efficiency
3
2nd generation Nuclear
2 biofuel Wind
Plug-in and Fuel switching
electric vehicles coal to gas
Fuel-cell vehicles
Solar photovoltaic
1
Concentrated Integrated gasification
solar power combined cycle Hydro
0 Geothermal
Energy efficiency. In the short term the deploying advanced technologies (carbon
largest and cheapest source of emission capture and storage in power and industry,
reductions is increased energy efficiency on second-generation biofuels, and electric
both the supply and demand side in power, vehicles) at unprecedented scale and speed
industry, buildings, and transport. Well- (box 4.6). Policies that put an adequate price
established technologies offer near-term on carbon are essential, as are international
reductions in greenhouse gas emissions by efforts to transfer low-carbon technologies
capturing methane emissions46 from coal to developing countries. Given the long lead
mines, municipal solid wastes, and gas time for technology development and the
flaring and by reducing black carbon emis- early emission peaking date required to
sions from traditional biomass fuels. These limit temperature increases to 2°C, govern-
technologies can also enhance coal mine ments need to ramp up research, develop-
safety and improve public health by reduc- ment, and demonstration efforts now to
ing air pollution.47 Many energy-efficiency accelerate the innovation and deployment
measures are financially viable for investors of advanced technologies. Developed coun-
but are not fully realized. Realizing these tries will need to take the lead in making
low-cost savings requires regulations such these technologies a reality.
as efficiency standards and codes—com- An integrated systems approach is needed
bined with fi nancial incentives, institu- to ensure compatible policies for sector-wide
tional reforms, financing mechanisms, and and economywide emission reductions.
consumer education—to correct market Market-based mechanisms, such as a car-
failures and barriers. bon cap-and-trade system or a carbon tax
(see chapter 6), encourage the private sector
Existing supply-side low-carbon technolo- to invest in least-cost, low-carbon technolo-
gies. In the short to medium term, low- or gies to achieve deep emission cuts.
zero-emission fuels for the power sector— Integrated urban and transport
renewable energy and nuclear power— approaches combine urban planning,
are commercially available and could be public transport, energy-efficient build-
deployed much more widely under the right ings, distributed generation from renew-
policy and regulatory frameworks. Smart able sources, and clean vehicles (box 4.7).
and robust grids can enhance the reliabil- Latin America’s pioneering experiences
ity of electric networks and minimize the with rapid bus transit—dedicated bus
downside of relying on variable renewable lanes, prepayment of bus fares, and efficient
energy and distributed generation (see box intermodal connections—are examples of
4.5). Fuel switching from coal to natu- a broader urban transformation.49 Modal
ral gas also has great mitigation potential shifts to mass transit have large develop-
but increases energy security risks for gas- ment co-benefits of time savings in traffic,
importing countries. Most renewable energy less congestion, and better public health
technologies are economically viable but from reduced local air pollution.
not yet financially viable, so some form of Changing behaviors and lifestyles to
subsidy (to internalize the externalities) is achieve low-carbon societies will take a
needed to make them cost competitive with concerted educational effort over many
fossil fuels. Adopting these technologies on a years. But by reducing travel, heating, cool-
larger scale will require that fossil-fuel prices ing, and appliance use and by shifting to
reflect the full cost of production and exter- mass transit, lifestyle changes could reduce
nalities, plus financial incentives to adopt annual CO2 emissions by 3.5–5.0 gigatons
low-carbon technologies. by 2030—8 percent of the reduction needed
(see chapter 8).50
Advanced technologies. While commer- Governments do not have to wait for a
cially available technologies can provide a global climate deal—they can adopt domes-
substantial share of the abatement needed tic efficient and clean energy policies now,
in the short to medium term,48 limiting justified by development and financial co-
warming to 2°C requires developing and benefits. Such domestic win-win measures
Energizing Development without Compromising the Climate 209
can go a long way to close the mitigation Buildings consume nearly 40 percent
gap,51 but they must be supplemented with of the world’s final energy,53 about half for
international climate agreements to bridge heating space and water, and the rest for
the remaining gap. running electric appliances, including light-
ing, air conditioning, and refrigeration.54
Realizing the savings from Opportunities to improve energy efficiency
energy efficiency lie in the building envelope (roof, walls, win-
Globally an additional dollar invested in dows, doors, and insulation), in space and
energy efficiency avoids more than two dol- water heating, and in appliances. Buildings
lars in investment on the supply side, and present one of the most cost-effective mitiga-
the payoffs are even higher in developing tion options, with more than 90 percent of
countries.52 So energy efficiency (negawatts) potential mitigation achievable with a CO2
should be considered on a par with tradi- price of less than $20 a ton.55 Studies find
tional supply-side measures (megawatts) in that existing energy-efficiency technologies
energy resource planning. Energy efficiency can cost-effectively save 30 to 40 percent of
reduces energy bills for consumers, increases energy use in new buildings, when evaluated
the competitiveness of industries, and cre- on a life-cycle basis.56
ates jobs. Energy efficiency is essential for While most of these studies are based
the 2°C trajectory, because it buys time by on high-income country data, the potential
delaying the need to build additional capac- for energy-efficiency savings in developing
ity while advanced clean energy technologies countries can be larger because of the low
are being developed and brought to market. baseline. For example, the current space-
210 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
BOX 4.7 The role for urban policy in achieving mitigation and development co-benefits
Urbanization is often cited as a major power services; and residential, commer- environmental impact has so far been
driver of global emissions growtha but cial, and industrial buildings—and that minimal. Deeper, higher-impact efforts—
is better understood as a major driver are not easily changed once the initial such as congestion charging, green build-
of development.b It is therefore a crucial patterns are set, increases the urgency of ing incentives, support for urban design
nexus of climate and development policy designing low- emissions cities in rapidly requiring less automobile dependence,
making. Most emissions occur in cities urbanizing countries. and incorporation of carbon pricing in
precisely because that is where most As discussed in chapter 8, cities have land taxes and development rights—will
production and consumption occur. And already become a source of political ultimately require a more comprehen-
the high concentration of population and momentum and will advance mitigation sive cultural momentum to overcome
economic activity in cities can actually actions on the international stage even as entrenched (or aspirational) high- carbon
increase efficiency—if the right policies they pursue their own initiatives at home. lifestyle preferences. Fortunately, many
are in place. A number of factors call for Contrary to a general presumption that city-led measures needed for mitigation
an urban climate agenda. local decision making focuses on local have benefits for adaptation to climate
First, denser cities are more energy and issues, more than 900 U.S. cities have change, which will reduce tradeoffs.
emission efficient (for example, in the signed on to meet or exceed Kyoto Pro-
transport sector; see the figure below), tocol targets to reduce greenhouse gas
and local policies are essential for encour- emissions,d while the C40 Cities Climate Sources: WDR team.
aging densification.c Second, the strong Leadership Group that aims to promote a. Dodman 2009.
and persistent influence of infrastructure action to combat climate change includes b. World Bank 2008f.
on long-term residential and commercial major cities on all continents.e c. World Bank 2009b.
citing decisions reduces the respon- Cities have the unique ability to d. U.S. Conference of Mayors Climate
siveness of emissions to price signals. respond to a global issue like climate Change Protection Agreement.
Complementary regulation and land-use change at a tangible local level. Many e. See http://www.c40cities.org/. In addition,
planning are therefore needed. Third, the cities have legislated to limit the use the United Cities and Local Governments
and International Council for Local Environ-
interdependence of the systems that con- of plastic bags, disposable cups, or
mental Initiatives have a joint resolution
stitute the urban form—roads and public bottled water. These initiatives may be requesting a greater voice for cities in the
transit lines; water, wastewater, and important for social messaging, but their UNFCCC negotiating process.
600
Marseilles
500
Atlanta
400 Johannesburg
heating technology used in Chinese build- reduce energy demand and CO2 emissions.
ings consumes 50 to 100 percent more energy It reduces the vehicle kilometers traveled
than that used in Western Europe. Making and makes it possible to rely on district and
buildings in China more energy efficient integrated energy systems for heating.61 In
would add 10 percent to construction costs Mexico, for example, dense urban develop-
but would save more than 50 percent on ment is expected to reduce total emissions
energy costs.57 Technology innovations such by 117 million tons of CO2e from 2009 to
as advanced building materials can further 2030, with additional social and environ-
increase the potential energy savings (see mental benefits.62
chapter 7). Integrated zero-emission building
designs, combining energy-efficiency mea- Market and nonmarket barriers
sures with on-site power and heat from solar and failures
and biomass, are technically and economi- The large untapped potential for greater
cally feasible—and the costs are falling.58 energy efficiency demonstrates that low-
Manufacturing accounts for one-third cost energy savings are not easy. Small-scale,
of global energy use, and the potential for fragmented energy- efficiency measures,
energy savings in industry is particularly involving multiple stakeholders and tens
large in developing countries. Key oppor- of millions of individual decision mak-
tunities include improving the efficiency of ers, are fundamentally more complex than
energy-intensive equipment such as motors large-scale, supply-side options. Energy-
and boilers and of energy-intensive indus- efficiency investments need cash up front,
tries such as iron, steel, cement, chemicals, but future savings are less tangible, making
and petrochemicals. One of the most cost- such investment risky compared with asset-
effective measures is combined heat and based energy-supply deals. Many market
power. Existing technologies and best prac- failures and barriers, as well as nonmar-
tices could reduce energy consumption in the ket barriers, to energy efficiency exist and
industrial sector by 20–25 percent, helping tackling them requires policies and inter-
reduce carbon footprints without sacrific- ventions that entail additional costs (box
ing growth.59 In Mexico cogeneration in the 4.8). Another concern is the rebound effect:
refineries of Pemex, the large state-owned acquiring efficient equipment lowers energy
petroleum company, could provide more bills, so consumers tend to increase energy
than 6 percent of the country’s installed consumption, eroding some of the energy
power capacity at a negative mitigation cost reductions. But empirically the rebound is
(meaning that the sale of previously wasted small to moderate, with long-run effects of
electricity and heat would generate sufficient 10–30 percent for personal transport and
revenue to more than offset the required space heating and cooling,63 and these can
investments).60 be mitigated with price signals.
Improving vehicle fuel efficiency, for
example by shifting to hybrid cars, is the most Price should reflect true cost
cost-effective means of cutting emissions in Many countries channel public subsidies,
the transport sector in the near to medium implicit and explicit, to fossil fuels, distorting
term. Improving power-train systems (for investment decisions for clean energy. Energy
example, by downsizing conventional inter- subsidies in the 20 highest-subsidizing devel-
nal combustion engines) and making other oping countries are estimated at around
design changes, such as lower vehicle weight, $310 billion a year, or around 0.7 percent
optimized transmissions, and start-stop of world GDP in 2007.64 The lion’s share of
systems with regenerative braking, can also the subsidies artificially lowers the prices of
improve fuel efficiency. fossil fuels, providing disincentives to save
In addition, smart urban planning— energy and making clean energy less attrac-
denser, more spatially compact, and with tive financially.65
mixed-use urban design that allows growth Removing fossil-fuel subsidies would
near city centers and transit corridors to reduce energy demand, encourage the sup-
prevent urban sprawl—can substantially ply of clean energy, and lower CO2 emissions.
212 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
BOX 4.8 Energy efficiency faces many market and nonmarket barriers and failures
• Low or underpriced energy. Low energy For most consumers, the cost of energy have difficulty obtaining financing.
prices undermine incentives to save is small relative to other expenditures. Financial institutions usually are not
energy. Because tenants typically pay energy familiar with or interested in energy
• Regulatory failures. Consumers who bills, landlords have little or no incen- efficiency, because of the small size of
receive unmetered heat lack the incen- tive to spend on efficient appliances or the deal, high transaction costs, and
tive to adjust temperatures, and utility insulation. high perceived risks. Many energy ser-
rate-setting can reward inefficiency. • Consumer preferences. Consumer deci- vice companies lack collateral.
• A lack of institutional champion and weak sions to purchase vehicles are usually • Products unavailable. Some efficient
institutional capacity. Energy-efficiency based on size, speed, and appearance equipment is readily available in high-
measures are fragmented. Without an rather than on efficiency. and middle-income countries but not
institutional champion to coordinate • Higher up-front costs. Many efficient in low-income countries, where high
and promote energy efficiency, it products have higher up-front costs. import tariffs reduce affordability.
becomes nobody’s priority. Moreover, Individual consumers usually demand • Limited awareness and information.
there are few energy-efficiency service very short payback times and are unwill- Consumers have limited information on
providers, and their capacity will not be ing to pay higher up-front costs. Prefer- energy- efficiency costs, benefits, and
established overnight. ences aside, low-income customers may technologies. Firms are unwilling to pay
• Absent or misplaced incentives. Utilities not be able to afford efficient products. for energy audits that would inform
make a profit by generating and selling • Financing barriers and high transaction them of potential savings.
more electricity, not by saving energy. costs. Many energy- efficiency projects Source: WDR team.
Ample evidence shows that higher energy income countries and a leading contributor
prices induce substantially lower demand.66 to the global burden of disease.69 A 15 per-
If Europe had followed the U.S. policy of low cent greenhouse gas reduction below busi-
fuel taxes, its fuel consumption would be ness as usual by 2020 in China would result
twice as large as it is now.67 Removing fossil- in 125,000–185,000 fewer premature deaths
fuel subsidies in power and industry could annually from pollution emitted by power
reduce global CO2 emissions by as much as 6 generation and household energy use.70 Pric-
percent a year and add to global GDP.68 ing local air pollution can be very effective in
But removing those subsidies is no reducing the related health costs.
simple matter—it requires strong politi- Pricing carbon, through a carbon tax
cal will. Fuel subsidies are often justified as or cap-and-trade system (see chapter 6), is
protecting poor people, even though most fundamental to scaling up advanced clean
of the subsidies go to better-off consumers. energy technologies and leveling the playing
As chapters 1 and 2 discuss, effective social field with fossil fuels.71 It provides incentives
protection targeted at low-income groups, and reduces risks for private investments
in conjunction with the phased removal and innovations in efficient and clean energy
of fossil-fuel subsidies, can make reform technologies on a large scale (see chapter 7).72
politically viable and socially acceptable. It Developed countries should take the lead in
is also important to increase transparency pricing carbon. Legitimate concerns include
in the energy sector by requiring service protecting the poor from high energy prices
companies to share key information, so and compensating the losing industries,
that the governments and other stakehold- particularly in developing countries. Social
ers can make better-informed decisions and safety nets and nondistortionary income
assessments about removing subsidies. support, possibly from revenues generated
Energy prices should reflect the cost of by the carbon tax or permit auction, can
production and incorporate local and global help (see chapters 1 and 2).
environmental externalities. Urban air pol-
lution from fossil-fuel combustion increases Pricing policy alone is not enough;
health risks and causes premature deaths. energy-efficiency policies are also critical
Lower-respiratory disease resulting from air Carbon-pricing policies alone will not be
pollution is a top cause of mortality in low- enough to ensure large-scale development
Energizing Development without Compromising the Climate 213
sales to give utilities incentives to save. Regu- than 50 countries, developed and developing,
lators forecast demand and allow utilities to have a national energy-efficiency agency. It
charge a price that would recoup their costs can be a government agency with a focus on
and earn a fi xed return based on that fore- clean energy or energy efficiency (the most
cast. If demand turns out to be lower than common), such as the Department of Alter-
expected, the regulator lets prices rise so that native Energy Development and Efficiency
the utility can make the mandated profit; if it in Thailand, or an independent corporation
is higher, the regulator cuts prices to return or authority, such as the Korea Energy Man-
the excess to customers (box 4.10). agement Corporation. To achieve successful
results, they require adequate resources, the
Institutional reform. An institutional ability to engage multiple stakeholders, inde-
champion, such as a dedicated energy- pendence in decision making, and credible
efficiency agency, is essential to coordinate monitoring of results.79
multiple stakeholders and promote and Energy service companies (ESCOs)
manage energy-efficiency programs. More provide energy-efficiency services such as
Table 4.5 Policy interventions for energy efficiency, renewable energy, and transport
tricity and heat meters, particularly smart the past two decades, wind, geothermal,
meters. Consumer awareness campaigns are and hydro power are already or nearly cost-
most effective in conjunction with regula- competitive with fossil fuels.87 Solar is still
tions and financial incentives. Based on expe- costly, but costs are expected to decline rap-
rience in the public health field, interventions idly along the learning curve over the next
to change behaviors need to occur at multiple few years (box 4.12). With rising fossil-fuel
levels—policy, physical environment (design prices, the cost gap is closing. Biomass, geo-
of walkable cities and green buildings), socio- thermal power, and hydropower can pro-
cultural (media communications), interper- vide base-load power, but solar and wind
sonal (face-to-face contacts), and individual are intermittent.
(see chapter 8).85 A large share of intermittent resources
in the grid system may affect reliability, but
Scaling up existing low-carbon this can be addressed in a variety of ways—
technologies through hydropower or pumped storage,
Renewable energy could contribute around load management, energy storage facili-
50 percent to the power mix by 2050.86 With ties, interconnection with other countries,
costs of renewable energy declining over and smart grids.88 Smart grids can enhance
reliability of electricity networks when Spain, Kenya, and South Africa produce
incorporating variable renewable energy the highest market penetration rates in a
and distributed generation. High-voltage, short period. They are considered most
direct-current lines can make long-range desirable by investors because of their price
transmission possible with low line losses, certainty and administrative simplicity and
which reduces the common problem of because they are conducive to creating local
renewable energy sources located far from manufacturing industries. Three methods
consumption centers. And further cost are commonly used to set prices for feed-
reduction and performance improvement in tariffs—avoided costs of conventional
of energy storage will be needed for large- power generation, costs of renewable energy
scale deployment of solar and wind power plus reasonable returns, and average retail
and electric vehicles. So, while the required prices (net metering allows consumers to
magnitude of renewable energy is vast, the sell excess electricity generated from their
transformation is achievable. For example, homes or businesses, usually through solar
wind already accounts for 20 percent of photovoltaics, to the grid at retail market
Danish power production (box 4.13). prices). The main risk is in setting prices
either too high or low, so feed-in tariffs
Renewable energy policies: financial need periodic adjustment.
incentives and regulations Renewable portfolio standards require
Transparent, competitive, and stable pricing utilities in a given region to meet a minimum
through long-term power purchase agree- share of power in or level of installed capacity
ments has been most effective in attract- from renewable energy, as in many U.S. states,
ing investors to renewable energy, and an the United Kingdom, and Indian states. The
enabling legal and regulatory framework can target is met through utilities’ own genera-
ensure fair and open grid access for indepen- tion, power purchases from other producers,
dent power producers. Two major manda- direct sales from third parties to the utility’s
tory policies for renewable power generation customers, or purchases of tradable renewable
are operating worldwide: feed-in laws that energy certificates. But unless separate tech-
mandate a fi xed price, and renewable port- nology targets or tenders are in place, renew-
folio standards that mandate a set target for able portfolio standards lack price certainty
the share of renewable energy (box 4.14).89 and tend to favor established industry players
Feed-in laws require mandatory pur- and least-cost technologies.90 They are also
chases of renewable energy at a fi xed price. more complex to design and administer than
Feed-in laws such as those in Germany, feed-in laws.
BOX 4.14 Feed-in laws, concessions, tax credits, and renewable portfolio standards in Germany,
China, and the United States
Developing countries account for 40 per- power and conventional power among all percent local content and new technology
cent of global renewable energy capacity. utility customers in the country.c transfer models to hire and acquire inter-
By 2007, 60 countries, including 23 devel- national design institutes.
China’s renewable energy law and
oping countries, had renewable energy
wind concession U.S. federal production tax credits
policies.a The three countries with the
China was one of the first developing and state renewable portfolio
largest installed capacity of new renew-
countries to pass a renewable energy law, standards
able energy are Germany, China, and the
and it now has the world’s largest renew- A federal tax credit for producing
United States.
able energy capacity, accounting for 8 electricity from renewable energy
Germany’s feed-in law percent of its energy and 17 percent of its has encouraged significant capacity
In the early 1990s Germany had virtually electricity.d The law set feed-in tariffs for increases, but the uncertainty of its
no renewable energy industry. Today it biomass power, but wind power tariffs are extension from year to year has led
has become a global renewable energy established through a concession process. to boom-and-bust cycles in U.S. wind
leader, with a multibillion-dollar industry The government introduced wind con- development. And twenty-five states
and 250,000 new jobs.b The government cessions in 2003 to ramp up wind power now have renewable portfolio stan-
passed the Electricity Feed-in Law in 1990, capacity and drive down costs. The win- dards. As a result, wind accounted for 35
requiring utilities to purchase the electric- ning bids for the initial rounds were below percent of new generation capacity in
ity generated from all renewable technolo- average costs and discouraged both wind 2007, and the United States now has the
gies at a fixed price. In 2000 the German developers and domestic manufacturers. world’s largest installed wind capacity.e
Renewable Energy Act set feed-in tariffs Improvements in the concession scheme
for various renewable energy technologies and provincial feed-in tariffs put China
for 20 years, based on their generation at no. 2 in newly installed wind capacity Sources:
costs and generation capacity. To encour- in 2008. The government’s target of 30 a. REN 21 2008.
age cost reductions and innovation, prices gigawatts of wind by 2020 will likely be b. Federal Ministry for the Environment 2008.
will decline over time based on a prede- reached ahead of time. The domestic wind c. Beck and Martinot 2004.
termined formula. The law also distributed manufacturing industry has been boosted d. REN 21 2008.
the incremental costs between wind by the government’s requirement of 70 e. Wiser and Bolinger 2008.
and better economics than the reactors cur- Accelerating innovation and
rently in operation. advanced technologies
Nuclear power has large requirements Accelerating innovation and advanced
for capital and highly trained person- technologies requires adequate carbon
nel, with long lead times before it comes pricing; massive investment in research,
on line, thus reducing its potential for development and demonstration; and
reducing carbon emissions in the short unprecedented global cooperation (see
term. Planning, licensing, and construct- chapter 7). Coupling technology push (by
ing a single nuclear plant typically takes a increasing research and development, for
decade or more. And because of the dearth example) with demand pull (to increase
of orders in recent decades, the world has economies of scale) is critical to substan-
limited capacity to manufacture many of tially reduce the cost of advanced technolo-
the critical components of nuclear plants, gies (figure 4.12).
and rebuilding that capacity will take at Utility-scale power generation technolo-
least a decade.94 gies require policies and approaches differ-
Natural gas is the least carbon-intensive ent from those for small-scale technologies.
fossil fuel for power generation and for resi- An international Manhattan Project is likely
dential and industrial use. There is a large to be needed to develop the former, such as
potential to reduce carbon emissions by power-plant-based carbon capture and stor-
substituting natural gas for coal in the short age, on a scale large enough to allow sub-
term. Some 2°C scenarios project that the stantial cost reductions as the technology
share of natural gas in the primary energy moves along the learning curve. Develop-
mix will increase from 21 percent currently ers—utilities or independent power pro-
to 27–37 percent by 2050.95 But the costs ducers—usually have sufficient resources
of natural gas-fi red power depend on gas and capacity. But adequate carbon pricing
prices, which have been highly volatile in and investment subsidies are required to
recent years. And, like oil, more than 70 overcome the high capital cost barrier. In
percent of the world’s gas reserves are in contrast, decentralized, smaller-scale, clean
the Middle East and Eurasia. Security of gas energy technologies require that “a thousand
supply is a concern for gas-importing coun- flowers bloom” to address the needs of many
tries. So energy diversification and supply small local players, with seed and venture
security concerns could limit the share capital and, in developing countries, busi-
of natural gas in the global energy mix to ness development advisory services.
less than indicated in some climate-energy To achieve the 2°C trajectory, a dif-
models.96 ferent technology path is required for
developing countries. Energy and emis-
sions growth are projected to come largely
Figure 4.12 Solar photovoltaic power is getting cheaper over time, thanks to R&D and higher from developing countries, but developed
expected demand from larger scale of production
countries attract much more investment
Cost reduction by factor ($/watt) in clean energy technology. Traditionally,
$25.30 new technologies are produced fi rst in
$25
developed economies, followed by com-
$20 Expected demand effect
mercial roll-outs in developing countries,
$15 43% as has been the case with wind energy.97
R&D
$10 But for emissions to peak in 10 years to
30% stay on the 2°C trajectory, both developed
$5 $3.68
22% 5%
and developing countries would need to
0 introduce large-scale demonstrations of
1979 price Plant size Efficiency Other Unexplained 2001 price
advanced technologies now and in parallel.
Source: Adapted from Nemet 2006. This pattern is fortunately emerging with
Note: Cost reduction is expressed in 2002 $. Bars show the portion of the reduction in the cost of solar photo-
voltaic power, from 1979 to 2001, accounted for by different factors such as plant size (which is determined by the rapid advent of research and develop-
expected demand) and improved efficiency (which is driven by innovation from R&D). The “other” category ment in Brazil, China, India, and a few
includes reductions in the price of the key input silicon (12 percent) and a number of much smaller factors
(including reduced quantities of silicon needed for a given energy output, and lower rates of discarded prod- other technology leaders in the developing
ucts due to manufacturing error). world. The lowest-cost manufacturers of
Energizing Development without Compromising the Climate 221
solar cells, efficient lighting, and ethanol world through mechanisms such as a global
are all in developing countries. technology fund. Developed countries will
One of the major barriers facing devel- also need to take the lead in encouraging
oping countries is the high incremental cost technological breakthroughs (see chapter
of developing and demonstrating advanced 7). The Mediterranean Solar Plan is an
clean energy technologies. It is essential that example of cooperation between developed
developed countries substantially increase and developing countries on the large-scale
fi nancial assistance and transfers of low- demonstration and deployment of concen-
carbon technologies to the developing trated solar power (box 4.15).
BOX 4.15 Concentrated solar power in the Middle East and North Africa
The Mediterranean Solar Plan would create opportunity for a partnership between financing, and revenue enhancement to
20 gigawatts of concentrated solar power developed and developing countries to cover the incremental costs of concen-
and other renewable energy capacity by scale up renewable energy for the benefit trated solar power, particularly for the
2020 to meet energy needs in the Middle of both Europe and North Africa. portion meeting demand in domestic
Eastern and North African countries and First, the demand for green electric- markets in the Middle East and North
export power to Europe. This ambitious ity and the attractive renewable energy Africa.
plan could bring down the costs of con- feed-in tariffs in Europe can significantly Third, a successful program also calls
centrated solar power enough to make it improve the financial viability of concen- for policy actions by the region’s govern-
competitive with fossil fuels. Concentrated trated solar power. ments, creating an enabling environment
solar power on less than 1 percent of Saha- Second, bilateral and multilateral for renewable energy and removing sub-
ran desert area (see the map below) would funds—such as the Global Environment sidies to fossil fuels.
meet Europe’s entire power needs. Facility, Clean Technology Fund, and
Financing this solar initiative will be a carbon financing—would be required
major challenge but offers an excellent for investment subsidies, concessional Source: WDR team.
Source: United Nations Environmental Program, Solar and Wind Energy Resource Assessment, http://swera.unep.net/index.php?id=metainfo&rowid=277&metaid=386
(accessed July 21, 2009).
222 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
vided at the current world average carbon inten- plied in a centralized location by efficient cogen-
sity of 590 grams of CO2 a kilowatt-hour for 1.6 eration plants or large-scale heating boilers.
billion people, equivalent to 160 million tons of 21. Negative emissions can be achieved by
CO2. Socolow (2006) assumed providing 35 kilo- sequestering carbon in terrestrial ecosystems
grams of clean cooking fuels (liquefied petroleum (for example, by planting more forests). It could
gas) for each of the 2.6 billion people would emit also be achieved by applying carbon capture and
275 million tons of CO2. So a total of 435 million storage to biomass-produced energy.
tons of CO2 accounts for only 2 percent of current 22. A 450 ppm concentration of greenhouse
global emissions of 26,000 million tons of CO2. gases translates into a 40–50 percent chance of
3. Black carbon, which is formed through temperatures not exceeding 2°C above preindus-
the incomplete combustion of fossil fuels, con- trial temperatures. Schaeffer and others 2008;
tributes to global warming by absorbing heat in Hare and Meinshausen 2006.
the atmosphere and, when deposited on snow 23. Tans 2009.
and ice, by reducing their reflective power and 24. Rao and others 2008.
accelerating melting. Unlike CO2, black carbon 25. Biomass obtained from plants can be a
remains in the atmosphere for only a few days carbon-neutral fuel, because carbon is taken up
or weeks, so reducing these emissions will have out of the atmosphere as the plants grow and
almost immediate mitigation impacts. In addi- is then released when the plants are burned as
tion, black carbon is a major air pollutant and a fuel. Biomass-based carbon capture and storage
leading cause of illness and premature death in could result in large-scale “negative emissions”
many developing countries. by capturing the carbon emitted from biomass
4. SEG 2007. combustion.
5. Wilbanks and others 2008. 26. Weyant and others 2009; Knopf and oth-
6. McKinsey & Company 2009b. ers, forthcoming; Rao and others 2008; Calvin
7. Ebinger and others 2008. and others, forthcoming.
8. The meaning and importance of energy 27. German Advisory Council on Global
security vary by country depending on its Change 2008; Wise and others 2009.
income, energy consumption, energy resources, 28. These five models (MESSAGE, MiniCAM,
and trading partners. For many countries depen- REMIND, IMAGE, and IEA ETP) are the global
dence on imported oil and natural gas is a source leading energy-climate models from Europe and
of economic vulnerability and can lead to inter- the United States, with a balance of top-down and
national tensions. The poorest countries (with bottom-up approaches and different mitigation
per capita income of $300 or less) are particu- pathways. MESSAGE, developed by the Inter-
larly vulnerable to fuel price fluctuations, with national Institute for Applied Systems Analysis
an average 1.5 percent decrease in GDP associ- (IIASA), adopts the MESSAGE modeling system,
ated with every $10 increase in the price of a bar- which comprises energy systems engineering
rel of oil (World Bank 2009a). optimization model MESSAGE and the top-down
9. Increasing fuel prices by 20 percent macroeconomic equilibrium model MACRO,
increases the costs of generation by 16 percent in addition to forest management model DIMA
for gas and 6 percent for coal, while leaving and agricultural modeling framework AEZ-BLS.
renewable energy practically untouched; see This analysis considers the B2 scenarios, because
World Economic Forum 2009. they are intermediary between A2 (a high popula-
10. IEA 2008b. tion growth case) and B1 (a plausible “best case”
11. WRI 2008; see also presentation of his- to achieve low emissions in the absence of vigor-
torical emissions in the overview. ous climate policies), characterized by “dynam-
12. IEA 2008c. ics as usual” rates of change (Riahi, Grübler,
13. IPCC 2007. and Nakićenović 2007; Rao and others 2008).
14. United Nations 2007. MiniCAM, developed at the Pacific Northwest
15. IEA 2008b. National Laboratory, combines a technologically
16. Chamon, Mauro, and Okawa 2008. detailed global energy–economy–agricultural-
17. Schipper 2007. land-use model with a suite of coupled gas-cycle,
18. Lam and Tam 2002; 2000 U.S. Census, climate and ice-melt models (Edmonds and oth-
http://en.wikipedia.org/wiki/List_of_U.S._cities ers 2008). REMIND, developed by Potsdam Insti-
_with_most_households_without_a_car (accessed tute for Climate Impact Research, is an optimal
May 2009). growth model that combines a top-down macro-
19. Kenworthy 2003. economic model with a bottom-up energy model,
20. District heating distributes heat for resi- aiming at welfare maximization (Leimbach and
dential and commercial buildings that is sup- others, forthcoming). IMAGE model, developed
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PART
2
CHAPTER
5
Integrating Development into
the Global Climate Regime
T
he past two decades have seen needed. The global regime has so far failed
the creation and evolution of an to spur countries to cooperate on research
international climate regime, with and development or to mobilize signifi-
the United Nations Framework cant funding for the technology transfer
Convention on Climate Change (UNFCCC) and deployment needed for low-carbon
and the Kyoto Protocol as the main pillars development (see chapter 7). Aside from
(box 5.1). Kyoto set binding international encouraging poor countries to prepare
limits on the greenhouse gas emissions of National Adaptation Programs of Action,
developed countries. It created a carbon it has delivered little concrete support for
market to drive private investment and adaptation efforts. And the Adaptation
lower the cost of emission reductions. And Fund, slow to get started, falls far short of
it prompted countries to prepare national the projected needs (see chapter 6).
climate-change strategies. In 2007 the Bali Action Plan launched
But the existing global regime has major negotiations to achieve an “agreed out-
limitations. It has failed to substantially come” during the UNFCCC 15th ses-
curb emissions, which have increased by sion in Copenhagen in 2009. These
25 percent since Kyoto was negotiated.1 negotiations present an opportunity to
It has delivered only very limited support strengthen the climate regime and address
to developing countries. Its Clean Devel- its shortcomings.
opment Mechanism (CDM) has so far
brought little transformational change in Building the climate regime:
countries’ overall development strategies Transcending the tensions between
(see chapter 6 on the strengths and weak- climate and development3
nesses of the CDM). The Global Environ- If we are to meaningfully address climate
ment Facility has invested $2.7 billion in change, there is no option but to integrate
climate projects, 2 well short of the flows development concerns and climate change.
The climate problem arises from the joint
evolution of economic growth and green-
house gas emissions. An effective regime
Key messages must thus provide the incentives to recon-
A global problem on the scale of climate change requires international coordination. Neverthe- sider trajectories of industrialization and
less, implementation depends on actions within countries. Therefore, an effective international unravel the ties that have bound develop-
climate regime must integrate development concerns, breaking free of the environment-versus- ment to carbon. However, for ethical and
equity dichotomy. A multitrack framework for climate action, with different goals or policies for practical reasons, this rethinking must
developed countries and developing countries, may be one way to move forward; this framework include meeting development aspirations
would need to consider the process for defining and measuring success. The international
and forging an equitable climate regime.
climate regime will also need to support the integration of adaptation into development.
Until recently, climate change was not
seen as an opportunity to rethink industrial
234 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
development. The climate debate was iso- are no tensions among these objectives.
lated from mainstream decision making Indeed, the very perception of tradeoffs can
on fi nancing, investment, technology, and prove a potent political barrier to integrating
institutional change. That time has sub- climate change and development. Differences
stantially, if not entirely, passed. Awareness in perceptions and conceptual frameworks
of climate change among leaders and pub- across high-income and developing coun-
lics has grown to the level that there is now tries can and do get in the way of a meaning-
readiness to integrate climate change into ful discussion on how climate action can be
development decision making. integrated with development. Many of these
Turning this readiness into an effec- tensions emerge along North-South lines.
tive climate regime requires simultaneously To ensure a climate regime that speaks to
addressing multiple goals involving equity, development concerns, it is useful to iden-
climate, and social and economic develop- tify and engage opposing perspectives and
ment. It would be naïve to suggest that there then seek to transcend them. This chapter
Integrating Development into the Global Climate Regime 235
discusses four points of tension between a and historical emissions, should provide
climate perspective and a development per- the basis of a fair climate regime.
spective: environment and equity; burden Equity and environmental goals have
sharing and opportunistic early action; a pre- thus become polar elements of the debate.
dictable climate outcome and an unpredict- High-income countries argue that newly
able development process; and conditionality industrializing countries are already large
in financing and ownership. These points emitters and will contribute an increasing
of tension are characterizations using broad share of emissions in the future—hence
brush strokes to bring out the disagreements the need for absolute emission reductions.4
and their possible resolution, knowing that Industrializing and developing economies
in practice individual country positions, in view a regime based on negotiated absolute
both the North and the South, are far more reductions as locking in unequal emissions
nuanced than the extremes described here. in perpetuity, a situation that is not viable
The second part of the chapter explores alter- for them. Concerns about equity have been
native approaches to integrating developing heightened by evidence that emissions from
countries into the international architecture. many high-income countries have increased
over the past two decades, since the initia-
Mitigating climate change: tion of climate negotiations. As the urgency
Environment and equity of fi nding a solution has increased, many
Since its beginning the climate regime has developing countries, particularly the large,
framed both equity and environmental rapidly industrializing countries, fear that
goals as core elements. Over time, though, attention and responsibility for mitigating
the articulation of these goals has turned emissions will be increasingly displaced
their complementarities into opposition, onto them. The notion of “major emitters,”
deadlocking the progress of climate nego- including the large, rapidly industrializing
tiations. Equity and environment have been countries, as primary drivers of the prob-
increasingly perceived as competing ways lem feeds this perception.
of thinking about the problem, with coun- An effective and legitimate global climate
tries arrayed behind these positions along regime will have to find a way around these
predictable North-South lines. opposing framings—and speak to both per-
For much of the past two decades, cli- spectives. To begin with, global negotiations
mate change has been construed mainly as need to be approached in a spirit of plural-
an environmental problem. This perspec- ism. Given the history of entrenched politics
tive follows directly from the underlying and the kernel of truth in each, neither the
science: greenhouse gases are accumulat- environmental nor the equity framing of the
ing in the atmosphere and causing climate climate problem can, practically, be an abso-
impacts because of growing anthropogenic lute guide to negotiations, even though both
emissions, combined with limits to the are essential. Hybrid approaches seek to relo-
ocean’s and biosphere’s ability to absorb cate discussions within a development frame
greenhouse gases. In this perspective the and could usefully broaden the debate. One
problem is one of global collective action, approach seeks to reformulate the problem
and the instrument of choice is negotiated around the right to develop rather than the
commitments for absolute reductions in right to emit and identifies country “respon-
emissions. sibility” and “capacity” to act on climate
This strict focus on the environment change.5 Another strand of thinking suggests
forced the rise of a competing perspective, the articulation of “sustainable development
which construes climate change as essen- policies and measures” (meaning measures
tially a problem of equity. Adherents to this to place a country on a low-carbon trajec-
position agree that there are environmental tory that are fully compatible with domestic
limits, but they see the problem as wealthy development priorities) by developing coun-
countries disproportionately occupying tries, combined with absolute reductions by
the finite ecological space available. In this high-income countries.6 While the specifics
perspective, allocation principles based on of any proposal may be debated, the climate
equity, such as those centered on per capita regime would be well served by a politics of
236 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
pragmatism built around the careful inte- than a burden to be shared. They point out
gration of climate and development. that the history of environmental regula-
But for developing countries to believe tion is littered with examples of responses to
that integrating climate and development regulation that have proved less costly than
is not a slippery slope toward ever greater feared—acid rain and ozone depletion are
mitigation responsibility being displaced two well-known examples.7 Even if climate
onto them, it will be necessary to have the mitigation imposes costs in the aggregate,
backstop of an equity principle in the global there are relative advantages to first mov-
regime. One example might be a long-term ers in mitigation technologies. First movers
goal of per capita emissions across countries will be well placed to seize new markets that
converging to a band; this principle could emerge as carbon is priced. Many climate-
serve as a moral compass and a means of mitigation opportunities—notably energy
ensuring that the regime does not lock in efficiency—can be harvested at negative
grossly unequal emission futures. Again, economic cost and bring other co-benefits
while the specifics may be debated, a legiti- for development. And in the medium term,
mate climate regime will need anchoring in moving first allows societies to cultivate the
some form of equity principle. positive feedbacks among institutions, mar-
Given the North’s historical responsibil- kets, and technology as their economies are
ity for stocks of greenhouse gases, already reoriented around a low-carbon future. In
supported by strong statements in the its strongest variant the opportunity narra-
framework convention, it is hard to imag- tive is one of seizing advantage by moving
ine an effective global regime that is not led first on climate mitigation, independent of
by early and strong mitigation action by the what other countries do.
developed world. The combination of early But it is important not to overplay this
action by the North, a robust equity princi- narrative. Conceptually the tightness of
ple, and a spirit of pluralism in negotiations the weave between the climate and indus-
could provide the basis for transcending the trial development suggests that adjustment
environment-equity dichotomy that has costs are likely to be substantial—and that
plagued global climate negotiations. past comparisons such as acid rain and
ozone depletion are of limited relevance.
Burden sharing and opportunistic Neither the stock of industrial capital built
early action around costless carbon nor the dependence
The environmental and equity constructions on endowments of fossil fuels can simply be
of the climate challenge share a common wished away. Skeptics will note that, so far,
assumption that the challenge is a prob- the narrative of climate opportunity has not
lem of burden sharing. The burden sharing been matched by concrete actions by any
language suggests that climate mitigation major high-income country to enable devel-
is going to impose considerable costs on oping countries to realize this opportunity.
national economies. Because current infra- Moreover, even if countries believe the
structure and economic production are built language of opportunity, they are likely
on the assumption of costless carbon, build- to act strategically by maintaining a pub-
ing economies and societies around costly lic stance based on burden sharing to win
carbon will impose considerable adjustment a better negotiating deal, even while pri-
costs. The difficult North-South politics vately organizing to seize available oppor-
around climate is closely tied to the burden tunities. So, opportunity-seizing is unlikely
sharing assumption, because environment to entirely dethrone burden sharing as a
and equity constructions of the problem dominant narrative in the short run—it
imply very different ways of sharing a bur- provides only a limited opening to change
den and therefore different political costs. the entrenched politics of climate change.
Recognizing how burden sharing con- It is important, however, that this limited
tributes to entrenched politics, advocates opening be seized. The prospect of a silver
for early climate mitigation have sought to lining of economic opportunity to the climate
develop a counternarrative of climate miti- cloud could tip the political balance toward
gation as an opportunity to be seized rather getting started with the hard task of turning
Integrating Development into the Global Climate Regime 237
economies and societies toward a low-carbon The climate challenge looks quite differ-
future. Getting started with no prospect of ent through a development lens. Building
an upside is a much harder sell. And start- on a rich and complex intellectual history,
ing is important, because it creates constitu- a recent strand of development thinking
encies with a stake in a low-carbon future, focuses on institutions and institutional
begins the process of experimentation, and inertia in development (chapter 8). In this
increases the costs to others of being left perspective formal “rules of the game” and
behind, thus generating a pull effect. That the informal norms, including those embedded
language of opportunity seizing is not water- in culture, are important determinants of
tight does not negate its potential to counter economic incentives, institutional transfor-
burden sharing as the prominent construct mation, technological innovation, and social
in the climate debate (box 5.2). change. Politics is central to this process, as
different actors organize to change institu-
Predictable climate outcome and tions and transform incentives. Also central
unpredictable development process are the mental maps of what actors can bring
Burden sharing is linked to the environment to their engagement with development pro-
framing of the climate problem, from which cesses. Three key ideas are relevant here. First,
the need emerges to set absolute reduction development is a process of change, largely
targets to avoid catastrophic climate change. driven from below. Second, history and the
Drawing on the recommendations of the past patterns of institutions matter a great
Intergovernmental Panel on Climate Change deal, so common templates are of only lim-
(IPCC), some countries and advocates have ited use—one size does not fit all. Third, this
urged a global goal of restricting global tem- characterization of change applies equally
perature rise to not more than 2°C, which to high-income countries, even though the
will require reducing global emissions by challenge of imperfect and incomplete insti-
at least 50 percent (the lower bound of the tutions appears less daunting, and top-down
IPCC’s range of 50–85 percent) by 2050 from policy and price signals are considered to be
their 1990 levels.8 In response several high- the main drivers of change.
income countries have submitted proposed In this perspective the task of low-carbon
national reduction targets (for 2050 and in development in developing countries is a
some cases for interim years).9 The underly- long-term process, one less amenable to
ing idea is to measure and benchmark prog- being driven from above by targets and
ress toward meeting the climate challenge. timetables than in high-income countries.
A global goal is particularly useful as Instead, changes in the direction of low-
a way to assess the commitment offers of carbon development can be brought about
the high-income world against the magni- only by internalizing this objective in the
tude of the challenge. But, as discussed in larger development processes in which
chapter 4, simple arithmetic suggests that bureaucracies, entrepreneurs, civil society,
a global goal also carries implications for and citizens are already engaged. In other
developing countries; the gap in reductions words, climate has to be integrated with
between the global goal and the sum of high- development. An example of this approach
income country targets will have to be met might be rethinking urban planning in a
by the developing world. Several developing low-carbon future, ensuring the colocation
countries therefore resist this approach as a of work and residence to reduce the need for
back door into forcing commitments by the transport, designing more sustainable build-
developing world or insist on a simultane- ings, and devising solutions to public trans-
ous discussion of an allocation framework.10 port (see chapter 4). This contrasts with a
This resistance stems less from opposition to target-led short-run approach, which might
the global goal and more from a sense that emphasize more fuel-efficient cars within
the language of predictability will prove a existing urban infrastructures.
slippery slope toward translating all actions As highlighted in chapter 4, both
into absolute emission reductions, leading approaches are necessary, one to yield results
to an implicit cap on developing-country in the short run and the other to permit the
emissions. necessary long-run transformation. The
238 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
two perspectives are, thus, complementary. codes, appliance standards, and the like.11
A climate-oriented perspective can throw And these approaches can be embedded in
up a series of short-term policy prescrip- a longer-term process aimed at rethinking
tions that can, in substantial measure, be development through a climate lens.
implemented across countries with minimal But concern with the short term and the
adjustment while also yielding development predictable should not crowd out or exclude
benefits. Many of them are in the realm of longer-term but more fundamental trans-
energy efficiency, such as improved building formations toward low-carbon development.
Integrating Development into the Global Climate Regime 239
And there are risks that overly enthusiastic actions. There is broad agreement that high-
benchmarking of developing-country efforts income countries will transfer some funds
to a long-term global target will do just that. to the developing world to assist specifically
As described above, many transformational with adaptation—and provide separate
measures are not subject to top-down plan- funding for mitigation. But questions remain
ning and so are not subject to prediction and about how much financing will be available,
easy measurement. Indeed, an insistence on its source, how its expenditure will be con-
measurement and predictability will encour- trolled, and on what basis it will be moni-
age only modest measures to minimize risks tored; those questions are discussed here.
of noncompliance. In addition, any hint Governments of high-income countries
of an implicit target reached by subtract- are anxious that any funds provided be well
ing high-income-country emissions from a targeted to climate mitigation or adaptation
global target encourages strategic gaming; and produce real and measurable reduc-
under these conditions, countries have an tions (in emissions or vulnerability). To this
incentive to persuade the international com- end they envision having oversight of these
munity that little can be done at home and funds, particularly in the current tight fis-
only at high cost. cal climate, where domestic constituencies
Reconciling these two perspectives may may have little appetite for sending money
require a nested two-track approach for the overseas. This is particularly true for miti-
short-to-medium term, at least until 2020. gation finance. Indeed, many high-income
Consonant with the UNFCCC principle of countries see public funds as playing a lim-
“common but differentiated responsibility,” ited role in supporting climate financing in
high-income countries could agree to priori- the developing world, instead envisioning
tize predictability of action aimed at carbon that a greater proportion of funds be har-
mitigation, to provide some assurance that nessed through market mechanisms.
the world is on track to meet the climate Developing countries envision these
challenge. Here, short- and medium-term funds entirely differently, as paying to help
targets, for 2020 and 2030, are as significant them adjust to and contribute to the miti-
as a target for 2050, because carbon reduc- gation of a problem not of their making.
tions are more useful now than later and As a result, they eschew any overtones of
because they can win the confidence of the aid and strongly resist any mechanisms of
developing world. The developing countries conditionality. To the contrary, they envi-
could follow a second track, as discussed sion the use of these funds as guided by
later in this chapter, that sets priorities for recipient-country priorities.
reorienting their economies and societies to Elements in both positions appear rea-
low-carbon development. sonable. There are good arguments for not
These approaches, it should be clear, considering transfers of climate-related
need not and should not compromise living funds within an aid umbrella because of
standards—they should instead aggressively high-income-country responsibility for a
explore the co-benefits of development for substantial part of the climate problem.
climate. Nested within this longer-term But it would appear politically difficult for
objective, developing countries could agree high-income countries to sign a blank check
to short-term “best-practice” measures— without some mechanism of accountability
notably for energy efficiency—that bring for the funds. One way forward might be to
both developmental and climate benefits. focus on what the past teaches about condi-
Agreeing to aggressively pursue these mea- tionality as a tool.
sures would provide some reassurance that Developing-country positions in the
some predictable climate gains will be real- climate debate are, in part, shaped by the
ized in the short term. fraught history of conditionality in devel-
opment debates. Civil society and other
The problem of financing— actors came to see conditionality as an
conditionality and ownership instrument that undercuts democracy
The foregoing tensions are closely tied to and forced through unpopular reforms.
the problematic issue of financing climate Because the conditions imposed did not
240 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
gas concentrations of 450 parts per million countries. Instead multitrack frameworks
(ppm) CO2 or 550 ppm of CO2e (box 5.3). permit early action but emphasize win-win
Other modeling has also convincingly options. And the models and the approaches
shown that a multitrack framework can be discussed here suggest that multitrack
very effective if it provides some certainty as approaches and forward-looking, predict-
to when a country may commit to a binding able policies are worthwhile approaches to
agreement.16 This, in fact, reduces the cost for reconciling the need for urgent action and
any country of joining a binding agreement the priority that must be granted to devel-
in the future because it spreads the transition opment and poverty alleviation.
over a longer period of time and investors
can factor eventual policy changes into their A policy-based mitigation track
investment choices, a process that reduces To recognize and advance developing-coun-
the amount of stranded assets or expensive try mitigation efforts, the major new element
retrofits a country can be left with. needed in the climate regime is a new cat-
In addition to the mitigation tracks, a egory of mitigation action that is broad and
comprehensive agreement would need to supple enough to incorporate a wide variety
include of actions. Many developing countries have
• An adaptation track to assist vulnerable begun to identify existing and potential pol-
countries with adaptation planning and icies and actions at the national level that,
implementation while not driven exclusively or primarily
by climate-change concerns, contribute to
• Cross-cutting enabling elements on tech-
climate-mitigation efforts. As these policies
nology, fi nance, and capacity-building
support to developing countries and actions arise within national contexts,
they inherently reflect a country’s national
• Means to measure, report, and verify mit-
circumstances and its development objec-
igation actions and support for the miti-
tives and priorities. Indeed many of these
gation actions of developing countries, as
policies are driven by development objectives
specified under the Bali Action Plan.
such as energy access and security, better air
Chapter 4 showed that it would be almost quality, improved transportation services,
impossible to remain close to 2°C warming and sustainable forestry, with mitigation an
with delayed participation of developing incidental co-benefit.
Integrating Development into the Global Climate Regime 243
A mechanism that allows the integra- Process for introducing policy actions. For
tion of such nationally driven policies into country policy actions to be recognized
the international framework offers four within the international framework, gov-
advantages to developing countries. First, ernments would need to establish a process
it enables developing countries to contrib- to bring them forward and, possibly, to have
ute to the climate effort in ways that, by other parties consider and accept them.
their own determination, are compatible Within the negotiations, some parties have
with their development agendas. Second, it proposed the establishment of a “registry”
allows each country to come forward with for countries to record nationally appropri-
a nationally defined package tailored to its ate mitigation actions they plan or propose
circumstances, capabilities, and mitigation to undertake.20
potential. Third, if it is coupled with a robust One critical issue is whether the process
support mechanism, policies can be scaled of bringing actions forward occurs in the
or tiered to provide for stronger action on course of negotiating a new agreement or is
the provision of stronger support. Fourth, an outcome of those negotiations. The lat-
while providing a clear pathway for stronger ter may be preferable for most developing
mitigation efforts by developing countries, it countries. In this scenario a new agreement
does not bind them to quantified emission would establish binding emission targets for
limits, which they perceive as undue con- developed countries, mechanisms to sup-
straints on their growth and development. port developing-country mitigation and
The case for a policy-based track has been adaptation efforts, and a process for devel-
advanced in the academic literature in dif- oping countries to then define their mitiga-
ferent guises. One formulation, called “sus- tion actions. But developed countries may be
tainable development policies and measures” reluctant to enter into binding emission tar-
(SD-PAMs), envisions voluntary pledges by gets unless the major developing countries
developing countries.17 Another proposal are prepared to indicate at the same time the
describes “policy-based commitments” in actions they will undertake. In that case the
which the policy content might be identi- process of specifying those actions could be
cal to that under an SD-PAMs approach structured as part of the negotiating process,
but would be reflected in the international with the aim of arriving at a comprehensive
framework as a commitment rather than a agreement integrating binding targets for
voluntary action.18 Since the adoption of the developed countries and specified policy
Bali Action Plan, governments have put for- actions for developing countries.
ward proposals addressing various aspects of In either case, parties also need to con-
how a policy-based approach could be made sider whether the process should be com-
operational in a future climate agreement.19 pletely open-ended, with countries free to
In fashioning a new policy-based track propose any type of policy or action, or
as part of an evolving international climate circumscribed in some way. One option
framework, governments would need to con- proposed in the negotiations is a menu, or
sider several interrelated issues, including “tool box,” of mitigation actions for devel-
oping countries to choose from. 21 The
menu could identify broad categories of
• The process for countries to bring for-
action, with parties invited to put forward
ward policies and actions and have them
detailed policies or action plans within the
reflected in the international framework
categories they choose. For consistency or
• The legal character of these policies and comparability it may be useful to establish
actions some form of template for countries to fol-
• The links to other mechanisms pro- low in describing their mitigation actions.
viding incentives and support for their Another important consideration is
implementation quantifying the expected emission impacts
• The standards and mechanisms for of mitigation actions. Although countries
measuring, reporting, and verifying the participating in a policy-based track would
policies and actions and the support for not be committing to specific emission out-
them. comes, other parties will want to know what
244 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
impact their actions are likely to have on their prepared to deliver on its own, and a higher
future emissions. At a minimum countries level of effort it would be prepared to under-
should be prepared to offer such projections. take with support. Or recording an action in
Depending on the type of process established, the registry could initiate a review by a des-
emission projections also could be prepared ignated body, using agreed criteria, to evalu-
or verified by an intergovernmental body or ate the need for support, taking into account
an independent third party. a country’s circumstances and capacities. All
of these approaches could lead to a determi-
Legal character. The Bali Action Plan nation of support commensurate with the
distinguishes between “nationally appro- proposed action.
priate mitigation commitments or actions”
by developed countries and “nationally Measurement, reporting, and verification.
appropriate mitigation actions” by devel- Parties agreed in Bali that the mitigation
oping countries, implying that the actions efforts of developed and developing coun-
of developing countries are not to take tries—as well as the support for developing-
the form of legally binding commitments. country efforts—are to be “measurable,
Indeed, proposals put forward by devel- reportable, and verifiable” (MRV). Effective
oping countries in the post-Bali negotia- approaches to MRV can establish and main-
tions, including proposals for a registry of tain parties’ confidence in one another’s
developing-country actions, emphasize the respective efforts and in the overall regime.
voluntary nature of these actions. To be workable, MRV terms and mecha-
But the Bali Action Plan does not nisms must balance the need for transpar-
expressly preclude commitments by devel- ency and accountability against the parties’
oping countries, contrary to the 1995 Berlin traditional concerns about sovereignty.
Mandate that framed the negotiations that Reporting requirements for developing
led to the Kyoto Protocol. In the current countries under the existing regime are
round of negotiations some developed coun- fairly minimal—national “communica-
tries have taken the position that actions by tions” (including emission inventories) are
some developing-countries should be bind- submitted infrequently and are not subject
ing.22 Developing countries, however, have to review. In a future agreement the MRV
been reluctant to take on binding commit- of developing-country actions on a policy-
ments, at least at this stage. based mitigation track would likely require
a more rigorous approach. Parties first
Links to support. Robust efforts by devel- must consider what actions are subject to
oping countries will be feasible only with measurement and verification. Some devel-
stronger international support. Indeed, oping countries have taken the view that
under the Bali Action Plan, the mitiga- MRV should apply only to actions for which
tion actions of developing countries are to they are receiving support. A second issue
be “supported and enabled by technology, is whether verification is performed by the
financing, and capacity building.” Potential country, an international body, or a third
mechanisms to generate such support are party. In some international regimes par-
discussed below. If parties were to establish ties verify their own actions under national
a policy-based mitigation track for devel- systems that must conform to international
oping countries, a related question is how guidelines. In others expert teams review
actions under that track would be linked to parties’ submissions (as for national com-
specific flows of support. munications and emission inventories sub-
Any process to enable countries to bring mitted by developed countries under the
forward proposed actions could, in addi- UNFCCC and the Kyoto Protocol).
tion, identify means and levels of support for Third is the metrics to be employed,
those actions. For example, in entering a pro- regardless of the means of verification.
posed action in a mitigation-action registry, One rationale for a policy-based track is
a country could indicate the type and level of that it allows parties to pursue the types of
support needed to implement the action. Or action most appropriate to their circum-
a country might specify the level of effort it is stances and development objectives. This
Integrating Development into the Global Climate Regime 245
diversity presents challenges for MRV, how- mechanisms—and both must be substan-
ever, because different metrics are needed tially scaled up in a future agreement.
to measure and verify different types of
actions (efficiency standards, renewable Public finance
energy targets, carbon levies). How MRV is A new multilateral effort must scale up
structured will therefore depend very heav- public fi nance in support of developing
ily on how the actions are defined. In turn, countries. Among the key issues are fund-
the need for actions to be measurable and ing sources, funding criteria, funding
verifiable could strongly influence the way instruments, links to private fi nance, and
parties choose to defi ne them. Somehow managing and governing any new fund-
bounding the types of actions allowable in ing mechanisms (all discussed extensively
a policy-based track—say, by establishing in chapter 6). This section highlights a few
a menu for parties to choose from—could findings.
make MRV more manageable. Most of the funds under the climate
Measurement and verification of regime have relied on pledging by donor
developed-country support will likewise countries, resulting in inadequate and
depend heavily on the specific types and unpredictable f lows. Several proposals
mechanisms of support. If a new agree- now under discussion could produce more
ment were to recognize support provided reliable funding streams. These include
through bilateral channels, criteria would funding commitments based on agreed
be needed to determine what flows are “cli- assessment criteria, a levy on international
mate related” and “new and additional.” aviation or other greenhouse gas–generat-
As a general matter, support generated ing activities, or an auction of a portion of
through a multilateral instrument, such developed countries’ international emis-
as an international carbon levy or an auc- sion allowances. Another option—pressed
tion of international emission allowances, by developing countries at the UN Climate
would be more readily verifiable. Change Conference in Poznań, Poland, in
December 2008—is an extension of the
Support for developing-country existing levy on CDM transactions to the
mitigation efforts Kyoto Protocol’s other market-based flexi-
The ability of developing countries to bility mechanisms (international emissions
develop and effectively implement miti- trading and Joint Implementation).23
gation actions will depend in part on the Any new fund could deploy an array
availability of adequate and predictable of funding instruments, including grants,
support from the international community. concessional loans, loan guarantees or
General areas of support include fi nance, other risk mitigation instruments, depend-
technology, and capacity building. These ing on the types of activity to be supported.
could include analyzing mitigation poten- For technology the options include pay-
tials to identify opportunities to reduce ments for access to and use of intellectual
greenhouse gases with the lowest cost and property and the associated technological
highest co-benefits, developing and imple- know-how. Important criteria in selecting
menting greenhouse gas mitigation poli- activities for funding could include the
cies, disseminating and deploying the best projected emission reduction per dollar
available technologies, and measuring and of investment, a project’s contribution to
verifying mitigation actions and their asso- a host country’s sustainable development
ciated sustainable development benefits. objectives, or its ability to leverage carbon
Adequate support will require a range of finance or other private investment.
mechanisms to generate and channel public
resources and to do so in a way that leverages Market-based mechanisms
private investment, which under any sce- The Kyoto Protocol’s Clean Development
nario will be the majority of flows available Mechanism has generated substantial flows
for a low-carbon transition (see chapter 6). supporting clean energy and other green-
The climate regime has two broad forms of house gas-reducing projects in developing
support—public finance and market-based countries. While the CDM has had many
246 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
successes, experience has also highlighted approach fits well with the notion of a
many concerns and areas for potential policy-based mitigation track, providing
improvement (chapter 6). Beyond the a market-based incentive for countries to
reform of the original CDM model, how- develop, put forward, and implement miti-
ever, parties have also begun to consider gation policies aligned with their develop-
alternative approaches to emission credit- ment objectives. Methodologies could be
ing to provide incentives for investment established to quantify the reductions from
and emission reduction on a broader scale. different types of policy approaches. Credit-
As initially conceived and currently oper- ing countries for all the reductions generated
ating, the CDM generates emission credits by their policy actions could cause an exces-
from individual projects proposed and sive supply of credits; developed countries
certified case by case. In the view of many, might also object on the grounds that devel-
this project-based approach excludes many oping countries should bear some of the cost
strategies with greater mitigation potential of their policy actions. These concerns could
and imposes high transaction costs and be addressed by issuing credits only after a
administrative burdens, significantly limit- certain reduction has been achieved or by
ing the CDM’s potential to transform long- discounting credits (say, by issuing one ton
term emission trends. In an initial attempt of credit for every two tons reduced).
to address these concerns, parties have
authorized a “programmatic” CDM, which Promoting international efforts to
allows an aggregation of multiple activities integrate adaptation into climate-
over space and time as a single project. But smart development
emission reductions are still measured on Stronger international support for adap-
the basis of discrete activities. tation is a matter of need, because climate
Alternative models now under discussion impacts are already being felt and because
include sectoral or policy-based crediting. the poor who contribute least to the problem
By allowing the generation of credits on the face the gravest risks. But adaptation efforts
basis of policies or other broad programs, must extend well beyond the climate frame-
such approaches would help drive and work. As chapters 2 and 3 suggest, adaptation
support larger-scale emission-reduction concerns and priorities must be integrated
efforts. Under a sectoral approach, for across the full breadth of economic and
instance, emissions would be measured development planning and decision mak-
across an entire sector, and a country could ing, both national and international. The
earn credits for any reductions below an role of the international climate regime in
agreed emissions baseline. (This approach particular lies with catalyzing international
is sometimes described as “no-lose sectoral support and facilitating national adaptation
crediting,” because a country faces no con- efforts. The focus here is on how adaptation
sequences if emissions rise above the agreed can be best promoted and facilitated under
baseline.) The baseline could be set at busi- the international climate regime.
ness as usual, rewarding any deviation from
projected emission levels. Or it could be set Adaptation efforts under the current
below business as usual, requiring that a climate regime
country undertake some reductions on its Under the UNFCCC all parties commit to
own before qualifying for credits. Given the undertake national adaptation measures and
uncertainties in any projection of future to cooperate in preparing for the impacts of
emissions, however, the determination of climate change. Special consideration is given
business as usual is somewhat subjective to the least developed countries for their
and potentially quite contentious. special needs to cope with adverse effects of
Under policy-based crediting a country climate change.24 The least developed coun-
could earn credits for verifiable reductions tries are encouraged and supported under
achieved by implementing mitigation poli- the convention to prepare a National Adap-
cies recognized within the climate regime tation Program of Action identifying prior-
or by deploying technology action. This ity activities that respond to their urgent and
Integrating Development into the Global Climate Regime 247
immediate needs to adapt to climate change could serve as a basis for targeting imple-
(see chapter 8). To date, 41 least developed mentation assistance through the climate
countries have submitted national action regime or through other channels.
programs.25 The five-year Nairobi Work • Exchanging experiences and best prac-
Program adopted in 2005 aims to help these tices, and coordinating programmatic
countries improve their understanding and approaches to support national, regional,
assessment of the impacts of climate change and international systems for adapta-
and to make informed decisions on practical tion and resilience.27 This effort would
adaptation actions and measures.26 provide guidance to countries on vul-
Current funding for adaptation under nerability assessments and on how to
the UNFCCC process is mainly through the integrate adaptation activities into sec-
Global Environment Facility’s Strategic Pri- toral and national development plan-
ority on Adaptation initiatives; additional ning and policies, as well as help in
funding will come from the UNFCCC Adap- accessing technology for adaptation. The
tation Fund when it is fully operational. universal membership of the UNFCCC
The international effort to date has deliv- provides a unique forum for countries,
ered some information and capacity build- organizations, and private entities to
ing on adaptation, but it has yet to facilitate exchange experiences and learn from
significant implementation at the domestic each other. Bringing national devel-
level, access to technology, or the building of opment agencies to participate in this
national institutions to carry the adaptation process is essential to success. Apart
agenda forward. The effort is constrained by from using the UNFCCC process to dis-
limited funding (see chapter 6) and the lim- seminate information, it may be useful
ited engagement of national planning and to establish regional centers of excel-
development agencies. The UNFCCC pro- lence for catalyzing local, national, and
cess has traditionally involved environment regional activities. The direct impacts
agencies; its focus on climate change may not of climate change are felt locally, and
easily lead to a comprehensive, multisectoral response measures need to be tailored to
effort addressing adaptation. local circumstances. Regional centers,
with international support, can promote
Strengthening action on adaptation capacity building, coordinate research
under the UNFCCC activities, and exchange experiences and
Working through the national development best practices.
process is essential to encourage early plan- • Providing reliable funding to assist coun-
ning to strengthen climate resilience and tries in implementing high- priority
discourage investments that heighten climate measures identified in their national
vulnerability. The UNFCCC process can adaptation strategies. Funding for adap-
complement and facilitate this process by tation largely relies on public fi nanc-
ing (see chapter 6). Finding additional
• Supporting comprehensive national adapta- sources of adaptation finance and pack-
tion strategies in vulnerable countries. These aging them with existing development
strategies would establish frameworks for fi nance are essential for effective adap-
action and strengthen national capaci- tation. Funds could come from donors,
ties. They would build on the National a levy on the CDM, and the tax or auc-
Adaptation Programs of Action, which tion revenues from emission allowances.
target urgent priorities, to map out com- Equally important are defi ning criteria
prehensive long-term plans identifying for allocating funds and setting up insti-
climate risks, existing and needed adap- tutional arrangements to manage them
tation capacities, and national policies (see chapter 6). Efficient and equitable
and measures to fully integrate climate allocation and use of adaptation fi nance
risk management into development deci- is in everybody’s interest, and wasteful
sion making. In addition to organizing use of resources can undermine public
national adaptation efforts, the strategies support for the whole climate agenda.
248 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
“Let’s put in a joint effort . . . now before it’s too late to save our Mama Earth.”
—Sonia R. Bhayani, Kenya, age 8
22. For example, in their submissions to Center on Global Climate Change, Arlington,
the UNFCCC, the United States and European VA.
Union indicate that major developing coun- Burtraw, D., D. A. Evans, A. Krupnick, K. Palmer,
tries shall commit to formulate and submit and R. Toth. 2005. “Economics of Pollution
low-carbon strategies to the UNFCCC. See Trading for SO2 and NOx.” Discussion Paper
UNFCCC/AWGLCA/2009/MISC.4 at http:// 05-05. Resources for the Future, Washington,
unfccc.int/resource/docs/2009/awglca6/eng/ DC.
misc04p02.pdf (accessed August 5, 2009).
Calvin, K., L. Clarke, E. Diringer, J. Edmonds,
23. Akanle and others 2008. See http://unfccc.
and M. Wise. 2009. “Modeling Post-2012 Cli-
int/kyoto_protocol/mechanisms/items/1673.php
mate Policy Scenarios.” Pew Center on Global
(accessed July 8, 2009) for information about the
Climate Change, Arlington, VA.
Kyoto Protocol’s flexibility mechanisms.
24. Article 4.1 of the UNFCCC. DOE (U.S. Department of Energy). 2009. “Car-
25. UNFCCC Secretariat, http://unfccc.int/ bon Dioxide Information Analysis Center
cooperation_support/least_developed_countries (CDIAC).” Oak Ridge, TN.
_portal/submitted_napas/items/4585.php Dollar, D., and L. Pritchett. 1998. Assessing Aid:
(accessed August 5, 2009). What Works, What Doesn’t and Why. Oxford,
26. Decision 2/CP.11 of the UNFCCC. UK: Oxford University Press.
27. SEG 2007. Dubash, N. 2009. “Climate Change through a
Development Lens.” Background paper for
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250 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
The interaction between the international trade and climate change regimes has potentially major implications for devel-
oping countries. While there are positive reasons for exploring synergies between the two regimes and for aligning policies
that could stimulate production, trade, and investment in cleaner technology options, instead much focus has been on using
trade measures as sanctions in the global climate negotiations.
This focus on sanctions stems mutually supporting objectives and number of regional trade agreements
mainly from competitiveness con- the potential for synergies. While the (many of which include developing
cerns in countries that are now racing implementation of the Kyoto Protocol countries) now have elaborate envi-
to reduce greenhouse gas emissions to may have brought to light some con- ronmental provisions. However, there
meet Kyoto 2012 targets and beyond. flicts between economic growth and is little evidence to show that they have
These concerns have led to proposals environmental protection, the objec- contributed in any meaningful way to
for tariff or border tax adjustments to tives of the protocol also provide an achieving positive environmental out-
offset any adverse impact of capping opportunity for aligning development comes.3 Also, regional trade agreements
carbon dioxide (CO2) emissions. There and energy policies in ways that could may have limited value in addressing
is also a concern about “leakage” of car- stimulate production, trade, and invest- environmental issues that require global
bon-intensive industries into countries ment in cleaner technology options. solutions, such as climate change.
that are not implementing the Kyoto Recent attempts to bring together
Protocol. the two agendas have been received New developments
The broad objective of bettering with a great deal of skepticism. While The proposed use of punitive trade sanc-
current and future human welfare is trade ministers meeting in 2007 at the tions to support domestic climate action
shared by both global trade and cli- UNFCCC Bali Conference of Parties remains prominent and has gained
mate regimes. Just as the World Trade widely shared the view that the trade ground in the midst of the current finan-
Organization (WTO) recognizes the and climate regimes could buttress each cial crisis. All the recent energy and cli-
importance of seeking to “protect and other in several areas, they noted that mate policy bills introduced in the U.S.
preserve the environment,”1 the Kyoto tension between the two could arise, Congress provide for trade sanctions
Protocol states that parties should especially in the context of negotiations or tariffs (or equivalent instruments)
“strive to implement policies and on post-Kyoto climate commitments on certain goods from those countries
measures . . . in such a way as to mini- after 2012. that do not impose controls on car-
mize adverse effect on international A general developing-country per- bon emissions. Similarly, the European
trade.” The United Nations Frame- ception is that any discussion of climate Commission’s plans to tighten Europe’s
work Convention on Climate Change change issues (and, more broadly, envi- greenhouse gas reduction regime also
(UNFCCC) features similar language ronmental issues) in trade negotiations recognizes the risk that new legisla-
in several places, and the Doha Com- could eventually lead to “green pro- tion could put European companies at
muniqué specifically states that “the tectionism” by high-income countries, a competitive disadvantage compared
aims of upholding and safeguarding which would be detrimental to their to those in countries with less stringent
an open and non-discriminatory mul- growth prospects. They have resisted climate protection laws.
tilateral trading system, and acting for attempts to include climate issues in The issue of imposing border mea-
the protection of the environment and trade by stating that climate change sures on environmental grounds has
promotion of sustainable development issues primarily belong and have to be been much discussed in the economic
can and must be mutually supportive.”2 negotiated under the umbrella of the and legal literature. The WTO and
Both treaties thus recognize and respect UNFCCC. Even within the WTO there other trade agreements do allow for
each other’s mandate. has been a general reluctance to broaden “exceptions” for trade measures that
Yet both climate and trade agen- the climate mandate in the absence of a might otherwise violate free trade rules
das have evolved largely indepen- directive from the UNFCCC. Interest- but that can be justified as necessary
dently through the years, despite their ingly, despite all the rhetoric, a growing or related to an effort to protect the
BOX F C.1 Taxing virtual carbon
Should carbon be taxed where it is emit- Production- and consumption-based emissions (millions of tons of CO2)
ted, or at the point where goods are 6,000
consumed on the basis of their “embod- Virtual carbon in domestic final demand (foreign sources)
ied” or “virtual” carbon—the amount 5,000 Virtual carbon in domestic final demand (domestic sources)
Virtual carbon in domestic production
of carbon emitted in producing and
delivering the good? Many major export- 4,000
ing countries argue that they would be
penalized by taxing carbon at the point 3,000
of emission, when in fact much of this car-
bon is emitted in the production of goods 2,000
for export—goods that are enjoyed by
consumers in other countries. Based on 1,000
analysis of carbon flows within a multi-
regional input-output table, the figure 0
Brazil Canada China EU15 India Japan Mexico Russian United South
shows that China and the Russian Federa- Federation States Africa
tion are net exporters of virtual carbon,
while the European Union, the United Source: Atkinson and others 2009.
States, and Japan are net importers. Note: The height of the blue bar measures total emissions from production of goods and services; the green
bar represents how much carbon is emitted domestically to support domestic final demand (virtual carbon from
However, countries imposing a carbon domestic sources); the orange bar represents how much carbon is emitted abroad to support domestic final
tax will be concerned about competitive- demand (the virtual carbon from foreign sources). If the height of the blue bar is greater than the sum of the
ness and carbon leakage effects if other other two bars, then the country is a net exporter of virtual carbon.
countries do not follow suit, and may
consider taxing virtual carbon imports to
level the playing field. The table shows carbon tariff rates faced by developing areas where the competitive playing field
the effective tariff rates in addition to the countries could be significant if countries is viewed as uneven. Accurate measure-
existing tariffs that countries would face go this route. ment of virtual carbon would be highly
if a tax of $50 a ton of CO2 were placed on Unilateral imposition of virtual carbon complex and subject to dispute. More-
the virtual carbon content of imported tariffs would clearly be a source of trade over, placing tariffs on virtual carbon
goods and services. friction, however, damaging an inter- could burden low-income countries that
A carbon price of $50 a ton of CO2 is in national trading system that is already have contributed very little to the prob-
line with recent experience—emission being stressed by the current financial lem of climate change.
permits in the European Emission Trading crisis. Opening the door to border taxes
Scheme traded as high as €35 in 2008. for climate could lead to a proliferation
The table therefore suggests that virtual of trade measures dealing with other Source: Atkinson and others 2009.
Average tariff on imports of goods and services if virtual carbon is taxed at $50 a ton of CO2
(percent)
Importing countries
Russian United South
Brazil Canada China EU15 India Japan Mexico Federation States Africa Average
Brazil 0.0 3.4 3.2 3.2 2.8 4.0 2.7 2.6 3.0 2.9 3.1
Canada 4.5 0.0 3.4 3.4 3.7 3.2 2.8 2.8 2.6 3.0 2.8
China 12.1 10.5 0.0 10.5 13.4 10.4 9.9 10.0 10.3 11.1 10.5
EU15 1.6 1.1 1.1 0.0 1.3 1.2 1.1 1.1 1.2 1.2 1.2
Exporting countries
India 8.3 7.8 9.2 7.7 0.0 6.8 8.1 8.7 7.9 5.3 7.8
Japan 1.4 1.3 1.5 1.4 1.6 0.0 1.4 1.4 1.2 1.3 1.4
Mexico 3.5 2.1 4.2 4.0 10.8 4.0 0.0 4.1 1.7 3.5 2.1
Russian 18.0 14.3 12.4 11.8 12.8 11.3 14.7 0.0 10.4 15.9 11.7
Federation
United 3.3 3.0 3.1 3.1 3.3 3.0 2.8 2.8 0.0 3.2 3.0
States
South 15.9 10.1 10.6 9.8 11.5 11.4 16.6 7.9 8.9 0.0 10.1
Africa
Average 3.7 2.9 2.2 5.0 4.5 4.8 3.3 2.6 3.0 2.9
Source: Atkinson and others 2009.
Note: The last column is the trade-weighted average tariff faced by the exporting country; the last row is the trade-weighted average tariff applied by the importing country.
Trade and climate change 253
environment or conserve exhaustible cern. This issue has a parallel to the be net exporters and developing coun-
natural resources and so long as they “pollution havens” debate that domi- tries net importers of energy-intensive
are “nondiscriminatory” and “least- nated the trade and environment lit- products.
trade-restrictive.” 4 Trade measures erature in the 1990s. In a similar vein, firms in some high-
are often justified as a mechanism to A recent World Bank study exam- income countries are adopting “carbon
ensure compliance with multilateral ined the evidence for any relocation of labeling” as a mechanism for mitigat-
environmental agreements (MEAs). carbon-intensive industries attribut- ing climate change. Carbon labeling
Indeed MEAs such as the Convention able to more stringent climate policies, involves measuring carbon emissions
on International Trade in Endangered mostly in high-income countries. One from the production of products or ser-
Species and the Basel Convention use of the factors influencing the operations vices and conveying that information to
trade restrictions as a means to achieve of the energy-intensive sectors gener- consumers and those making sourcing
MEA aims and these are accepted by all ally is the relative energy price in addi- decisions within companies. It is pos-
parties to the MEA. In case of climate tion to land and labor costs. The study sible that well-designed schemes would
change, however, a particularly thorny used import-export ratios of energy- create incentives for production in dif-
issue in assessing the compatibility of intensive production in high-income ferent parts of the supply chain to move
trade measures with climate change countries and low- and middle-income to lower-emission locations. Thus, car-
policy may arise from the application of countries as a proxy for any shift in bon labeling could be an instrument
unilateral measures based on national production and trade patterns (figure that enables consumers to exercise
policies or product standards based on FC.1).5 The import-export ratios show their desire to join the battle against
Processes and Production Methods, an increasing trend for high-income climate change by using their purchas-
or both. The other issue with respect countries and a declining trend for ing preferences.
to “border tax adjustments” that has low- and middle-income countries. The downside of carbon-labeling
received little attention is what would While not conclusive, this seems to schemes is that they are likely to have
happen to the revenue that is generated. suggest that some relocation of energy- a significant impact on exports from
If it is all given back to the country that intensive industries may already be low-income countries.6 Fears have been
is taxed it may have a very different happening to countries that do not face raised that low-income countries will
political economy than if it stays in the caps on their greenhouse gas emissions. face greater difficulties exporting in a
country imposing the tax. However, the ratio is still less than 1 for climate-constrained world where car-
But legal experts remain divided high-income countries and more than bon emissions need to be measured and
on whether a tax on embodied carbon 1 for developing economies, suggesting certification obtained to enable partici-
would be compatible with international that high-income countries continue to pation in carbon-labeled trade. Exports
trade regulations, because the WTO so
far has not come out with clear provi-
sions on the subject. Nonetheless, the Figure FC.1 Import-export ratio of energy-intensive products in high-income countries and low- and
recent proposals could have significant middle-income countries
implications for trade in manufactures Ratio
in developing countries (box FC.1). 2.5
Many high-income countries also
express concern that any plan that
2.0
exempts developing countries from
emissions limits would not be effective
because carbon-intensive industries 1.5
would simply shift their operations to
one of the exempt countries. Carbon 1.0
leakage, as such a shift is called, not
only would undercut the environmen-
0.5 Low- and middle-income countries
tal benefits of the Kyoto Protocol but
High-income countries
also would affect the competitiveness
of high-income-country industries. 0
For energy-intensive industries such 1990 1992 1994 1996 1998 2000 2002 2004
as cement and chemicals, international Year
competitiveness is an important con- Source: World Bank 2008.
254 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
from low-income countries typically technology transfer needed to deal with wind power capacity. Similarly other
depend on long-distance transporta- increasing greenhouse gas emissions in developing countries have emerged as
tion and are produced by relatively the developing world (see chapter 6), it manufacturers of renewable energy
small firms and tiny farms that will find has been suggested that broader trade technologies. India’s solar photovoltaic
it difficult to participate in complex and investment rules could be one way manufacturing capacity has increased
carbon-labeling schemes. to speed up transfer of technology.8 several times in the past four years, while
There is a significant knowledge gap Liberalizing trade in environmental Brazil continues to be a world leader in
to be filled regarding scientific studies goods and services has been on the the production of biofuels. These devel-
of the structure of carbon emissions agenda of the WTO Doha Round since opments call for liberalizing bilateral
throughout international supply chains the beginning. All WTO members agree trade in clean technologies that could
that include low-income countries. The that environmental goods liberalization also facilitate buoyant South-South tech-
small number of existing studies sug- should be geared toward environmen- nology transfer in the future.
gests that emissions patterns are highly tal protection. Yet very little has been
complex, and an important finding is achieved owing to the differing percep- The way forward on trade and
that geographic location alone is a poor tions of high-income and developing climate change
proxy for emissions, because favorable countries on what goods are to be lib- Countries have generally been reluctant
production conditions may more than eralized and how to liberalize. to bring the trade and climate regimes
offset a disadvantage in transport. For Efforts have been made, includ- closer for fear of one overwhelming the
example, Kenyan-produced roses air- ing by the World Bank,9 to move these other. This is unfortunate because trade
freighted to and sold in Europe are negotiations forward by identifying in clean energy technologies potentially
associated with considerably lower car- climate-friendly goods and services that offers an economic opportunity for
bon emissions than roses produced in currently face tariff and nontariff barri- developing countries that are emerging
the Netherlands. ers to trade, and making the removal of as major producers and exporters of
The design and implementation these barriers through the WTO negoti- these technologies.
of carbon labeling will also need to ations a priority. This effort has proved Progress in the trade regime is possi-
take into account a number of com- challenging, because WTO members ble even on very complex subjects. The
plex, technical challenges.7 First, using have yet to agree on a definition of “cli- success of the WTO’s 1997 Information
secondary data from producers in mate friendly” that both contributes to Technology Agreement suggests that
rich countries to estimate the carbon climate policy objectives and generates implementation of any agreement on
emissions of producers in low-income a balanced distribution of trade ben- climate-friendly goods and technologies
countries will not capture the fact that efits among members. Two particular will certainly need to follow a phased
the technologies being applied in rich areas of controversy involve “dual use” approach to enable developing coun-
and low-income countries are substan- technologies that may be used to reduce tries to deal gradually with implement-
tially different. A second technical issue emissions as well as to meet other con- ing liberalization, including increasing
relates to the use of emission factors— sumer needs, and agricultural products, the efficiency of customs administra-
the amount of carbon emitted during which are mired in a very contentious tion and harmonizing customs clas-
particular parts of the manufacture and part of the Doha negotiations. sifications for climate-friendly goods.
use of products—and how they should The other issue that often goes unno- This should be supported through
be calculated. A third issue is the choice ticed is the huge potential for trade a package of financial and technical
of system boundaries, which define the between developing countries (South- assistance measures. Postponing action
extent of processes that are included in South trade) in clean technology. Tra- on the trade and climate agenda until
the assessment of greenhouse gas emis- ditionally developing countries have another lengthy round of WTO negoti-
sions. Estimates of the carbon footprint been importers of clean technologies, ations beyond the Doha Round is risky
of a system, product, or activity will also while high-income countries have been because of the imminent danger that
depend on where the system boundary exporters. However, as a result of their climate-related trade sanctions of the
is drawn. improving investment climate and huge variety proposed in the United States
consumer base, developing countries are and the European Union could become
The positive agenda increasingly becoming major players in a reality.
The other area where trade and climate the manufacture of clean technologies.10 If climate-related trade measures
have recently overlapped relates to tech- A key development in the global wind bite deeply enough, developing coun-
nology transfer. Given the limitations power market is the emergence of China tries can use the trade and climate
of the Clean Development Mechanism as a significant player, both in manu- negotiations to push back, or they may
in delivering the kind and magnitude of facturing and in investing in additional choose to adapt to the new policies and
Trade and climate change 255
standards set by their major trading development. Developed countries ‘Virtual Carbon’: Empirical Results and
partners, in order to maintain access to also have an important stake in the Implications for Policy.” Background
their markets. In either case, developing multilateral trading system and bear a paper for the WDR 2010.
countries will need to build their capac- major responsibility for ensuring that Brenton, P., G. Edwards-Jones, and M. Jensen.
ity to better understand and respond to the system is maintained. 2009. “Carbon Labeling and Low Income
these developments. Further, the need Country Exports: An Issues Paper.” Devel-
opment Policy Review 27 (3): 243–267.
to push for financial and technology Notes
transfer as a part of any global deal on Brewer, T. L. 2007. “Climate Change Tech-
1. Preamble to the Marrakesh Agree-
nology Transfer: International Trade and
trade and climate change could not be ment that established the WTO in 1995.
Investment Policy Issues in the G8+5
more emphasized. 2. Quoted in World Bank 2008.
Countries.” Paper prepared for the G8+5
While there could be many ben- 3. Gallagher 2004.
Climate Change Dialogue, Georgetown
efits to bringing the trade and climate 4. See article XX (b) and (g) of the 1947
University, Washington, DC.
regimes closer, the potential for harm General Agreement on Tariffs and Trade.
WTO 1986. Gallagher, K. P. 2004. Free Trade and the
to the international trade regime from Environment: Mexico, NAFTA and
5. World Bank 2008.
actions such as unilateral imposition Beyond. Palo Alto, CA: Stanford Univer-
6. Brenton, Edwards-Jones, and Jensen
of border taxes on carbon should not sity Press.
2009.
be underestimated, especially since 7. Brenton, Edwards-Jones, and Jensen World Bank. 2008. International Trade and
the burden will fall disproportionately 2009. Climate Change: Economic, Legal and
on developing countries. It is thus in 8. Brewer 2007. Institutional Perspectives. Washington,
the interest of developing countries 9. World Bank 2008. DC: World Bank.
to ensure that the pursuit of global 10. World Bank 2008. WTO (World Trade Organization). 1986.
climate objectives is compatible with Text of the General Agreement on Tariffs
maintaining a fair, open, and rule- References and Trade 1947. Geneva: WTO.
based multilateral trading system as Atkinson, G., K. Hamilton, G. Ruta, and D.
a foundation for their growth and van der Mensbrugghe. 2009. “Trade in
CHAPTER
6
Generating the Funding Needed for
Mitigation and Adaptation
D
eveloped countries must take developing and diffusing new technologies.
the lead in combating climate Mitigation, adaptation, and the deployment
change. But mitigation will be of technologies have to happen in a way that
neither effective nor efficient allows developing countries to continue
without abatement efforts in developing their growth and reduce poverty. This is
countries. Those are two key messages of why additional fi nancial flows to develop-
earlier chapters. But there is a critical third ing countries are so crucial.
dimension to meeting the climate challenge: The funding required for mitigation,
equity. An equitable approach to limiting adaptation, and technology is massive. In
global emissions of greenhouse gases has developing countries mitigation could cost
to recognize that developing countries have $140 to $175 billion a year over the next
legitimate development needs, that their 20 years (with associated fi nancing needs
development may be jeopardized by climate of $265 to $565 billion); over the period
change, and that they have contributed little, 2010 to 2050 adaptation investments could
historically, to the problem. average $30 to $100 billion a year (in round
Flows of climate fi nance, both fi scal numbers). These figures can be compared
transfers and market transactions, from with current development assistance of
developed to developing countries repre- roughly $100 billion a year. Yet efforts to
sent the principal way to reconcile equity raise funding for mitigation and adaptation
with effectiveness and efficiency in dealing have been woefully inadequate, standing at
with the climate problem. Financial flows less than 5 percent of projected needs.
can help developing countries reduce their At the same time, existing fi nancing
greenhouse gas emissions and adapt to instruments have clear limits and ineffi-
the effects of climate change. In addition, ciencies. Contributions from high-income
there will be fi nancing needs related to country governments are affected by frag-
mentation and the vagaries of political and
fi scal cycles. Despite all its success, the
Key messages Clean Development Mechanism (CDM),
Climate finance provides the means to reconcile equity with effectiveness and efficiency in the main source of mitigation fi nance to
actions to reduce emissions and adapt to climate change. But current levels fall far short of date for developing countries, has design
estimated needs—total climate finance for developing countries is $10 billion a year today, shortcomings and operational and admin-
compared with projected annual requirements by 2030 of $30 to $100 billion for adaptation istrative limits. The scope for raising adap-
and $140 to $175 billion (with associated financing requirements of $265 to $565 billion) for tation funding through the CDM, now the
mitigation. Filling the gap requires reforming existing carbon markets and tapping new sources, main source of income for the Adaptation
including carbon taxes. Pricing carbon will transform national climate finance, but international Fund, is thus also limited.
financial transfers and trading of emission rights will be needed if growth and poverty reduction
So new sources of finance will have to be
in developing countries are not to be impeded in a carbon-constrained world.
tapped. Governments will have to step in,
but it will be equally important to develop
258 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
new innovative funding mechanisms and effectiveness of the agreement. For mitiga-
to leverage private finance. The private sec- tion, chapter 1 shows that delayed imple-
tor will have a key role in financing miti- mentation of emission reductions, whether
gation through carbon markets and related in developed or developing countries,
instruments. But official flows or other risks hugely increasing the cost of limit-
international funding will be an important ing global warming. The overview chap-
complement to build capacity, correct mar- ter shows that on a global least-cost path
ket imperfections, and target areas over- for climate stabilization, a large fraction
looked by the market. Private finance will (65 percent or more)1 of the needed miti-
also be important for adaptation, because gation would occur in developing coun-
private agents—households and fi rms— tries. The cost of limiting global warming
will carry much of the adaptation burden. can thus be substantially reduced if high-
But good adaptation is very closely linked to income countries provide enough fi nan-
good development, and those most in need cial incentives for developing countries
of adaptation assistance are the poor and to switch to lower carbon paths. As other
disadvantaged in the developing world. This chapters emphasize, however, fi nance will
means public finance will have a key role. need to be combined with access to tech-
In addition to raising new funds, using nology and capacity building if develop-
available resources more effectively will ing countries are to shift to a lower-carbon
be crucial. This calls both for exploiting development path.
synergies with existing financial f lows, This chapter deals with raising enough
including development assistance, and for finance to reduce emissions and cope with
coordinating implementation. The scale of the impacts of unavoidable changes. It
the fi nancing gaps, the diversity of needs, assesses the gap between the projected needs
and differences in national circumstances for mitigation and adaptation finance com-
require a broad range of instruments. pared with sources of finance available up to
Concerns with effectiveness and efficiency 2012. It looks at inefficiencies in the existing
mean that finance for climate change must climate-finance instruments and discusses
be raised and spent coherently. potential funding sources beyond the ones
Financing needs are linked to the scope currently available (table 6.1). And it pres-
and timing of any international agree- ents models for increasing the effectiveness
ment on climate change. The size of the of existing schemes, particularly the Clean
adaptation bill will depend directly on the Development Mechanism, and for allocating
Research, development,
Type of instrument Mitigation Adaptation and diffusion
Market-based mechanisms to lower Emissions trading (CDM, JI, voluntary), Insurance (pools, indexes, weather
the costs of climate action and create tradable renewable energy certificates, derivatives, catastrophe bonds),
incentives debt instruments (bonds) payment for ecosystem services, debt
instruments (bonds)
Grant resources and concessional GEF, CTF, UN-REDD, FIP, FCPF Adaptation Fund, GEF, LDCF, SCCF, PPCR GEF, GEF/IFC Earth Fund,
finance (levies and contributions and other bilateral and multilateral GEEREF
including official development funds
assistance and philanthropy) to pilot
new tools, scale up and catalyze action,
and act as seed money to leverage the
private sector.
Other instruments Fiscal incentives (tax benefits on investments, subsidized loans, targeted tax or subsidies, export credits),
norms and standards (including labels), inducement prizes and advanced market commitments, and trade and
technology agreements
Source: WDR team.
Note: CDM = Clean Development Mechanism; CTF = Clean Technology Fund; FCPF = Forest Carbon Partnership Facility; FIP = Forest Investment Program; GEEREF = Global
Energy Efficiency and Renewable Energy Fund (European Union); GEF = Global Environment Facility; IFC = International Finance Corporation; JI = Joint Implementation; LDCF =
Least Developed Country Fund (UNFCCC/GEF); PPCR = Pilot Program for Climate Resilience; SCCF = Strategic Climate Change Fund (UNFCCC/GEF); UN-REDD = UN Collaborative
Program on Reduced Emissions from Deforestation and forest Degradation.
Generating the Funding Needed for Mitigation and Adaptation 259
adaptation finance. Throughout the focus is Figure 6.1 Annual mitigation costs rise with the
on financing needs in developing countries, stringency and certainty of the temperature target
where the questions of effectiveness, effi- Mitigation costs (% GDP)
ciency, and equity all come together. 2.0
1.8
The financing gap 1.6
Successfully tackling climate change will 1.4
1.5°C
cost trillions. How many depends on how 1.2
ambitious the global response is, how it is 1.0 2°C
structured, how the measures are timed, 0.8 2.5°C
how effectively they are implemented, where 0.6
mitigation takes place, and how the money 0.4 3°C
is raised. Bearing the costs will be the inter- 0.2
national community, national governments, 0
local governments, firms, and households. 0 0.2 0.4 0.6 0.8 1.0
Probability of reaching the target
The need for finance
Source: Schaeffer and others 2008.
According to the Intergovernmental Panel on
Climate Change (IPCC), which reviewed cost
estimates in its fourth assessment, the cost of
cutting global greenhouse gas emissions by For fiscally constrained developing countries
50 percent by 2050 could be in the range of these high up-front capital costs can be a sig-
1–3 percent of GDP.2 That is the minimum nificant disincentive to invest in low-carbon
cut most scientists believe is needed to have a technologies.
reasonable chance of limiting global warm- Table 6.2 reports both incremental costs
ing close to 2°C above preindustrial tempera- and associated financing requirements for
tures (see overview). the mitigation efforts needed to stabilize
But mitigation costs are sensitive to pol- atmospheric concentrations of CO2e (all
icy choices. They increase steeply with the greenhouse gases summed up and expressed
stringency of the emission reduction target in terms of their carbon dioxide equivalent)
and with the certainty of reaching it (figure at 450 parts per million (ppm) over the next
6.1). Global mitigation costs will also be decade, as well as the adaptation invest-
higher if the world deviates from the least- ments estimated to be required in 2030.
cost emission reduction path. As earlier Focusing on the 450 ppm target, mitigation
chapters explain, not including developing costs in developing countries range between
countries in the initial mitigation effort $140 billion and $175 billion a year by 2030
would increase global costs significantly (a with associated financing needs of $265 to
consideration that led to the establishment $565 billion a year. For adaptation the most
of the Clean Development Mechanism comparable estimates are the medium-term
under the Kyoto Protocol). Similarly, not figures produced by the United Nations
considering all mitigation opportunities Framework Convention on Climate Change
would markedly increase overall costs. (UNFCCC) and the World Bank, which
It is also important to distinguish between range from $30 billion to $100 billion.
mitigation costs (the incremental costs of a Many, but not all, of the identified
low-carbon project over its lifetime) and adaptation needs would require public
incremental investment needs (the addi- expenditures. According to the UNFCCC
tional financing requirement created as a secretariat, 3 private funding would cover
result of the project). Because many clean about a quarter of identified investment,
investments have high up-front capital costs, although this estimate is unlikely to capture
followed later by savings in operating costs, the full private investment in adaptation.
the incremental financing requirements tend These numbers give a rough indication
to be higher than the lifetime costs reported of the adaptation cost, but they are neither
in mitigation models. The difference could particularly accurate nor fully compre-
be as much as a factor of three (table 6.2). hensive. Most were derived from rules of
260 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
sanitation, and livelihood security, for exam- machinery to cleaner cars to renewable
ple, constitute good development. They also energy—will come from the private sec-
help reduce socioeconomic vulnerability to tor. Currently, governments account for
both climatic and nonclimatic stress factors. less than 15 percent of global economywide
Certainly in the short term, development investment, although they largely control
assistance is likely to be a key complement the underlying infrastructure investments
to close adaptation deficits, to reduce climate that affect the opportunities for energy-
risks, and to increase economic productivity. efficient products.
But new adaptation finance is also needed. There are various ways to encourage
private investment in mitigation,5 but the
Mitigation finance available to date most prominent market instrument involv-
Over the coming decades trillions of dol- ing developing countries has been the Clean
lars will be spent to upgrade and expand Development Mechanism. It has triggered
the world’s energy and transport infrastruc- more than 4,000 recognized emission
ture. These massive investments present an reduction projects to date. Other similar
opportunity to decisively shift the global mechanisms, such as Joint Implementation
economy onto a low-carbon path—but they (the equivalent mechanism for industrial
also raise the risk of a high-carbon lock-in if countries) and voluntary carbon markets,
the opportunity is missed. As earlier chap- are important for some regions (transition
ters show, new infrastructure investments countries) and sectors (forestry) but are
need to be steered to low-carbon outcomes. much smaller. Under the CDM, emission
Both public and private flows will be reduction activities in developing countries
needed to fund these investments. Many can generate “carbon credits”—measured
instruments already exist (table 6.1). All against an agreed baseline and verified by
will have a role in catalyzing climate action: an independent entity under the aegis of the
mobilizing additional resources; reorient- UNFCCC—and trade them on the carbon
ing public and private flows toward low- market. For example, a European power
carbon and climate-resilient investments; utility may acquire emission reductions
and supporting the research, develop- (through direct purchase or financial sup-
ment, and deployment of climate-friendly port) from a Chinese steel plant embarking
technologies. on an energy-efficiency project.
The public sector will provide capital The financial revenues the CDM gener-
mostly for big infrastructure projects, but a ates are modest relative to the amount of
large part of the investment to create a low- mitigation money that will have to be raised.
carbon economy—from energy- efficient But they constitute the largest source of
262 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
mitigation finance to developing countries to energy, energy efficiency, and fuel switch-
date. Between 2001, the first year CDM proj- ing. This could raise $18 billion ($15 billion
ects could be registered, and 2012, the end of to $24 billion) in direct carbon revenues
the Kyoto commitment period, the CDM is for developing countries, depending on the
expected to produce some 1.5 billion tons of price of carbon (table 6.3).6 In addition each
carbon dioxide equivalent (CO2e) in emis- dollar of carbon revenue leverages on aver-
sion reductions, much through renewable age $4.60 in investment and possibly up to
$9.00 for some renewable energy projects. It
Table 6.3 Potential regional CDM delivery and carbon revenues (by 2012) is estimated that some $95 billion in clean
Millions of
energy investment benefited from the CDM
certified emission Percentage over 2002–08.
By region reductionsa $ millions of total In comparison, official development
East Asia and Pacific 871 10,453 58 assistance for mitigation was about $19 bil-
China 786 9,431 52 lion over 2002–07,7 and sustainable energy
investment in developing countries totaled
Malaysia 36 437 2
approximately $80 billion over 2002–08.8
Indonesia 21 252 2
Donors and international financial
Europe and Central Asia 10 119 1 institutions are establishing new financing
Latin America and the 230 2,758 15 vehicles to scale up their support for low-
Caribbean carbon investment in the lead-up to 2012
Brazil 102 1,225 7 (table 6.4). Total fi nance under these ini-
Mexico 41 486 3 tiatives amounts to $19 billion up to 2012,
Chile 21 258 1
although this figure combines mitigation
and adaptation finance.
Argentina 20 238 1
The current inadequacy of mitigation
Middle East and North Africa 15 182 1 funding is obvious (figure 6.2). Combining
South Asia 250 3,004 17 the donor funds in table 6.4 (and counting
India 231 2,777 16 them as if committed solely to mitigation)
Sub-Saharan Africa 39 464 3
with the projected CDM fi nance to 2012
produces mitigation finance of roughly
Nigeria 16 191 1
$37 billion up to 2012, or less than $8 billion
Developed countries 85 1,019 6 a year. This falls far short of the estimated
By income mitigation costs in developing countries of
Low income 46 551 3 $140 to $175 billion a year in 2030, and even
Nigeria 16 191 1
farther short of the associated fi nancing
requirements ($265 to $565 billion).
Lower middle income 1,127 13,524 75
China 786 9,431 53
Adaptation finance available to date
India 231 2,777 16
Funding for adaptation started to f low
Indonesia 21 252 2 only recently. The main existing source of
Upper middle income 242 2,906 16 adaptation funding is international donors,
Brazil 102 1,225 7 channeled either through bilateral agencies
Mexico 41 486 3 or through multilateral institutions like the
Global Environment Facility (GEF) and the
Malaysia 36 437 2
World Bank.
Chile 21 258 1
The establishment of the Adaptation
Argentina 20 238 1 Fund in December 2007, a funding mecha-
High income 85 1,019 6 nism with its own independent source of
Korea, Rep. of 54 653 4 finance, was an important development. Its
main income source is the 2 percent levy
Total 1,500 18,000 100
on the CDM, a novel financing source (dis-
Source: UNEP 2008.
cussed in more detail later) that could raise
Note: Volumes include withdrawn and rejected projects.
a. 1 million certified emission reductions = 1 million tons of CO2e. between $300 million and $600 million
Generating the Funding Needed for Mitigation and Adaptation 263
Figure 6.2 The gap is large: Estimated annual Table 6.4 New bilateral and multilateral climate funds
climate funding required for a 2°C trajectory
compared with current resources Fund Total amount ($ millions) Period
Funding under UNFCCC
Constant 2005$, billions
200 Strategic Priority on Adaptation 50 (A) GEF 3-GEF 4
climate finance, because as transaction costs • Harmonization. To the extent that the
increase, recipient country ownership lags, various climate funds have divergent
and alignment with country development purposes, this fragmentation of climate
objectives becomes more difficult. Each new finance presents a great challenge to har-
source of finance, whether for development monizing different sources of finance and
or climate change, carries with it a set of exploiting synergies among adaptation,
costs. These include transaction costs (which mitigation, and development finance.
rise in aggregate as the number of funding • Results. The results agenda for climate
sources increases), inefficient allocation action is not substantially different from
(particularly if funds are narrowly defined), those of other development domains.
and limitations on scaling up. The current Designing and implementing meaning-
fragmentation and the low level of resources ful outcome indicators will be key to
highlights the importance of the ongoing maintaining public support for climate
negotiations about a climate-financing finance and building country ownership
architecture adequate to mobilize resources for climate action.
at scale and to deliver efficiently across a
wide range of channels and instruments.
• Mutual accountability. Weak progress
toward Kyoto targets by many developed
While there is not an exact parallel countries puts their accountability for cli-
between climate fi nance and development mate action in the spotlight. An essential
aid, some of the lessons from the aid- part of any global agreement on climate
effectiveness literature are highly relevant change must be a framework that holds
to climate finance. Concern about the nega- high-income countries accountable for
tive effects of aid fragmentation was one of moving toward their own emission tar-
the key drivers of the Paris Declaration on gets and for providing climate fi nance,
Aid Effectiveness. In that declaration, most and that also holds developing countries
recently reaffi rmed in the Accra Agenda accountable for climate actions and uses
for Action, both aid donors and recipients of climate finance, as established in the
committed to incorporate the key tenets Bali Action Plan. Beyond provision of
of ownership, alignment, harmonization, resources, monitoring and reporting of
results orientation, and mutual account- climate finance flows and verification of
ability into their development activities. results are a central topic of the ongoing
The Paris Declaration raises important climate negotiations.
issues for financing climate investments in
developing countries, many of which are In addition to the sources of finance, an
widely accepted and reflected in negotiation important question is what investments cli-
documents, such as the Bali Action Plan: 9 mate funds should finance and the associated
financing modalities. While some climate
• Ownership. Building a shared consen- investments will be for individual projects—
sus that climate change is a development low-carbon power plants, for example—
issue, a central tenet of this Report, will efficiencies can, in many instances, be gained
be key in building country ownership. by moving to the sector or program level.
This consensus view must then be built For adaptation, finance at the country level
into country development strategies. should in most cases be commingled with
• Alignment. Ensuring alignment between overall development finance, not used for
climate actions and country priorities is specific adaptation projects.
the second critical step in increasing the More generally, rather than being overly
effectiveness of climate finance. Moving prescriptive, climate finance could emulate
from the project to the sector and pro- the poverty reduction strategy approach now
gram level can facilitate this process. Pre- implemented in many low-income countries.
dictability and sustainability of finance This entails linking aid resources targeted
is another key aspect of alignment. Stop- at reducing poverty to a poverty reduction
start climate-action programs, driven strategy prepared by the recipient country.
by the volatility of fi nance, will reduce Based on an analysis of poverty and a defi-
overall effectiveness. nition of country priorities, as validated by
Generating the Funding Needed for Mitigation and Adaptation 265
participatory processes with civil society, the climate change; and the sustainable devel-
strategy becomes the basis for broad bud- opment of developing countries. But the
get support by donors to finance a program CDM has been more effective in reducing
of action aimed at reducing poverty. Indi- mitigation costs than in advancing sustain-
vidual projects become the exception rather able development.11 A project is deemed to
than the rule. If countries integrate climate contribute to sustainable development if
action into their development strategies, a national authorities sign off on it, acknowl-
similar approach to climate finance should edging a wide range of local co-benefits in
be feasible. line with their development priorities (box
6.2). While many critics accept this broad
Inefficiencies of the Clean Development definition,12 some nongovernmental orga-
Mechanism nizations have found flaws both in the
The principal instrument for catalyzing acceptance of certain project types (such
mitigation in developing countries is the as hydropower, palm oil plantations, and
CDM. It has grown beyond initial expecta- the destruction of industrial gases) and in
tions, demonstrating the ability of markets implementation. A closer look at the CDM
to stimulate emission reductions, provide project pipeline suggests that the treatment
essential learning, raise awareness, and of sustainable development in project docu-
build capacity. But the CDM contains some ments is sketchy and uneven and that project
inherent inefficiencies, raising questions developers display only a rudimentary con-
about the overall process and its efficiency cern for or understanding of the concept.
as a financing instrument:
Weak governance and inefficient operation.
Questionable environmental integrity. The CDM is unique in regulating a mar-
The long-term success of the CDM can be ket dominated by private players through
best assessed by its contribution to measur- an executive board—essentially a United
ably reducing greenhouse gas emissions. In Nations committee—that approves the
order not to dilute the environmental effec- calculation methods and projects that cre-
tiveness of the Kyoto Protocol, CDM emis- ate the market’s underlying asset. The cred-
sion reductions must be additional to the ibility of the CDM depends largely on the
reductions that would have occurred other- robustness of its regulatory framework and
wise. The extent of additionality provided the private sector’s confidence in the oppor-
by the CDM has been debated vigorously.10 tunities the mechanism provides.13 Com-
The additionality of individual projects is plaints are mounting about the continuing
difficult to prove and even more difficult to lack of transparency and predictability in
validate, because the point of reference is by the board’s decision making.14 At the same
definition a counterfactual reality that can time, the CDM architecture has begun to
never be incontrovertibly argued or con- show some weaknesses that are signs of it
clusively proven. Because debates on base- being a victim of success. There have been
line and additionality concerns continue to copious complaints about yearlong delays
plague the CDM process, it is time to explore in the approval of methodologies15 and
alternative, and simpler, approaches to dem- the one- to two-year time lag in the assess-
onstrate additionality. Approaches such as ment of projects.16 These are significant
benchmarks and a positive list of specific constraints to the continuing growth of the
desired activities should be explored further CDM as a key instrument to support miti-
to streamline project preparation and moni- gation efforts in developing countries.
toring. Revisiting additionality will not only
address major inefficiencies in CDM opera- Limited scope. CDM projects are not
tion but can also help to increase the cred- evenly distributed. A full 75 percent of
ibility of the mechanism. sales revenues from offsets accrue to Brazil,
China, and India (see table 6.3). The CDM
Insufficient contribution to sustainable has pretty much bypassed low-income
development. The CDM was created with countries, which have received only 3 per-
two objectives: the global mitigation of cent of carbon revenues, a third of them for
266 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
three gas-flaring projects in Nigeria. There to increase.22 The CDM’s project approach
is a similar concentration in sectors, with structure and lack of leverage have restricted
much of the abatement action concentrated it to a fairly small number of projects.
in a fairly small number of industrial gas Uncertainty about the continuation of the
projects. The CDM has not supported carbon offset market beyond 2012 is also
any increased efficiencies in the built and having a chilling effect on transactions.
household environments or transportation
systems, which produce 30 percent of global The efficiency cost of adaptation
carbon emissions17 and are the fastest- funding
growing sources of carbon emissions in the An important source of adaptation finance,
emerging markets.18 Nor has the CDM sup- and the key revenue source of the Adapta-
ported sustainable livelihoods or catalyzed tion Fund, is a 2 percent levy on the CDM, a
energy access for the rural and peri-urban tax that could be extended to include other
poor.19 The exclusion of deforestation emis- trading schemes, such as Joint Implemen-
sions from the CDM leaves the largest emis- tation. This is a promising route to rais-
sion source of many tropical developing ing fi nancial resources for the Adaptation
countries untapped.20 Fund, which offers clear additionality. But
it also raises some basic economic issues.
Weakness of the incentive, reinforced by Perhaps the most important objection is
uncertainty about market continuity. The that the CDM levy is taxing a good (mitiga-
CDM has not moved developing countries tion finance) rather than a bad (emissions).
onto low-carbon development paths.21 The More generally, the levy raises two basic
incentive of the CDM has been too weak to questions:
foster the necessary transformation in the
economy, without which carbon intensi- • What is the scope for raising additional
ties in developing countries will continue adaptation finance through the levy, and
Generating the Funding Needed for Mitigation and Adaptation 267
what is the loss in economic efficiency levy would transfer resources from the big
(or deadweight loss, in economic jargon) CDM host countries (Brazil, China, India
associated with the tax? —see table 6.3) to the vulnerable countries
• How is the tax burden distributed between eligible for adaptation funding.
the sellers (developing countries) and
buyers (developed countries)? Increasing the scale of climate-
Analysis based on the U.K. government’s change finance
GLOCAF model shows that the ability of To close the financing gap, financing sources
an extended carbon trading scheme to have to be diversified, and the existing
raise additional adaptation revenues will instruments have to be reformed to increase
depend on the type of global climate deal their efficiency and permit the required
that is agreed.23 Revenues will vary depend- scale-up. This section highlights some of the
ing on the expected demand, particularly main challenges in this respect, arguing for
whether demand will be constrained by the following:
supplementary restrictions to promote
domestic abatement, and to a lesser extent • Harnessing new sources of revenue to
on the expected supply, including whether support adaptation and mitigation by
a future regime could encompass credits national governments, international
from avoided deforestation and from other organizations, and dedicated financing
sectors and regions that currently produce mechanisms like the Adaptation Fund.
little carbon trade. • Increasing the efficiency of carbon mar-
Revenues will also depend on the tax kets by reforming the CDM as a key vehicle
rate. At the current rate of 2 percent the levy to promote private mitigation funding.
could be expected to raise around $2 billion • Expanding performance-based incentives
a year in 2020 if demand is unconstrained to land use, land-use change, and forestry
but less than half that amount if restrictions to change the balance between private and
are placed on the purchase of credits (table public funding in this important area.
6.5). To raise $10 billion a year the tax rate • Leveraging private sector funding for
would have to increase to 10 percent and adaptation.
all supplementary restrictions would have
to be abolished. Even at this higher rate the Countries will also have to consider
economic cost of the tax would be fairly the fi scal framework for climate action.
minor, particularly in relation to the overall Government action on climate mitigation
gains from trade. and adaptation can have important fiscal
Like all taxes, the cost of the levy is
shared between the buyers and sellers of Table 6.5 The tax incidence of an adaptation levy on the Clean Development Mechanism (2020)
carbon credits depending on their respon- $ millions
siveness to price changes (the price elastici- Burden to
ties of supply and demand). In the scenarios Deadweight developing
where demand is constrained, buyers do Tax rate Revenue raised loss countries
not respond strongly to the tax, and much 2 percent
of the tax burden is thus passed on to them. Restricted demand and low supply 996 1 249
But this response changes if constraints on
Unrestricted demand and high supply 2,003 7 1,257
demand are eased. At that point the tax
10 percent
incidence shifts decidedly against develop-
ing countries, which have to shoulder more Restricted demand and low supply 4,946 20 869
than two-thirds of the tax burden to keep Unrestricted demand and high supply 10,069 126 6,962
the price of their credits competitive. That Source: Fankhauser, Martin, and Prichard, forthcoming.
is, developing countries would make the Note: Under restricted demand, regions can buy up to 20 percent of their target through credits; there is
completely free trading in the unrestricted demand scenario. In the low-supply scenario the CDM operates
main contribution to the Adaptation Fund in the same sectors and regions as it does now. In the high-supply scenario carbon trading is expanded
(through forgone carbon market revenues). in regional and sectoral scope, including credits from Reduced Emissions from Deforestation and forest
Degradation (although, as noted, the latter emissions are not currently in the CDM). The total market volume
Rather than transferring funds from devel- (excluding secondary transactions) is around $50 billion in the restricted-demand, low-supply case and around
oped to developing countries, the CDM $100 billion in the unrestricted-demand, high-supply case.
268 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
consequences for revenues, subsidies, and Distributional impacts. Any price instru-
flows of international finance. Key elements ment for mitigation will have distribu-
of this framework include the following. tional consequences for different income
groups depending on the carbon inten-
Choice of mitigation instrument. Taxes sity of their consumption and whether
or tradable permits will be more efficient they are employed in sectors that shrink
instruments than regulation, and each can as a result of carbon taxes or caps; offset-
generate significant fiscal revenues (assum- ting fiscal actions may be required if low-
ing that permits are auctioned by the income households are disproportionately
government). Box 6.3 highlights the key affected.
characteristics of carbon taxes versus cap-
and-trade approaches. Policy coherence. Existing subsidy
schemes, particularly on energy and agri-
Fiscal neutrality. Countries have the culture, may run counter to actions to miti-
option of using carbon fiscal revenues to gate and adapt to climate change. Subsidies
reduce other distorting taxes, which could on goods that will become scarcer under
have major growth and welfare conse- climate change, such as water, also risk per-
quences. But treasuries in developing coun- verse effects.
tries typically have a weak revenue base, Box 6.4 highlights the efforts of the Indo-
which may reduce the incentives for com- nesian Ministry of Finance to incorporate
plete fiscal neutrality. climate issues into overall macroeconomic
and fiscal policy.
Administrative simplicity and cost. Car-
bon taxes, because they can be placed on the Generating new sources of finance for
carbon content of fuels, offer the simplicity adaptation and mitigation
of building on existing fuel excise regimes. Public institutions—national governments,
Cap-and-trade systems can entail large international organizations, and the official
administrative costs for allocating permits financing mechanisms of the UNFCCC—
and ensuring compliance. are among the key drivers of climate-smart
development. So far they have relied almost ties under the Kyoto Protocol are expressed
exclusively on government revenues to in assigned amount units (AAUs)—the
finance their activities. But it is unlikely that amount of carbon a country is permitted
climate-change costs rising into the tens or to emit. An innovative approach, put for-
hundreds of billions of dollars a year could be ward originally by Norway, would set aside
predominantly covered through government a fraction of each country’s AAU allocation
contributions. Although additional funds and auction it to the highest bidder, with
will be forthcoming, the experience with revenues earmarked for adaptation.
development assistance suggests that there
are constraints on the amount of traditional Domestic auction revenues. Earmarking
donor finance that can be raised. Moreover, auction revenues relies on the assumption
there is a worry from developing countries that most developed countries will soon have
that contributions from developed countries fairly comprehensive cap-and-trade schemes
may not be fully additional to existing devel- and that most of the permits issued under
opment assistance. the schemes would be auctioned rather
Other sources of fi nance will therefore than handed out for free. With schemes
have to be tapped, and there are several pro- already running or under consideration in
posals, particularly for adaptation. These practically all developed countries, this is
include: a reasonable expectation. But earmarking
auction revenues would encroach on the fis-
Internationally coordinated carbon cal autonomy of national governments just
tax. Proposals for a nationally adminis- as much as an internationally coordinated
tered but globally levied carbon tax have carbon tax and may therefore be similarly
the appeal that the tax base would be broad difficult to implement.
and the revenue flow fairly secure. Moreover,
unlike the CDM levy, the tax would be aimed Each of these options has its advantages
at emissions rather than emission reductions. and disadvantages.24 What is important is
Rather than impose a deadweight loss, the that the chosen options provide a secure,
tax would have a desirable and beneficial steady, and predictable stream of revenues
corrective effect. The main drawback is that of sufficient size. This suggests that finance
an internationally coordinated tax could will have to come from a combination of
impinge on the tax authority of sovereign sources. Table 6.6 presents a range of poten-
governments. Gaining international consen- tial sources of finance as proposed by devel-
sus for this option may thus be difficult. oped and developing countries.
In the short term some impetus may
Tax on emissions from international trans- also come from international efforts to
port. A tax more narrowly focused on overcome the current economic slump and
international aviation or shipping would kick-start the economy through a fi scal
have the advantage of targeting two sectors stimulus (see chapter 1).25 Globally, well
that so far have not been subject to carbon over $2 trillion has been committed in vari-
regulation and whose emissions are grow- ous fiscal packages, chief among them the
ing fast. The international nature of the $800 billion U.S. package and the $600 bil-
sector might make a tax more palatable for lion Chinese plan. Some 18 percent of this,
national finance ministers, and the tax base or about $400 billion, is green investment
would be large enough to raise considerable in energy efficiency and renewable energy,
amounts. But the global governance of the and also, in the Chinese plan, adaptation.26
sectors is complex, with considerable power Deployed over the next 12–18 months these
in the hands of international bodies, such as investments could do much to shift the
the International Maritime Organization. world toward a low-carbon future. At the
So the administrative hurdles of setting up same time, the packages are by their very
such a tax might be considerable. nature geared toward stimulating domestic
activity. Their effect on international cli-
Auctioning assigned amount units. The mate fi nance to developing countries will
emission reduction commitments of par- at best be indirect.
Generating the Funding Needed for Mitigation and Adaptation 271
It takes more than finance: away. They matter enormously today, and in
Market solutions are essential but addressing them the need for a smooth tran-
additional policy tools are needed sition to an ultimately global carbon market
With more national or regional initiatives must not be forgotten. However, some mar-
exploring emissions trading, the carbon ket failures will remain, and governments
market will likely be significant in catalyz- will need to intervene to correct them.
ing and fi nancially supporting the needed Decisions that help the emergence of a
transformation of investment patterns and long-term, predictable, and adequate car-
lifestyles. Through purchasing offsets in bon price are necessary for effective mitiga-
developing countries, cap-and-trade sys- tion but, as chapter 4 shows, not sufficient.
tems can finance lower-carbon investments Some activities, such as risky research and
in developing countries. Carbon markets development or energy-efficiency improve-
also provide an essential impetus to finding ments, are hindered by market or regulatory
efficient solutions to the climate problem. failures; others, such as urban planning, are
Looking forward, stabilizing tempera- not directly price sensitive. The forest and
tures will require a global mitigation effort. agriculture sectors present significant addi-
At that point carbon will have a price world- tional potential for emission reduction and
wide and will be traded, taxed, or regulated sequestration in developing countries but
in all countries. Once an efficient carbon are too complex, with intricate social issues,
price is in place, market forces will direct to rely exclusively on market incentives.
most consumption and investment decisions Many climate actions will require comple-
toward low-carbon options. With global mentary finance and policy interventions—
coverage many of the complications affect- for example, to overcome energy-efficiency
ing the current carbon market—additional- barriers, reduce perceived risks, deepen
ity, leakage, competitiveness, scale—will fall domestic financial and capital markets, and
272 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
and cooking stoves now have the option climate-friendly policies in developing
of being registered as organized programs countries. The proposed options all con-
of activities under the current CDM (thus sider a mechanism for carbon fi nance to
cutting down on transaction costs through reward the measurable outcomes of a policy
aggregation). Most small or least devel- (in reduced emissions). Variants pertain to
oped countries have more urgent demands the policy and country commitment under
on scarce institutional capacity than the an international agreement (mandatory or
development of complex greenhouse gas flexible), the geographical scale (regional
accounting schemes. This means that for or national), or the sectoral scope (sectoral
some developing countries, perhaps most, or cross-sectoral). Among these options
there is no need for another set of rules to sectoral no-lose targets, whereby a coun-
supply their mitigation potential into the try could sell carbon credits for emission
market. reductions below an agreed target (which
Key administrative improvements would lie below business-as-usual levels),
would target, for example, improving while not being penalized for not achiev-
the quality, relevance, and consistency of ing the target, have attracted a great deal
information flows within the CDM com- of interest. Such a mechanism would be
munity; engagement of a professional, adapted to developing countries needing to
full-time staff for the CDM Executive significantly scale up private sector invest-
Board and consideration of how to make ment—beyond the reach of the CDM in its
it more representative of practitioners; and current form—in line with their sustain-
increasing the accountability of the pro- able development priorities.
cess, potentially including a mechanism
that provides an opportunity for project Creating financial incentives for REDD
participants to appeal board decisions. In A particular concern for developing coun-
parallel, countries would have to create a tries is the lack of fi nancial incentives for
business environment conducive to low- Reduced Emissions from Deforestation
carbon investment in general. and forest Degradation (REDD). In 2005,
nearly one fourth of emissions in develop-
A trend- changing market mechanism. ing countries came from land-use change
This new mechanism would seek to reduce and forestry, so this is a substantial exclu-
long-term emission trends much more com- sion.29 But land use, land-use change, and
prehensively. Set up either in or outside the forestry have always been problematic and
current CDM, it would support the enact- contentious in the climate negotiations.
ment of policy changes that put developing There was great opposition to their inclu-
countries onto a low-carbon path. It would sion in the Kyoto Protocol. As a result,
recognize and promote emission reductions
achieved by adopting particular policies
or programs that lead to emission reduc- Table 6.7 National and multilateral initiatives to reduce deforestation and degradation
tions at multiple sources. A programmatic
CDM could be a first step toward a trend- Total estimated funding
Initiative ($ millions) Period
changing market mechanism, allowing for
International Forest Carbon Initiative 160 2007–12
the aggregation of unlimited similar activi- (Australia)
ties resulting from the implementation of a
Climate and Forest Initiative (Norway) 2,250 2008–12
policy across time and space. Proposals to
support a sectoral shift can be classified in Forest Carbon Partnership Facility 300 2008–18
(World Bank)
two broad groups: those that stem from an
agreement among industries that operate in Forest Investment Program 350 2009–12
(part of Climate Investment Funds)
the same sector but are located across dif-
ferent countries; and those that evolve from UN-REDD Program 35 2008–12
a national government’s decision to imple- Amazon Fund 1,000 2008–15
ment a specific policy or program. Congo Basin Forest Fund 200 Uncertain
There have been many thoughts on how Source: UNFCCC 2008b.
CDM and carbon fi nance could support Note: Names in parentheses are countries or institutions that championed the proposal.
274 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
would evaluate the investment and capacity Climate Investment Funds, and the Prince’s
building needed to implement the strategy Rainforest Project and the Coalition for
and would assess the environmental and Rainforest Nations have recently proposed
social impacts of the various strategy and that fi nancial institutions issue bonds to
implementation options (the benefits, risks, raise significant resources to help forest
and risk-mitigation measures). countries fi nance forest conservation and
REDD-ready countries need to develop development programs. This example illus-
a national reference scenario. The scenario trates how a mix of instruments is required
should include a retrospective part, calculat- to steer a transformation of behaviors and
ing a recent historical average of emissions, investment decisions: a combination of up-
and could also include a forward-looking front finance (concessional and innovative
component, forecasting future emissions fi nance) and performance-based incen-
based on economic growth trends and tives are needed to promote policy reforms,
national development plans. build capacity, and undertake investment
A national monitoring, reporting, and programs. The example also highlights the
verification (MRV) system is central to a crucial role of public fi nance as a catalyst
system of performance-based payments. for climate action.
The MRV system could include the pay-
ments’ impacts on biodiversity and liveli- Leveraging private finance for adaptation
hoods as well as on carbon levels. The roles Compared with mitigation, where the empha-
of remote-sensing technology and ground- sis has been on private finance from carbon
based measurements must be defi ned as markets, adaptation finance has a strong
part of the MRV system. Experience from focus on official flows. This is not surpris-
community-based natural resource man- ing, given that adaptation is closely linked to
agement initiatives has shown that involve- good development and that many adaptation
ment of local people, including indigenous measures are public goods—for example,
peoples, in participatory monitoring of the protection of coastal zones (a local pub-
natural resources can also provide accu- lic good) and the provision of timely climate
rate, cost-effective, and locally anchored information (a national public good).
information on forest biomass and natural Despite the emphasis on public finance,
resource trends.30 Natural resource stocks, much of the adaptation burden will fall on
benefit sharing, and wider social and eco- individuals and firms. Insurance against cli-
logical effects of REDD schemes can be mate hazards, for example, is provided pri-
monitored by local communities. Partici- marily by the private sector. Similarly, the
patory approaches have the potential to task of climate-proofing the world’s capital
greatly improve the governance and man- stock—private dwellings, factory buildings,
agement of REDD schemes. and machinery—will fall predominantly
Before large-scale, performance-based on private owners, although the state will
payments for REDD can begin, most for- have to provide flood protection and disas-
est countries will need to adopt policy ter relief. Private companies also own or
reforms and undertake investment pro- operate some of the public infrastructure
grams. Investments may be needed to that will have to be adapted to a warmer
build institutional capacity, improve for- world—seaports, electric power plants, and
est governance and information, scale up water and sewage systems.
conservation and sustainable management For governments the challenge of involv-
of forests, and relieve pressure on forests ing the private sector in adaptation finance
through, say, relocating agribusiness activ- is threefold: getting private players to adapt;
ities away from forests or improving agri- sharing the cost of adapting public infra-
cultural productivity. To assist countries in structure; and leveraging private finance to
these activities several initiatives have been fund dedicated adaptation investments.
launched or are under design (see table 6.7).
In addition the World Bank has proposed Getting private players to adapt effectively.
a forest investment program under the Most consumption and business decisions
276 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
are affected, directly or indirectly, by cli- alternatives. A good example is the model
mate factors—from the clothes people wear adopted by the U.K. energy regulator, which
to the planting decisions farmers make to can act as an auditor and leave investment
the way buildings are designed. People are decisions to the key actors in the government
used to making these implicit adaptation and the private sector.32
decisions. The main role for governments
will be to provide an economic environment Leveraging private finance to fund dedicated
that facilitates these decisions. This can take adaptation investments. For several rea-
the form of economic incentives (tax breaks sons the scope for private participation in
for adaptation investments, property taxes dedicated adaptation infrastructure is prob-
differentiated by risk, differentiated insur- ably limited. Given that dedicated adapta-
ance premiums), regulation (zone planning, tion investments typically do not create
building codes) or simply education and commercial revenues for private operators,
better information (long-term weather fore- they must be remunerated from the public
casts, agricultural extension services). purse. This creates a debt-like liability for
These measures will entail an economic the government that needs to be recorded
cost, such as meeting stricter building reg- in the public accounts. Nor does the effi-
ulation, using different seed varieties, or ciency argument look compelling.33 Adap-
paying higher insurance premiums. That tation structures such as flood defenses are
cost will be borne by the economy and fairly cheap and simple to operate and so
spread across sectors as producers pass on offer little scope for operational efficiency
higher costs to their clients and as insurance gains by a private manager. There may be
schemes help to pool risks. There will be more scope for efficiency gains in the con-
little need to draw on dedicated adaptation struction and design phase, but these can
funding, except perhaps to meet the gov- be captured equally well through appropri-
ernment’s administrative costs or to protect ate procurement mechanisms.
vulnerable groups from the adverse effects More generally private f lows have
of a policy. amounted to a small share of the overall
infrastructure funding needs of developing
Sharing the costs of adapting public infra- countries and are likely to remain modest for
structure. A large part of the public the duration of the current financial crisis.34
adaptation bill involves climate-proofing a For this and the reasons discussed above,
country’s transport infrastructure, electric infrastructure experts have warned not to
power networks, water systems, and commu- expect too much from public-private part-
nication networks. Whether these services nerships in raising climate-change finance.35
are provided by public, private, or commer-
cialized public entities, the bill will need to
be funded either by taxpayers (domestic, or Ensuring the transparent, efficient,
foreign if adaptation assistance is provided) and equitable use of funds
or by users (through higher tariffs). However successful the attempts at raising
For infrastructure service providers cli- additional funds may be, climate finance will
mate change (and climate policy) will become be scarce, so funds have to be used effectively
another risk factor to take into account and allocated transparently and equitably.
alongside other regulatory, commercial, and On the mitigation side, fund alloca-
macroeconomic risks.31 It would therefore tion will be dominated by efficiency con-
be wise to build responsibility for adapta- siderations. Mitigation is a global public
tion into the regulatory regime as early and good, and its benefits are the same wher-
predictably as possible. The greater physical ever abatement takes place (although
uncertainty also requires building more flex- the allocation of mitigation costs raises
ibility into the regulatory system because ex equity issues). With the right framework
ante regulation is ill suited to situations with in place—essentially a carbon market that
unpredictable changes. New and innovative allows the exploration of abatement oppor-
approaches to regulation offer promising tunities on a global scale while protecting
Generating the Funding Needed for Mitigation and Adaptation 277
Central government performance and Some tentative fi rst steps toward con-
absorptive capacity for flows of finance structing a vulnerability index are shown
clearly determine a country’s capacity to in box 6.7, which plots a composite index of
adapt, but they are not the only critical projected physical impacts against a com-
performance factors in climate adaptation. posite index of social capacity. The results
What might be called “social capacity” would of this stylized exercise are indicative only,
appear important in determining the sever- but they suggest that the countries with the
ity of local climatic impacts, including such highest vulnerability are predominantly in
factors as inequality (Gini coefficient), depth Sub-Saharan Africa.39 Box 6.8 scatters the
of financial markets, dependency ratio, adult same projected impact index against a mea-
literacy rate, and female education. sure of country performance (combined
In sum, an allocation index for adapta- central government capacity and ability to
tion finance could consist of the following absorb finance) derived from the IDA allo-
factors: cation formula. Again Sub-Saharan Africa
exhibits the combination of projected high
Allocation index = Central government
impacts and low capacity to adapt.
performance
× Absorptive capacity Matching financing needs and
× Lack of social capacity sources of funds
Combating climate change is a massive socio-
× Climate sensitivity
economic, technological, institutional, and
× Climate change exposure
policy challenge. Particularly for develop-
× Population weight ing countries it is also a financing challenge.
× Poverty weight By about 2030 the incremental investment
needs for mitigation in developing countries
Actually constructing such an index pres- could be $140 to $175 billion (with associated
ents several challenges. Information about financing requirements of $265 to $565 bil-
the vulnerability of developing countries is lion) a year. The financing needs for adapta-
still sketchy. Difficulties emerge from the tion by that time could be $30 to $100 billion
complicated, and often undefined, pathways a year. This is additional funding beyond
that translate potential impacts, themselves baseline development finance needs, which
uncertain, into vulnerability. Compound- also remain essential and will help in part to
ing the uncertainty in linking environmen- close existing adaptation gaps.
tal to socioeconomic impacts is the further Though growing, current climate-related
uncertainty inherent in future climate sce- financial flows to developing countries cover
narios. Models rely on a limited number only a tiny fraction of the estimated needs.
of defined socioeconomic predictions, and No single source will provide that much
each model has a range of potential changes. additional revenue, and so a combination
So most studies relating to future climatic of funding sources will be required. For
scenarios focus on expected impacts within adaptation funding might come from the
sectors or relate to specific outcomes, such current adaptation levy on the CDM, which
as changes in health and losses because of could raise around $2 billion a year by 2020
sea-level rise. Few studies have attempted to if extended to a wider set of carbon transac-
translate these outputs into an assessment of tions. Proposals like the sale of AAUs, a levy
vulnerability on the ground.38 on international transport emissions, and a
As with IDA allocations, there is a risk global carbon tax could each raise around
that a climate adaptation allocation index $15 billion a year.
will penalize poor countries with high cli- For mitigation at the national level the
mate sensitivity and exposure but very weak majority of funding will have to come
institutions. If an allocation formula is pur- from the private sector. But public policy
sued, allowances for extremely fragile coun- will need to create a business environment
tries should be part of the overall allocation conducive to low- carbon investment,
framework. including but not limited to an expanded,
Generating the Funding Needed for Mitigation and Adaptation 279
0.00
–0.50
–1.00
–1.50
–2.00
–2.50 –2.00 –1.50 –1.00 –0.50 0.00 0.50 1.00 1.50 2.00
Social capacity
–1.50
–2.00
–4.00 –3.00 –2.00 –1.00 0.00 1.00 2.00 3.00
Capacity to adapt
Sources: CPIA figures http://go.worldbank.org/S2THWI1X60. For details on the calculation of CPIA scores, see World Bank 2007b. ARPP scores
are reported in World Bank 2007a.
efficient, and well-regulated carbon mar- agreement, markets can autonomously gen-
ket. Complementary public funding— erate much of the needed national mitiga-
most likely from fiscal transfers—may be tion finance as consumption and production
required to overcome investment barri- decisions respond to carbon prices, whether
ers (such as those related to risk) and to through taxes or cap-and-trade. But national
reach areas the private sector is likely to carbon markets will not automatically gen-
neglect. Stringent emission targets will erate international flows of finance. Flows
also be required—initially in high-income of mitigation finance to developing coun-
countries, eventually for many others—to tries can come from fiscal flows, from link-
create enough demand for offsets and to ing national emission trading schemes, or
support the carbon price. potentially from trading AAUs. Flows from
Once the majority of countries have emis- developed to developing countries can thus
sion caps under an international climate be achieved in several ways. But these flows
Generating the Funding Needed for Mitigation and Adaptation 281
are central to ensuring that an effective and secondary CDM market continued to grow in
efficient solution to the climate problem is 2008 with transactions in excess of $26 billion
also an equitable solution. (a fivefold increase over 2007). In contrast the
primary CDM market declined in value for the
first time, to $ 7.2 billion (down 12 percent from
Notes 2007 levels), under the weight of the economic
1. See the overview chapter for details. downturn and amid lingering uncertainty about
2. Barker and others 2007. market continuity after 2012. See Capoor and
3. UNFCCC 2008a. Ambrosi 2009.
4. Agrawala and Fankhauser (2008) review 7. OECD/DAC, Rio Marker for climate
the adaptation cost literature; Klein and Persson change, http://www.oecd.org/document/11/0,33
(2008) discuss the link between adaptation and 43,en_2649_34469_11396811_1_1_1_1,00.html
development. Parry and others (2009) critique (accessed May 2009).
the UNFCCC adaptation cost estimate, suggest- 8. UNEP 2009. Estimates of clean energy
ing that the true costs could be 2–3 times higher. investments that benefit from CDM tend to be
5. Besides carbon markets, tradable green higher than actual sustainable energy investment
and white certificates schemes (targeting respec- in developing countries because many CDM
tively the expansion of renewable energy sources projects are at an early stage (not operational or
or the improvement of energy efficiency through commissioned or at financial closure) when cer-
demand-side management measures) are other tified emission reductions are transacted.
examples of market-based mechanisms with 9. See Decision 1/CP.13 reached at the 13th
potential mitigation benefits. Other instruments Conference of the Parties of the UNFCCC in
include financial incentives (taxes or subsidies, Bali, December 2007, http://unfccc.int/resource/
price support, tax benefits on investment, or docs/2007/cop13/eng/06a01.pdf#page=3
subsidized loans) and other policy and measures (accessed July 3, 2009).
(norms, labels). 10. Michaelowa and Pallav (2007) and
6. The financial benefit to host countries is Schneider (2007), for example, claim that a num-
lower than the overall size of the CDM market ber of projects would have happened anyway. In
for two reasons. First a vast majority of CDM contrast, business organizations complain about
transactions on the primary market are forward an excessively stringent additionality test (IETA
purchase agreements with payment on delivery 2008; UNFCCC 2007).
of emission reductions. Depending on project 11. Olsen 2007; Sutter and Parreno 2007;
performance, the amount and schedule of car- Olsen and Fenhann 2008; Nussbaumer 2009.
bon delivery may prove quite different. Project 12. Cosbey and others 2005; Brown and others
developers tend to sell forward credits at a dis- 2004; Michaelowa and Umamaheswaran 2006.
count that reflects these delivery risks. Second 13. Streck and Chagas 2007; Meijer 2007;
CDM credits are bought and sold several times Streck and Lin 2008.
on a secondary market until they reach the end 14. IETA 2005; Stehr 2008.
user. The financial intermediaries active on the 15. IETA 2008.
secondary market that take on the delivery risk 16. Michaelowa and Pallav 2007; IETA 2008.
are compensated with a higher sell-on price if 17. Barker and others 2007.
the risk does not materialize. These trades do 18. Sperling and Salon 2002.
not directly give rise to emission reductions, 19. Figueres and Newcombe 2007.
unlike transactions in the primary market. The 20. Eliasch 2008.
“The ice is melting because of rising temperature. The boy sits upset. A
bird has fallen—another victim of polluted air. Flowers grow near the
trash can. They die before the boy could take them to the bird. To reverse
these phenomena my appeal to world leaders is keep nature clean, use
solar and wind energies, and improve technologies.”
—Shant Hakobyan, Armenia, age 12
282 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
21. Figueres, Haites, and Hoyt 2005; Wara Alcamo and Henrichs (2002) for water availabil-
2007; Wara and Victor 2008. ity changes; Tol, Ebi, and Yohe (2006) and Bosello,
22. Sterk 2008. Roson, and Tol (2006) for health.
23. See Fankhauser, Martin, and Prichard, 39. In boxes 6.7 and 6.8, composite indexes
forthcoming. are calculated by transforming individual indi-
24. See Müller 2008 for a discussion. cators to z-scores then taking an unweighted
25. Barbier 2009; Bowen and others 2009. average of the resulting scores.
26. Robins, Clover, and Magness 2009, as dis-
cussed in chapter 1. References
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Organisation for Economic Co-operation and
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Development.
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or involve project activities. Crediting could be
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Generating the Funding Needed for Mitigation and Adaptation 285
7
Accelerating Innovation and
Technology Diffusion
W
indmills peppered Euro- and together they host nearly 20 percent of
pean landscapes to pro- the world’s capacity. An Indian company,
vide energy for agricultural Suzlon, is one of the world’s leading wind
activities long before the dis- turbine manufacturers, employing 13,000
covery of electricity. Thanks to the forces of people across Asia. So the global takeoff of
innovation and technology diffusion, wind wind technology is setting an early prec-
is now powering the first stages of what edent for climate-smart development. And
could become a veritable energy revolution. complementary advances, such as global
Between 1996 and 2008 the global installed geospatial wind resource information, are
wind capacity increased twentyfold to stand making siting decisions easier (map 7.1).
at more than 120 gigawatts, displacing an Technological innovation and its asso-
estimated 158 million tons of carbon diox- ciated institutional adjustments are key
ide (CO2) a year while creating some 400,000 to managing climate change at reasonable
jobs (figure 7.1).1 Much of this growth is cost. Strengthening national innovation and
attributable to government incentives and technology capacity can become a power-
to publicly and privately funded research, ful catalyst for development.2 High-income
driving down the cost of wind technology economies, the world’s major emitters, can
and driving up efficiency. replace their stock of high-carbon tech-
And although most installed capacity is nologies with climate-smart alternatives
in Europe and the United States, the pat- while massively investing in tomorrow’s
tern is shifting. In 2008 India and China breakthrough innovations. Middle-income
each installed more wind capacity than
any other country except the United States,
Figure 7.1 Global cumulative installed wind
capacity has soared in the past decade
Gigawatts
Key messages 140
Meeting climate change and development goals requires significantly stepping up international 120
efforts to diffuse existing technologies and develop and deploy new ones. Public and private 100
investment—now in the tens of billions of dollars per year—need to be steeply ramped up to
80
several hundreds of billions of dollars annually. “Technology-push” policies based on increasing
public investments in R&D will not be sufficient. They need to be matched with “market-pull” 60
policies that create public and private sector incentives for entrepreneurship, for collaboration, 40
and to find innovative solutions in unlikely places. Diffusing climate-smart technology requires 20
much more than shipping ready-to-use equipment to developing countries; it requires building
0
absorptive capacity and enhancing the ability of the public and private sectors to identify, adopt, 1996 1998 2000 2002 2004 2006 2008
adapt, improve, and employ the most appropriate technologies.. Year
Source: Global Wind Energy Council 2009.
288 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
3 6 9
countries can ensure that their investments (RDD&D) is lacking, and the financial cri-
take them in the direction of low-carbon sis is reducing private spending on climate-
growth and that their firms reap the ben- smart technology, delaying its diffusion.
efits of existing technologies to compete Mobilizing technology and fostering inno-
globally. Low-income countries can ensure vation on an adequate scale will require
that they have the technological capacity that countries not only cooperate and pool
to adapt to climate change, by identifying, their resources but also craft domestic poli-
assessing, adopting, and improving exist- cies that promote a supportive knowledge
ing technologies with local knowledge and infrastructure and business environment.
know-how. As chapter 8 points out, reaping And most developing countries, particu-
the benefits of technological changes will larly low-income countries, have small
require significant changes in human and market sizes which, taken individually,
organizational behavior, as well as a host are unattractive to entrepreneurs wishing
of innovative supportive policies to reduce to introduce new technologies. But con-
human vulnerability and manage natural tiguous countries can achieve a critical
resources. mass through greater regional economic
Yet today’s global efforts to innovate integration.
and diffuse climate-smart technologies fall International cooperation must be
far short of what is required for significant scaled up to supply more financing and to
mitigation and adaptation in the coming formulate policy instruments that stimu-
decades. Investment in research, develop- late demand for climate-smart innova-
ment, demonstration, and deployment tion, rather than simply focus on research
Accelerating Innovation and Technology Diffusion 289
the electronics industry and the 15 percent Figure 7.3 Annual spending for energy and climate
in the pharmaceuticals sector.23 change R&D pales against subsidies
Progress in some technologies has just $ (billions)
been too slow. Although patenting in renew- 350
able energy has grown rapidly since the 300
mid-1990s, it was less than 0.4 percent of all
250
patents in 2005, with only 700 applications.24
Most growth in low-carbon technology pat- 200
enting has been concentrated in the areas of 150
waste, lighting, methane, and wind power, 100
but improvement in many other promising
technologies like solar, ocean, and geother- 50
mal power has been more limited (figure 0
7.4), with little of the needed progress toward World World subsidies World public
subsidies to petroleum funding for
steep cost reductions. to energy products energy R&D
Developing countries are still lagging in
Sources: IEA 2008a; IEA 2008b; IEA, http://www.iea.org/
innovation for adaptation. While it is more Textbase/stats/rd.asp (accessed April 2, 2009).
cost-effective to adopt technologies from Note: Global subsidy estimates are based on subsidies shown
abroad than to reinvent them, in some cases for 20 highest-subsidizing non-OECD countries only (energy
subsidies in OECD countries are minimal).
technological solutions for local problems
do not exist.25 So innovation is not only
relevant to high-income economies. For (table 7.1). Some efforts are under way, while
example, advances in biotechnology offer other opportunities are as yet untapped.
potential for adapting to climate-related Because of the mix of required technol-
events (droughts, heat waves, pests, and ogies and their stages of development and
diseases) affecting agriculture and for- because their global adoption rates are so
estry. But patents from developing coun- widely varied, all these approaches to coop-
tries still represent a negligible fraction eration will be required. Moreover, climate-
of global biotechnology patents.26 That smart technology cannot be produced
will make it difficult to develop location- through fragmented efforts. Innovation
specific agricultural and health responses has to be seen as a system of multiple inter-
to climate change. Moreover, little spend- acting actors and technologies, path depen-
ing on agricultural R&D—though on dency, and learning processes, not just as
the rise since 1981—occurs in developing a product of R&D (box 7.2).28 Subsidies
countries. High-income economies con- for research, development, demonstration,
tinue to account for more than 73 percent and deployment have to be combined with
of investments in global agricultural R&D. market incentives for firms to innovate and
In developing countries the public sec-
tor makes 93 percent of agricultural R&D Figure 7.4 The pace of invention is uneven across low-carbon technologies
investments, compared with 47 percent in
high-income countries. But public sector Ocean power
Solar power
organizations are typically less effective at Cement production
commercializing research results than the Hydropower
private sector.27 Geothermal power
Buildings
Bioenergy
International collaboration and Fuel injection engines
Wind power
cost sharing can leverage domestic Methane
efforts to promote innovation Lighting
Waste
Cooperation to drive technological change
–100 0 100 200 300 400 500 600 700 800
covers legislative and regulatory harmoni-
zation, knowledge sharing and coordina- Increase in patents from 1978 to 2003 (%)
tion, cost sharing, and technology transfer Source: Dechezleprêtre and others 2008.
294 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
Type of Existing
agreements Subcategory agreements Potential impact Risk Implementation Target
Legislative Technology Very little (mainly High impact Wrong Difficult Energy
and regulatory deployment and EU) technological technologies with
harmonization performance choices made by strong lock-in
mandates government effects (transport)
and that are highly
decentralized
(energy efficiency)
Knowledge sharing Knowledge Many (such as Low impact No major risk Easy All sectors
and coordination exchange International
and research Energy Agency)
coordination
Voluntary Several Low impact Limited adoption Easy Industrial and
standards and (EnergyStar, ISO of standards and consumer
labels 14001) labeling by private products;
sector communication
systems
Cost-sharing Subsidy-based Very few (ITER) High impact Uncertainty of Difficult Precompetitive
innovation “technology push” research outcomes RD&D with
instruments important
economies of scale
(carbon capture
and storage, deep
offshore wind)
Reward-based Very few (Ansari Medium impact Compensation Moderate Specific medium-
“market pull” X-prize) and required scale problems;
instruments effort may result solutions for
in inappropriate developing-country
levels of innovation markets; solutions
not requiring
fundamental R&D
Bridge-the-gap Very few (Qatar-UK High impact Funding remains Moderate Technologies at the
instruments Clean Technology unused due to lack demonstration and
Investment Fund) of deal flow deployment stage
Technology Technology Several (Clean High impact Low absorptive Moderate Established (wind,
transfer transfer Development capacities of energy efficiency),
Mechanism, Global recipient countries region-specific
Environment (agriculture), and
Facility) public sector
(early-warning,
coastal protection)
technologies
Sources: Davis and Davis 2004; De Coninck and others 2007; Justus and Philibert 2005; Newell and Wilson 2005; Philibert 2004; World Bank 2008a.
move technologies along the innovation standards that regulate the share of energy
chain (figure 7.5).29 And innovation has to coming from renewable sources, and per-
rely on knowledge flows across sectors and formance mandates such as automobile fuel
on advances in such broad technologies as economy standards (see chapter 4) are cost-
information and communications technol- effective and can promote the development
ogies and biotechnology. and diffusion of low-carbon technologies.
For example, a number of countries have
Regulatory harmonization across initiated measures to phase out incandes-
countries forms the backbone of any cent light bulbs, because more efficient
climate-smart technology agreement technologies such as compact fluorescent
Harmonized incentives with a broad geo- lamps as well as light emitting diodes now
graphic reach can create large investor exist. Harmonized at a global scale, these
pools and markets for climate-smart inno- regulations can drive the market for low-
vation. Carbon pricing, renewable portfolio carbon products in the same way that the
Accelerating Innovation and Technology Diffusion 295
BOX 7.2 Innovation is a messy process and can be promoted only by policies that address multiple
parts of a complex system
In most countries, government policy is Most innovations fail in one stage or (technology push) and creating market
still driven by an outdated linear view of another. Feedback from manufactur- demand (market pull). While both types
innovation, that perceives innovation as ers in the deployment stage, or from of policy are extremely important, they
happening in four consecutive stages. retailers and consumers in the diffusion ignore the contributions of the numerous
• R&D, to find solutions to specific techni- stage, trickles back to the earlier stages, interactions among the actors involved in
cal problems and apply them to new completely modifying the course of the different stages of innovation: firms,
technologies. innovation, leading to new, unexpected consumers, governments, universities,
ideas and products and sometimes to and the like. Partnerships, learning by
• Demonstration projects, to further
unforeseen costs. Sometimes break- selling or buying a technology, and learn-
adapt the technology and demonstrate
through innovations are driven not by ing through imitation play critical roles.
its functioning in larger-scale and real-
R&D but by new business models that Equally critical are the forces that drive
world applications.
put together existing technologies. diffusion. The compatibility, perceived
• Deployment, once fundamental techni-
And learning curves, whereby unit costs benefits, and learning costs of using a new
cal barriers have been resolved and the
decline as a function of cumulative pro- product are all key factors for innovation.
commercial potential of a technology
duction or cumulative RDD&D, are not Effective policies must view innovation as
becomes apparent.
well understood. part of a system and find ways to stimulate
• Diffusion, when technology becomes So why does this matter for policy? The all these facets of the innovation process,
competitive in the market. linear view gives the misleading impres- particularly where there are market gaps.
But experience shows that the process sion that innovation can be managed
of innovation is much more complex. simply by supplying more research inputs Sources: Tidd 2006; World Bank 2008a.
BOX 7.3 Innovative monitoring: Creating a global climate service and a “system of systems”
Demand for sustained and reliable data other institutions, such as the World Data (GEOSS). Providing the institutional
and information on trends, unusual Centers and the International Research mechanisms to ensure the coordination,
events, and long-range predictions has Institute, regularly provide climate- strengthening, and supplementation
never been greater than it is today. A related data and products including fore- of existing global Earth observation
number of public and private entities casts on monthly to annual timescales. systems, GEOSS supports policy makers,
in sectors as diverse as transportation, There are also a few examples of fledg- resource managers, scientific researchers,
insurance, energy, water, agriculture, and ling regional climate services. One such and a broad spectrum of decision mak-
fisheries are increasingly incorporating example is the Pacific Climate Informa- ers in nine areas: disaster risk mitigation;
climate information into their planning. tion System (PaCIS), which provides a adaptation to climate change; integrated
Such forecasting has become a critical regional framework to integrate ongoing water resource management; manage-
component of their adaptation strategies. and future climate observations, opera- ment of marine resources; biodiversity
A global climate services enterprise tional forecasting services, and climate conservation; sustainable agriculture
(GCS) could provide the climate-relevant projections. PaCIS facilitates the pool- and forestry; public health; distribu-
information that society needs to better ing of resources and expertise, and the tion of energy resources; and weather
plan for and anticipate climate conditions identification of regional priorities. One monitoring. Information is combined
on timescales from months to decades. of the highest priorities for this effort from oceanic buoys, hydrological and
Such an enterprise would build on exist- is the creation of a Web-based portal meteorological stations, remote-sensing
ing observation systems but must go that will facilitate access to climate data, satellites, and internet-based Earth-
far beyond them. A GCS would provide products, and services developed by the monitoring portals.
information to help answer questions U.S. National Oceanic and Atmospheric Some early progress:
about appropriate city infrastructure Administration and its partners across the
• In 2007 China and Brazil jointly
to cope with the 100-year extreme pre- Pacific region.
launched a land-imaging satellite and
cipitation and storm surge events that Another example is the formation
committed to distribute their Earth
will now occur at higher magnitude and of regional climate centers, which the
observation data to Africa.
greater frequency, help farmers decide World Meteorological Organization
on appropriate crops and water manage- (WMO) has formally sought to define and • The United States recently made avail-
ment during droughts, monitor changing establish since 1999. The WMO has been able 40 years of data from the world’s
stocks and flows of carbon in forests and sensitive to the idea that the responsi- most extensive archive of remotely
soils, and evaluate efficacy of disaster bilities of regional centers should not sensed imagery.
response strategies under changing cli- duplicate or replace those of existing • A regional visualization and monitor-
mate conditions. agencies but instead support five key ing system for Mesoamerica, SERVIR, is
A GCS will require innovative partner- areas: operational activities, including the largest open-access repository of
ships across governments, the private the interpretation of output from global environmental data, satellite imagery,
sector, and other institutions, and its prediction centers; coordination efforts documents, metadata, and online map-
design will be quite critical. Beginning that strengthen collaboration on observ- ping applications. SERVIR’s regional
with today’s observations and model- ing, communication, and computing net- node for Africa in Nairobi is predicting
ing capacity, a connected multi-hub- works; data services involving providing floods in high-risk areas and outbreaks
and-spoke design should be developed data, archiving it and ensuring its qual- of Rift Valley Fever.
whereby global services are provided to ity; training and capacity building; and • GEO is beginning to measure forest-
regional service providers that in turn research on climate variability, predict- related carbon stocks and emissions
deliver information to local providers. ability, and impacts in a region. through integrated models, in situ
This eliminates the requirement that monitoring, and remote sensing.
every community develop very sophisti- Integrating climate services with
cated information on their own. other innovative monitoring systems
Building a comprehensive and inte- Sources: Global Earth Observation System
Building the Components of a GCS grated system to monitor environmental of Systems, http://www.epa.gov/geoss
Some of the necessary information to changes across the planet is beyond the (accessed January 2009); Group on Earth
develop a GCS is being provided by means of any single country, as is analyz- Observations, http://www.earthobserva-
United States National Meteorologi- ing the wealth of data it would generate. tions.org (accessed January 2009); IRI 2006;
note from Tom Karl, National Oceanic and
cal and Hydrologic Service Centers and That is why the Group on Earth Observa-
Atmospheric Administration, National Cli-
increasingly by Global Climate Observing tion (GEO), a voluntary partnership of matic Data Center, 2009; Pacific Region Inte-
System contributions through various governments and international organiza- grated Climatology Information Products,
government agencies and nongovern- tions, developed the concept of a Global http://www.pricip.org/ (accessed May 29,
mental institutions. Also, a number of Earth Observation System of Systems 2009); Rogers 2009; Westermeyer 2009.
Accelerating Innovation and Technology Diffusion 297
BOX 7.5 Technologies on the scale of carbon capture and storage require international efforts
For carbon capture and storage to achieve Carbon capture and storage technology requires massive additional efforts
a fifth of the emission reductions needed
CO2 removed/year (millions of tons)
to limit atmospheric concentrations to, for
example, 550 parts per million, the technol- 25,000
ogy has to ramp up from the 3.7 million
22,330
tons of carbon sequestered todaya to more
than 255 million tons by 2020 and at least
22 billion tons by the end of the century, or
20,000
about the same amount of current global
emissions from energy use today (figure).
Each capture and storage plant costs
between $1.5 and $2.5 billion to construct,
and deploying the 20–30 needed by 2020 15,000
to prove the commercial viability of the
technology would be prohibitive for a sin-
gle country. There are only four commercial
end-to-end carbon capture and storage
projects, and their storage capacity is one 10,000
to two orders of magnitude smaller than
the capacity a commercial 1,000 megawatt
plant would need over its expected opera-
tional lifetime.
5,000
Sources: Edmonds and others 2007; IEA
2006; IEA 2008b. 2160
a. To convert tons of carbon to CO2, multiply
by 3.67. 4 257
0
2000 2020 2050 2095
Note: Observed data for 2000. For all other years, projections based on needs in order to limit greenhouse gas
concentrations to 550 ppm.
global fi nancial instruments give markets winner was announced in 2004.39 In March
the flexibility to find innovative solutions. 2008 the X-Prize Foundation and a com-
Inducement prizes and advanced mar- mercial partner announced a new $10 mil-
ket commitments are two closely related lion international competition to design,
market-pull incentives for rewarding inno- build, and bring to market high-fuel-
vations that attain prespecified technologi- mileage vehicles. One hundred and eleven
cal targets in a competition. Inducement teams from 14 countries have registered in
prizes involve a known reward; advanced the competition.40
market commitments are fi nancial com- Advanced market commitments, which
mitments to subsidize future purchases of encourage innovation by guaranteeing
a product or service up to predetermined some minimum market demand to reduce
prices and volumes. uncertainty, have promoted climate-smart
Although there are no examples of inter- technologies through the U.S. Environ-
nationally funded climate-smart prizes, mental Protection Agency, in partnership
other recent national public and private with nonprofit groups and utilities (box
initiatives have gathered growing interest. 7.6). A more recent international initiative
The $10 million Ansari X-Prize was estab- is a pilot program for pneumococcal vac-
lished in the mid-1990s to encourage non- cines designed by the GAVI Alliance and
governmental space flight. The competition the World Bank.41 In 2007 donors pledged
induced $100 million of private research $1.5 billion in advanced market commit-
investments across 26 teams, leveraging ments to the pilot. Vaccines are bought with
10 times the prize investment, before the donor-committed funds and with minor
300 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
Government equity,
research subsidies, for fear of distorting the market, and pri-
funding customers vate investors consider them too risky, with
Venture
capital the exception of a limited number of inde-
pendent investors termed “business angels”
and some corporations. Venture capitalists,
Business who typically only fund firms with demon-
angels strated technologies, were able to deploy no
more than 73 percent of capital available in
Basic research Demonstrated products the clean technology sector in 2006 because
Maturity of the technology so few firms in this sector had survived the
Source: WDR team. valley of death.45
Accelerating Innovation and Technology Diffusion 301
Venture capital funding is also lacking levels where they can take root in the global
for many types of climate-smart technolo- economy.
gies. Investors are unlikely to be attracted
to market segments involving particularly The scale and scope of international
high-risk and capital-intensive energy tech- efforts are far short of the challenge
nologies where demonstration costs can be Technology transfer comprises the broad
massive. And it is expected that today’s processes to support flows of information,
fi nancial crisis will slow corporate ven- know-how, experience, and equipment to
ture capital, given the higher cost of debt.46 governments, enterprises, nonprofits, and
Moreover, the bulk of the global venture research and educational institutions. The
capital industry is in a few developed coun- absorption of foreign technologies depends
tries, far from opportunities in several rap- on much more than fi nancing physical
idly growing middle-income countries.47 equipment and technology licenses. It
Programs to commercialize technology requires building national capacity to iden-
can also support links with potential users tify, understand, use, and replicate useful
of climate-smart technologies, particularly technology. As discussed below, interna-
for small firms where breakthrough innova- tional policies can work hand in hand with
tions often occur but which face the great- national efforts to improve national institu-
est financial and market access constraints. tions and create an enabling environment
To commercialize ideas that meet its tech- for technology transfer.
nology needs, the U.S. Environmental Pro-
tection Agency provides funding to small International organizations. Many inter-
fi rms through the Small Business Inno- national organizations dealing with envi-
vation Research Program.48 The French ronmental challenges are mainly mission
government’s Passerelle program provides focused; these include the World Health
cofunding to large enterprises willing to Organization, the Food and Agriculture
invest in innovation projects of potential Organization, and the UN Environment
interest in small fi rms.49 Other programs Programme. But these entities can be
provide special grants to collaborative proj- encouraged to collectively enhance the ade-
ects to encourage technology spillovers. quacy and coherence of the existing institu-
Because the gap between research and tions for addressing climate change.
the market is particularly wide in develop- Similarly, many international agree-
ing countries and because many solutions ments exist to address particular envi-
to local problems may come from foreign ronmental problems but as these are
countries, special multilateral funding operationalized, they should be mutually
can support research projects that include reinforcing. 51 These can be evaluated in
developing- country participants. This terms of goals and means to achieve them
funding can create incentives for conduct- in relation to their ability to support miti-
ing research relevant to developing-country gation and adaptation of the magnitude
needs such as drought-resistant crops. Mul- expected under a 2°C world or a 5°C or
tilateral efforts can also promote climate- beyond world.
smart venture capital funds in high-income
countries and in the several rapidly grow- Financing mechanisms. The Clean
ing middle-income countries that have Development Mechanism (CDM), the
the critical mass of innovative activity and main channel for fi nancing investments
fi nancial infrastructure to attract venture in low-carbon technologies in developing
capital investors. This latter group includes countries, has leveraged public and private
China and India. In Israel, the Republic of capital to fi nance over 4,000 low-carbon
Korea, and Taiwan, China, the government projects. But the majority of its projects
provided venture capital, acting as a core do not involve either knowledge or equip-
investor and attracting other funds.50 Such ment transfer from abroad.52 (Chapter 6
strategies can provide the “valley of life” discusses the limits of scaling up the CDM
needed to nurture nascent technologies to to accelerate technology transfers.)
302 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
Skills and knowledge constitute a key Skills and knowledge can be acquired by
pillar for building a climate-smart econ- investing in the institutions and programs
omy. Basic education provides the founda- that make up a country’s knowledge infra-
tion of any technology absorption process structure. Institutions such as universities,
and reduces economic inequity, but a large schools, training institutes, R&D institu-
enough pool of qualified engineers and tions, and laboratories, and such techno-
researchers is also crucial. Engineers, in logical services as agricultural extension
particularly short supply in low-income and business incubation60 can support the
countries, play a role in implementing private and public capacity to use climate-
context-specific technologies for adaptation smart technologies and make decisions on
and are critical to rebuilding efforts after the basis of sound science.
natural disasters (figure 7.7). Bangladesh, Another pillar for building a climate-
particularly prone to hurricanes and sea- smart economy is to create incentives for
level rise, is an extreme example: university the private sector to invest in climate-smart
students enrolled in engineering repre- technologies. This means creating not only
sented barely 0.04 percent of the population regulatory incentives but also an enabling
in 2006, compared with 0.43 percent in the environment paired with public support
Kyrgyz Republic, a country with a very sim- programs for business innovation and tech-
ilar per capita GDP.59 Equally important are nology absorption.
the management and entrepreneurial skills
that channel technical knowledge into prac- Knowledge infrastructure is a key to
tical applications in the private sector. And creating and adapting local mitigation
in the public sector, skills are required in a and adaptation systems
wide range of areas including utility regula- Research institutes in developing coun-
tion, communication, urban planning, and tries can help governments better prepare
climate policy development. for the consequences of climate change. In
Indonesia and Thailand, for example, they
are using NASA satellites to monitor envi-
Figure 7.7 Enrollment in engineering remains low in many developing countries ronmental characteristics affecting malaria
Enrollment in engineering, manufacturing, and construction transmission in Southeast Asia, such as
in tertiary education as a share of the total population (%) rainfall patterns and vegetation status.61
1.6 Research institutes can partner with gov-
ernment agencies and private contractors
1.4 Belarus to identify and design appropriate coastal
Ukraine adaptation technologies and to implement,
1.2 operate, and maintain them. They can help
devise adaptation strategies for farmers by
Iran, Islamic Rep. Lithuania combining local knowledge with scientific
1.0
Colombia testing of alternative agroforestry systems or
Mongolia support forestry management by combin-
0.8 ing indigenous peoples’ knowledge of for-
Chile
Bulgaria est conservation with genetically superior
0.6 Latvia planting material.62 And they can help firms
Kyrgyz Republic Jordan Turkey Hungary improve the energy efficiency of their pro-
0.4 Mexico cesses through consultancy, testing, trouble-
Ethiopia Tunisia shooting, and training.
Georgia El Salvador
Algeria In middle-income countries research
0.2 Cambodia Mauritius
Guatemala South Africa institutions can also solve longer-term mit-
Lao PDR
0 Pakistan Swaziland Peru igation challenges. Mastering the energy
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 technologies that will be useful involves
GDP per capita ($, PPP) a learning process that can take decades.
Source: WDR team based on UNESCO Institute for Statistics, http://stats.uis.unesco.org/unesco/
Agriculture and health depend on bio-
ReportFolders/ReportFolders.aspx (accessed August 30, 2009). technology to develop new technologies
Accelerating Innovation and Technology Diffusion 305
and climate science for planning purposes. national research funding by 92 percent.65
Development of smart grids for national Institutional reforms that give the private
electricity distribution relies on mastering sector a greater voice in the governance of
integrated communications, sensing, and research institutions and that reward trans-
measurement technologies. fer of knowledge and technology to exter-
Yet after investing in research and aca- nal clients can also help.66 In some cases
demic institutions, many governments have “bridging institutions” such as business
found the contributions to development incubators can facilitate knowledge spill-
minimal.63 The reasons: the research typi- overs from research institutions. In 2007,
cally is not demand-driven, and there are 283 clean technology companies were under
few links between research institutes, uni- incubation worldwide (even before includ-
versities, the private sector, and the com- ing China), twice as many as in 2005.67
munities in which they operate (box 7.8).64 High-income countries can support
In addition universities in many develop- the global development and diffusion of
ing countries have historically focused on climate-smart systems by helping build
teaching and do little research. capacity and partnering with research
Shifting the balance of government institutions in developing countries. An
funding in favor of competitive research example is the International Research Insti-
funding, instead of guaranteed institutional tute for Climate and Society at Columbia
funding, can go a long way to increase the University in the United States, which col-
effectiveness of public research institutions. laborates with local institutions in Africa,
In Ecuador the government’s Program for Asia, and Latin America.
Modernization of Agricultural Services Another example is the Consulta-
finances a competitive research grant tive Group on International Agricultural
program that supports strategic work on Research (CGIAR). A donor-funded, decen-
innovations to open new export markets tralized, and cooperative global structure
by controlling fruit flies, reducing produc- of research institutions, the CGIAR already
tion costs for new export products, and targets a number of topics relevant to climate
controlling disease and pests in traditional adaptation (box 7.9). A similar approach
exports crops. The program introduced can be used for other climate technologies.
a new research culture and brought new Lessons from CGIAR suggest that regional
organizations into the research system. research centers can be funded in develop-
Cofi nancing requirements helped increase ing countries to focus on a limited number
to increase only in the late 1960s in antici- But regulation alone can have its draw-
pation of new national standards on SO2 backs. Unlike price signals, regulations can
control. From 1975 to 1995 technological limit the flexibility of firms, especially when
improvements reduced the capital costs for they are technology-specific. They can also
removing SO2 from power plant emissions result in mitigation options that are more
by half, and the share of SO2 removed rose costly for society. But they are a necessary
from less than 75 percent to above 95 per- complement to carbon pricing (see chapter
cent.76 Regulations can also provide firms 4). Studies have analyzed the comparative
with niche markets to develop new tech- effects of environmental regulations and
nologies and allow countries to gain a com- market-based incentives on innovation: the
petitive edge. A ban on gasoline-propelled general view is that combining different pol-
motorbikes in several urban areas of China icy instruments may be the most effective, so
in 2004—which coincided with techno- long as their development and enforcement
logical improvements in electric motor and are predictable to stakeholders.78
battery technologies, faster urbanization,
higher gasoline prices, and increases in pur- An enabling business environment
chasing power—boosted the electric bicy- provides the basic framework for
cle market from a mere 40,000 in 1998 to climate-smart technology diffusion and
21 million in 2008. E-bikes are now cheaper innovation
and cleaner than other motorized modes of Markets need to function properly to ensure
transportation, including buses (figure 7.8), that firms do not face unnecessary risk, have
and China is exporting these low-carbon access to information, operate within a well-
vehicles to developed countries.77 defined legal framework, and have supportive
Figure 7.8 E-bikes are now among the cheapest and cleanest travel mode options in China
10
0
Bicycle E-bike Bus Motor Compact
scooter car
(gasoline) (gasoline)
CO2 (g/passenger/km)
350
300
250
200
150
100
50
0
Bicycle Light Heavy Bus Motor
E-bike E-bike vehicle
Sources: Cherry 2007; Weinert, Ma, and Cherry 2007; photograph from the Wikipedia Foundation.
Note: E-bike emissions refer to full life-cycle, which, in this case, includes production, energy production, and use. For the regular
bicycle only emissions from production are included.
308 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
market institutions. Securing land tenure, As a result, investments are not being made
documenting land rights, strengthening where technology is the most cost-effective.
land rental and sale markets, and broadening Brazil, the world’s lowest-cost ethanol pro-
access to financial services can create incen- ducer, saw a modest 6 percent increase in
tives for technology transfer for rural small- its ethanol production between 2004 and
holders (see chapter 3).79 But an enabling 2005, whereas the United States and Ger-
business environment needs to recognize the many saw production increases of 20 and
basic rights of vulnerable groups, particu- 60 percent respectively, protected by tariffs
larly indigenous peoples, heavily dependent of over 25 percent in the United States and
on land and natural resources. Many of them over 50 percent in the EU.85 Removing these
have become landless, live on small parcels of tariffs and subsidies would likely reallocate
land, or do not have secure tenure.80 production to the most efficient biofuel
Reducing entry barriers for firms and producers.86
offering a flexible labor market supports An attractive investment climate for
technology start-ups that can create break- foreign direct investment (FDI) is criti-
through innovations and agribusinesses that cal to accelerating technology transfer and
can bring new types of fertilizers or seeds to absorption.87 In 2007 FDI accounted for 12.6
farmers.81 The case of hybrid pearl millet in percent of total gross fixed capital formation
India shows that market liberalization in the in electricity, gas, and water in developing
late 1980s increased not only the role of pri- countries, three times the amount of mul-
vate companies in seed development and dis- tilateral and bilateral aid.88 Transnational
tribution but also the rates of innovation.82 corporations based in high-income coun-
Macroeconomic stability is another pillar of tries have invested massively in photovoltaic
the enabling environment, along with a well- production in India (BP Solar), ethanol in
functioning financial sector. Basic infrastruc- Brazil (Archer Daniels Midland and Car-
ture services, such as continuous energy and gill), and wind power in China (Gamesa
water supplies, are also indispensable. and Vestas). China had one foreign-owned
Eliminating tariff and nontariff barri- R&D laboratory in 1993 and 700 in 2005.89
ers on clean energy technologies—such as General Electric, a world leader in energy
cleaner coal, wind power, solar photovolta- generation and efficiency products, opened
ics, and energy-efficient lighting—could global R&D centers in India and China in
increase their traded volume by 14 percent 2000, centers that now employ thousands of
in the 18 developing countries that emit high researchers. Figure 7.9 highlights the oppor-
levels of greenhouse gases.83 Trade barriers tunities brought about by the globalization
on imports, such as quotas, rules of origin, of wind power equipment R&D and produc-
or unclear customs code specifications, can tion in middle-income countries.
impede the transfer of climate-smart tech- Developing local production capacity
nologies by raising their domestic prices can help these countries ensure their long-
and making them cost-ineffective. In Egypt term uptake of climate-smart technologies
the average tariffs on photovoltaic panels and compete in global markets, driving
are 32 percent, 10 times the 3 percent tariff prices down and performance up. This will
imposed in high-income members of the occur fastest through licensing or FDI.
Organisation for Economic Co-operation To facilitate the transfer of climate-smart
and Development (OECD). In Nigeria technologies, middle-income countries can
potential users of photovoltaic panels face allow foreign firms to establish fully owned
nontariff barriers of 70 percent in addition subsidiaries instead of mandating joint
to a 20 percent tariff.84 Biofuels are hit par- ventures or licensing. They can also build
ticularly hard by tariffs. Tariffs on ethanol a base of local suppliers and potential part-
and on some biodiesel feedstocks, includ- ners for foreign-invested fi rms by invest-
ing import and export duties on Brazilian ing in training and capacity building.90
ethanol, totaled $6 billion in 2006. OECD And they can ensure that their intellectual
country subsidies to their domestic biofu- property rights adequately protect foreign
els producers came to $11 billion in 2006. technology transfer and R&D.
Accelerating Innovation and Technology Diffusion 309
When enforcement of intellectual prop- and foreign venture capitalists from invest-
erty rights (IPR) is perceived to be weak (see ing in promising domestic enterprises.92
figure 7.9), foreign firms may not be willing Despite their investments in local manu-
to license their most sophisticated tech- facturing and R&D, foreign subsidiaries of
nologies, for fear that competitors will use global wind equipment producers register
it—which is the situation for wind equip- very few patents in Brazil, China, India, or
ment in China.91 Weak IPR enforcement Turkey. All these countries have weak IPR
also discourages foreign subsidiaries from regimes that could discourage scaling up
increasing the scale of their R&D activities R&D.93
Figure 7.9 Middle-income countries are attracting investments from the top five wind equipment firms, but weak intellectual property rights constrain
technology transfers and R&D capacity
b. Number of wind power patents in 2007 c. Location of investments of top five wind firms
Australia: India: China: Italy: Number of R&D and production investments
1 2 2 2 8
United 7 Production plants
Kingdom: 10 6 R&D centers
5
Spain: 23 4
3
2
1
United
States: 0
a
De in
er k
Si nds
Au re
Be ia
m
Ca il
da
No y
Po y
Sw al
en
Ki ey
m
an
te
ar
az
a
di
in
Ita
a
l
iu
do
o
ra
rw
rk
na
ed
29
In
a
Ch
Sp
rtu
nm
ap
Br
rm
la
lg
St
u
ng
st
Denmark:
T
ng
Ge
th
ite
86
d
Ne
ite
Un
Germany: 41
Un
Sources: Published patent data from U.S., Japanese, European, and international patent application databases, annual reports, and Web sites of Vestas, General Electric,
Gamesa, Enercon, and Suzlon (accessed on March 4, 2009); Dedigama 2009.
Note: A country’s IPR score reflects its ranking according to an IPR index based on the strength of its intellectual property protection policies and their enforcement.
310 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
Yet IPRs may also hamper innovation publicly funded research for climate-smart
if a patent blocks other useful inventions technologies of global importance. In many
because it is too broad in scope. Some pat- countries, universities are not allowed to
ent claims on synthetic biology products license technology funded by their national
and processes with promise for synthetic government to foreign firms.98 Other pro-
biofuels are perceived by critics to be so posals include patent buyouts and the
broad that scientists fear they may halt sci- transfer of climate-smart IPRs to the public
entific progress in related fields.94 Strong domain by international organizations.
IPRs can also hamper technology transfer High-income countries can also ensure
if firms refuse to license their technology to that concerns over IPRs and transfer and
keep their market power. innovation of climate-smart technologies
There is no evidence that overly restric- are considered in international treaties
tive IPRs have been a big barrier to transfer- such as those of the World Trade Orga-
ring renewable energy production capacity nization (WTO). The WTO’s agreement
to middle-income countries, but there are on Trade-Related Aspects of Intellectual
fears that they could one day become so. Property Rights (TRIPS) establishes the
Brazil, China, and India have joined the minimum legal standards of protection for
ranks of global industry leaders in photovol- WTO members. But the TRIPS agreement
taics, wind, and biofuels, often by acquiring also recognizes that patents should not be
licensed technologies. IPR issues may become abused, namely, that they should not pre-
more of a barrier to technology transfer as vent technology from serving the urgent
patenting activity accelerates in photovoltaics needs of developing countries. In fact, the
and biofuels and as equipment supplier con- TRIPS agreement includes provisions to
solidation continues in the wind sector.95 allow developing countries to exploit pat-
In low-income countries weak IPRs do ented inventions without the consent of
not appear to be a barrier to deploying the IPR owner.99 The WTO and its mem-
sophisticated climate-smart technologies. bers can limit abuses in IPR protection
But predictable and clearly defi ned IPRs if they ensure that the TRIPS agreement
can still stimulate technology transfer grants such exceptions for mitigation and
from abroad. In these countries, licensing adaptation technologies.
and building local versions of a technol- On the whole however, the impact of
ogy is not a realistic option given the lim- IPRs on technology transfer may be over-
ited domestic production capacity.96 The stated in comparison with other costs such
absorption of energy technologies gener- as management and training and barriers
ally occurs through imports of equipment. such as limited absorptive capacity. Build-
For climate adaptation, patents and plant ing engineering competence could go a long
variety rights held in developed countries way in enhancing the absorptive capacity of
are seldom a problem in small and lower- developing countries.
income countries. A patent registered in
a specific country can only be protected Public funding can help firms overcome
in that market, and foreign companies market failures associated with
do not register their intellectual property innovation and technology diffusion
in many low-income countries, because There is a limit to how much carbon prices
they do not represent attractive markets and emission standards can increase invest-
or potential competitors. Poorer countries ments in low-carbon technology and inno-
can thus decide to use a gene or tool from vation. New technologies are not always
abroad.97 rapidly adopted even when they become
High-income countries can ensure that economically attractive to potential users
excessive industry consolidation in climate- (see box 4.5 in chapter 4). Accelerating
smart sectors does not reduce incentives to technological change requires supplement-
license technology to developing countries. ing carbon pricing and regulations with
They can also ensure that national policies public funding to explore a wide portfolio
do not prevent foreign firms from licensing of technological options.100 Well-known
Accelerating Innovation and Technology Diffusion 311
market failures leading to private underin- innovation and was largely demand-driven
vestment in innovation and diffusion have (box 7.10).
provided the basis for public funding poli- As already pointed out in chapter 4, gov-
cies for decades.101 ernment procurement is another market-
In middle-income countries with indus- pull instrument that can create market
trial capacity, fi nancial support can go to niches for climate-smart technology, but
the local design, production, and export it relies on good governance and a sound
of climate-smart systems. Public funding institutional environment. Public pur-
policies can broadly defi ne innovation to chasing preferences can stimulate climate-
include adapting, improving, and develop- smart innovation and technology adoption
ing products, processes, and services that when the government is a major customer
are new to a firm, irrespective of whether in areas such as wastewater management,
they are new to their markets. This takes construction, and transport equipment
into account the spillover effects of R&D and services. Germany and Sweden already
in helping build technological absorptive include “green” criteria in more than 60
capacity.102 For example, the Technology percent of their tenders.106
Development Foundation of Turkey pro- Preventing unmanageable climate
vides zero-interest loans of up to $1 mil- change, coping with its unavoidable
lion to companies that adopt or develop impacts on society, and meeting global
systems for energy efficiency, renewable development objectives requires signifi-
energy, or cleaner production.103 In small cantly stepping up international efforts at
and low-income countries where there are diffusing existing technologies and deploy-
even more market barriers to technology ing new ones. For ambitious high-priority
absorption, public fi nancial support can initiatives, such as carbon capture and
selectively finance technology absorption in storage, countries can pool their resources,
firms, along with related technical consult- share the risks and share the learning ben-
ing and training. efits of joint RDD&D. They can create new
Publicly supported technology diffusion global funding mechanisms. “Technology-
programs bridge gaps in information and push” policies based on increasing public
know-how among firms, farmers, and pub- investments in R&D will not be sufficient
lic agencies. The most effective programs to reach our technological objectives. They
respond to real demand, address multiple need to be matched with “market-pull”
barriers, and include community institu- policies that create public and private sec-
tions from the beginning. This creates local tor incentives for entrepreneurship, for
buy-in, builds sustainability, and ensures collaboration, and to fi nd innovative solu-
that the programs are compatible with local tions in unlikely places.
development goals.104 In South Africa the The world must ensure that techno-
Clean Production Demonstration project logical advances fi nd their ways rapidly
for metal finishers was successful precisely to countries that have the least ability
because it targeted a wide range of issues to adopt them but the most need. Dif-
in parallel—from the lack of information fusing climate- smart technology will
about the advantages of cleaner technolo- require much more than shipping ready-
gies to the lack of legislation or its enforce- to-use equipment to developing countries.
ment. The demand-driven project obtained Namely, it will require building techno-
the buy-in of all stakeholders—a broad logical absorptive capacity—the ability of
range of company owners, managers, staff, the public and private sectors to identify,
consultants, regulators, and suppliers—and adopt, adapt, improve, and employ the
combined awareness campaigns, training, most appropriate technologies. It will also
technical consulting, and fi nancial assis- require creating environments that facili-
tance.105 In China the government’s strat- tate the transfer of mitigation and adap-
egy to improve and diffuse biomass cook tation technologies from one country to
stove technology was equally successful the next through channels of trade and
because it recognized the systems nature of investment.
312 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
BOX 7.10 Improved cook stoves designs can reduce soot, producing important benefits for human
health and for mitigation
About 2 billion people in developing Public programs to introduce improved A woman cooks with her Envirofit G-3300
countries depend on biomass for heating biomass cook stoves over the past two cookstove
and cooking. Rudimentary cookstoves in decades have produced mixed results.
rural areas from Central America to Africa, In India the government subsidized 50
India, and China release CO2 along with percent of the cost of 8 million stoves
black carbon (tiny particles of carbon in that it distributed. Initially, the program
soot) and products of incomplete com- encountered some difficulties because
bustion (carbon monoxide, nitrogen com- the stove design was not appropriate for
pounds, methane, and volatile organic the tools and foods used by the popula-
compounds). These products pose a seri- tion, but during the past five years the
ous health hazard. Inhalation of indoor government has launched new research
smoke from burning of solid biomass is to correct these problems. Improved
thought to contribute to the deaths of 1.6 cook stoves are gaining some ground in
million people a year globally, about 1 other countries. In China the government
million of them children under five years recognized that success hinged on meet- Photo credit: Envirofit India.
of age. ing people’s needs, and that this could
Recent studies suggest that the power not be achieved through a supply- driven
of black carbon as a driver for climate top- down approach. It confined its role pollutants through cutting edge sensor
change could be as much as twice what to research, technical training, setting technologies, measuring solar heating of
the Intergovernmental Panel on Climate manufacturing standards, and reducing the air, and combining these data with
Change previously estimated. New analy- bureaucratic impediments to the produc- measurements from NASA satellites, the
ses suggest that black carbon could have tion and diffusion of new stoves. The project team hopes to observe a “black
contributed more than 70 percent of the enterprise sector was mobilized for local carbon hole”—the absence of the usual
warming of the Arctic since 1976 and distribution. black carbon particles—in the atmosphere
could have been a strong factor in the Given recent technological progress over the areas of intervention, and to
retreat of Himalayan glaciers. in biomass cookstoves, their impact on measure how this impacts regional tem-
Given that household solid fuel used health, and their recently revealed impact peratures and people’s health. The study
in cookstoves in the developing world is on climate change, it is appropriate to will also improve understanding of how
responsible for 18 percent of the emis- massively scale up and commercialize future cookstove programs should address
sions of black carbon, new cookstove high-quality biomass-based cookstoves. households’ needs and behaviors.
technologies that improve combustion The most effective stoves will be afford-
and thus reduce soot and emissions of able to the poor, adaptable to local
Sources: Bond and others 2004; Columbia
other gases can have benefits not only for cooking needs, durable, and appealing
Earthscape, http://www.earthscape.org/
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A lot of funding has been devoted to ation program, is going to undertake the and others 2007; Hendriksen, Ruzibuka, and
support the use of liquefied petroleum most comprehensive and rigorous scien- Rutagambwa 2007; Project Surya, http://
gas (LPG) stoves as a cleaner alternative tific evaluation to date on the efficacy of www-ramanathan.ucsd.edu/ProjectSurya
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than and Carmichael 2008; Ramanathan,
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Rehman, and Ramanathan 2009; Shindell
diffusing the technology widely in devel- port the introduction of new cookstove and Faluvegi 2009; Smith, Rogers, and
oping countries. Even with subsidies, models in 15,000 households in three Cowlin 2005; UNEP 2008b; Watkins and Ehst
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CHAPTER
8
Overcoming Behavioral
and Institutional Inertia
M
any policies to address adap- Most countries still gear policies and regu-
tation and mitigation are latory institutions to ensure the supply of
already known. Secure prop- energy—not to manage demand. Pollu-
erty rights, energy-efficient tion taxes in economies where pollution is
technologies, market-based eco-taxes and not considered a public bad will generate
tradable permits—all have been piloted resistance from decision makers and the
and studied over decades. But implement- public alike. And economic interests can
ing them still proves difficult. Their success hinder the deployment of energy-efficient
relies not just on new finance and new tech- technologies.2
nology but also on complex and context- The examples show another dimension
specific social, economic, and political of the urgency of tackling climate change.
factors normally called institutions—the In addition to the inertia of climate, tech-
formal and informal rules affecting policy nology, and capital stocks, policy has to
design, implementation, and outcomes.1 overcome institutional inertia. Institu-
Values, norms, and organizational tions tend to be sticky—once in place and
arrangements can make policy change accepted, they can limit policy change and
hard. Experiences frame current and future future choices.3
action. Patterns of individual and organi- Institutional inertia has three implica-
zational behavior die hard even in the face tions for climate-smart development pol-
of new challenges. And political traditions icy. First, institutional change should be a
constrain policy choices. Some examples. priority. Success will hinge on reshaping
the institutional framework supporting
interventions. Second, institutional reform
pays off. Addressing the institutional deter-
minants of climate policy can ensure the
Key messages effectiveness and sustainability of interven-
Achieving results in tackling the climate challenge requires going beyond the international tions, maximize the impact of finance and
mobilization of finance and technology, by addressing the psychological, organizational, and technology, and yield additional develop-
political barriers to climate action. These barriers stem from the way people perceive and think ment payoffs. Third, institutional change is
about the climate problem, the way bureaucracies work, and the interests shaping government feasible. Increasing gender inclusion, recog-
action. Policy change requires shifting political incentives and even organizational responsibili- nizing indigenous peoples’ rights, reform-
ties. And it requires the active marketing of climate policies, tapping into social norms and ing property rights, and shaping individual
behaviors, in order to translate the public’s concern into understanding and understanding into
incentives can be demanding, but they are
action—starting at home.
not impossible. Many of these changes can
be accomplished without technological
322 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
breakthrough or additional fi nance. More (figures 8.1 and 8.2). 5 If fully adopted,
important, many of these interventions fall existing efficiency measures for households
within the realm of national or even local and motor vehicles could produce energy
policy—there is no need for a global climate savings of almost 30 percent—10 per-
deal to enhance press freedom, for example, cent of total U.S. consumption.6 Second,
or the voice of civil society.4 individuals drive the larger processes of
This chapter discusses the behavioral, change in organizations and political sys-
organizational, and political determi- tems. Particularly in democratic countries,
nants of the institutional inertia hindering much government action is the result of
climate-smart development. It shows how citizen and voter pressures to act. Third,
these forces affect the implementation of when designing and implementing policy,
new policies and hamper their success in decision makers apply the same mental
both developed and developing countries. processes as other individuals.
And it argues that overcoming inertia The debate about changing individual
requires reconsidering the scope and qual- behavior has focused on market mecha-
ity of government’s role. We start with indi- nisms. Better pricing of energy and cost-
viduals’ minds. ing of scarce resources can steer individuals
away from carbon-intensive consumption
Harnessing individuals’ and encourage them to preserve endangered
habitats and manage ecosystems better. But
behavioral change
the drivers of consumption by individuals
Understanding the drivers of human and groups go beyond prices. Many cost-
behavior is essential for climate- smart effective energy-efficient technologies have
development policy. First, myriad private been available for years. “No-regret” invest-
acts of consumption are at the root of cli- ments such as improving building insula-
mate change. As consumers, individuals tion, addressing water leaks, and limiting
hold a reservoir of mitigation capacity. building in flood-prone areas yield benefits
A large share of emissions in developed beyond mitigation and adaptation. So, why
countries results directly from decisions haven’t they been adopted? Because concern
by individuals—for travel, heating, food does not mean understanding, and under-
purchases. U.S. households account for standing does not necessarily lead to action.
roughly 33 percent of the nation’s carbon
dioxide (CO2) emissions—more than U.S.
industry and any other country bar China Concern does not mean understanding
Over the past decade, awareness of climate
Figure 8.1 The direct actions of U.S. consumers change has grown without translating into
produce up to one-third of total U.S. CO2 emissions widespread individual action.7 Indeed,
Residential f lying, driving, holidaying abroad, and
(natural gas, electricity, using household appliances have increased
LPG, and fuel oil)
Industrial 21%
globally.8
27% What explains the disconnect between
Transportation
perception and action? Concern about
(passenger vehicles climate change does not necessarily mean
and boats) understanding its drivers and dynamics or
Commercial 12%
the responses needed. Polls show that the
18%
Transportation public admits to remaining confused over
(light and heavy trucks, climate change’s causes and solutions.9 This
buses, rail, jet fuel,
and other sources)
“green gap” in public attitudes stems partly
22% from how climate science is communicated
Direct actions and how our minds (mis)understand cli-
Indirect actions mate dynamics (box 8.1).10
Sources: EIA 2009; EPA 2009. Standard information- deficit models
Note: LPG = liquified petroleum gas. assume that when people “know” more, they
Overcoming Behavioral and Institutional Inertia 323
act differently.11 People today are exposed to Figure 8.2 Small local adjustments for big global benefits: Switching from SUVs to fuel-
lots of information on the causes, dynam- efficient passenger cars in the United States alone would nearly offset the emissions
generated by providing energy to 1.6 billion more people
ics, and effects of climate change. This
information has clearly increased concern, Emissions (million tons of CO2)
but it has not led to action.12 Why? Because 350
information can produce misleading feel-
ings of “empowerment,” which then turns 300
into ambivalent powerlessness when paired
with more “realistic” messages. Convey-
250
ing urgency by stressing the unprecedented
nature and scale of the problems can result in
paralysis.13 Similarly, playing up the multi- 200
stakeholder nature of mitigation and adapta-
tion is a reminder that the solution rests with 150
no single actor, resulting in a general feeling
of helplessness and disempowerment.14 This
might explain why, in developed countries 100
where information on climate change is
more readily available, people are less opti- 50
mistic about a possible solution (figure 8.3).
To produce action, awareness needs to be 0
grounded in clear information from trust- Emission reductions by switching Emission increase by providing
worthy sources. The way climate change fleet of American SUVs to cars with basic electricity to 1.6 billion people
science is communicated to the public can EU fuel economy standards. without access to electricity.
complicate things. Scientific debate evolves Source: WDR team calculations based on BTS 2008.
Note: Estimates are based on 40 million SUVs (sports utility vehicles) in the United States traveling a total of 480
through testing and cross-checking of the- billion miles (assuming 12,000 miles a car) a year. With average fuel efficiency of 18 miles a gallon, the SUV fleet
ories and findings. News coverage can veer consumes 27 billion gallons of gasoline annually with emissions of 2,421 grams of carbon a gallon. Switching to
fuel-efficient cars with the average fuel efficiency of new passenger cars sold in the European Union (45 miles
from one extreme to another, resulting in a gallon; see ICCT 2007) results in a reduction of 142 million tons of CO2 (39 million tons of carbon) annually. Elec-
more confusion for the public, which may tricity consumption of poor households in developing countries is estimated at 170 kilowatt hours a person-year
and electricity is assumed to be provided at the current world average carbon intensity of 160 grams of carbon a
perceive the debate not as scientific prog- kilowatt-hour, equivalent to 160 million tons of CO2 (44 million tons of carbon). The size of the electricity symbol in
ress but as a proliferation of contradictory the global map corresponds to the number of people without access to electricity.
opinions.15 Moreover, the media’s need to
present “balanced” stories has given dis-
proportionate coverage to climate science
contrarians lacking scientific expertise and
standing.16
Figure 8.3 Individuals’ willingness to respond to climate change differs across countries and does not always translate into concrete actions
a. Globally, individual intentions to act b. In emerging markets people are more confident that climate change
do not yet translate into concrete action will be solved have higher intentions to act
BOX 8.3 How risk perceptions can sink policies: Flood risk management
The impulse to address risk is fundamen- than more frequent events such as storm negative outcome, but only if they take
tally related to perceptions of the serious- surges.b visible action—say, by helping farmers
ness and likelihood of impacts. These behavior patterns were identi- survive through resettlement.
The perception of probabilities and the fied among farmers and policy makers Different stakeholders view probabili-
methods people tend to use to estimate in Mozambique after the 2000 floods ties differently. Policy makers in Maputo
those probabilities can be misleading. and during the subsequent resettlement tend to associate the Limpopo River
For example, people evaluate the likeli- program implemented by the govern- floodplain with flood risk alone. For the
hood of an event occurring in a given ment. Farmers (more than policy makers) people living there, however, life in the
place based on how similar the latter is showed a bias toward the status quo: floodplain is defined by many other fac-
to locations where such events normally for farmers, actions to adapt to climate tors in addition to climate risks. Relative
occur.a The availability of recent and vivid factors are often weighted against risks to local farmers, these policy makers have
memories of an event also leads people of negative outcomes. The decision to a propensity to overestimate climate-
to overestimate its probability. It has move to a safe area on higher ground, related risks. Unless risk analysis and
been observed that often people overes- for example, entails the risk of losing communication are adequately factored
timate the likelihood of low-probability one’s livelihood or community. The deci- in, major differences in perceptions of risk
events and underestimate the likelihood sion to plant a drought-tolerant crop can can impede successful policy design and
of high-probability events. People are lead to the risk of having a lower harvest, implementation.
notoriously more scared of sitting in a if the rains are plentiful. Farmers want-
plane than in a car (although the risk of a ing to avoid personal responsibility for
deadly car accident event is significantly negative outcomes will avoid making Sources: Patt and Schröter 2008.
higher). Similarly, rare natural disasters new choices. By contrast, policy makers a. Tversky and Kahneman 1974.
such as tsunamis, generate more concern can gain personal credit for avoiding a b. Kahneman and Tversky 1979.
326 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
also assess both the market and nonmarket the way social factors influence percep-
costs of decisions. The nonmarket costs of tions, decisions, and actions. People natu-
acting on information that challenges core rally tend to resist and deny information
value systems (such as calls for resettlement that contradicts their cultural values or
and migration or for limiting consumption ideological beliefs. This includes informa-
patterns) can be high. Indeed, the very act tion that challenges notions of belonging
of interpreting or mediating additional and identity as well as of rights to freedom
information is costly. For a household and consumption. Notions of needs and the
having to decide whether to keep rebuild- priorities deriving from them are socially
ing on a flood-prone area, or for a local and culturally constructed.27 This might
official designing and enforcing building explain why awareness of environmental
codes in low-lying coastal areas, the trans- problems normally increases with wealth,
action costs can be substantial. Moreover, but concern about climate change does not
both mitigation—and, very often, adap- (figure 8.5).28 Individuals (and nations)
tation—present themselves as tragedies of with higher incomes (and higher carbon
the commons requiring collective action. dioxide emissions) may disregard global
Rational and self-interested individuals warming as a way to avoid incurring the
face structural disincentives to cooperate potential costs of solutions associated with
in solving these problems.25 Cooperation in lower levels of consumption and lifestyle
these conditions requires the payoffs to be changes.29
clear—obviously not the case with climate- People also construct and reconstruct
change impacts and responses.26 information to make it less uncomfortable,
Understanding barriers to behavior leading to strategies of socially organized
change also requires going beyond psycho- denial that shape the way societies and gov-
logical explanations based on the individ- ernments interpret and respond to climate
ual as a unit of analysis—and embracing change.30 The evolution of standard nar-
ratives about climate change provides an
Figure 8.4 Climate change is not a priority yet example. Focusing on country emissions
rather than per capita emissions can lead
Global warming people living outside the big emitters to
minimize their responsibility and rational-
Extinction of plants and animals ize their failure to act. Drastic calls for the
need for an international response tend to
Loss of rain forests play down the fact that domestic action will
be required in any case. And uncertainty
Air pollution about dynamics and impacts can be over-
played to justify inaction.
Supply of fresh water for households These forms of denial are not abstract—
nor are they confi ned to climate policy.
Similar processes operate at various lev-
Toxic contamination of soil/water
els of day-to- day decision making, and
addressing them is part of solving crucial
Water pollution
development challenges, such as reducing
the spread of HIV-AIDS or the incidence
Pollution of drinking water
of common water- and sanitation-related
0 10 20 30 40 50 60 70 80 90 100 diseases. Rather than an aberration, denial
Percentage of respondents concerned a great deal
needs to be considered a coping strategy
or fair amount about each problem deployed by individuals and communities
facing unmanageable and uncomfortable
Source: Gallup Poll, www.gallup.com/poll/106660/Little-Increase-Americans-Global-Warming-Worries.aspx
(accessed March 6, 2009). events. Resistance to change is never sim-
Note: Respondents were asked the following question: “ I’m going to read you a list of environmental prob- ply the result of ignorance—it derives from
lems. As I read each one, please tell me if you personally worry a great deal, a fair amount, only a little, or not individual perceptions, needs, and wants
at all.” Results are based on phone interviews on March 5–8, 2009. The sample comprised 1,012 U.S. citizens
aged 18 and older. based on material and cultural values.
Overcoming Behavioral and Institutional Inertia 327
Encouraging behavioral change Figure 8.5 Concern about climate change decreases as wealth goes up
Policy makers need to be aware of these Percentage of respondents who consider climate change a serious problem
barriers to action and treat policy options FRA
100 IDN PHL THA CHL PRT GRC
accordingly. Three policy areas are relevant JAP HKG
95 IND CHN TURBRA ARG KOR ESP SGP CHE
here: communications, institutional mea- MYS ZAF HUN CZE ITA GBR CAN IRL
sures, and social norms. VNM
90 POL LTU SWE AUT
NZL FIN NOR
85 DNK
From information to communication. LVA BEL
80 EST
Information, education, and awareness USA
RUS
raising, as carried out so far, are at best not 75
enough to spur people to action and at worst 70
counterproductive. This calls for a different
65
approach to providing information about cli- NLD
mate change.31 First, the information-driven 60
approach must shift to an audience-centric 0 10 20 30 40 50
one in communicating climate change. GDP per capita ($, PPP, thousands)
Both scientists and the media need to work Source: Sandvik 2008.
together to enhance the salience of their Note: Public concern about global warming is expressed as percentage based on respondents who consider
messages. Second, as in other policy areas, climate change a serious problem. It was taken from a global online survey conducted by ACNielsen in 2007 on
consumer attitudes toward global warming. Respondents from 46 different countries were asked how serious
such as AIDS prevention, this shift should a problem (on a scale from 1 to 5) they thought global warming was. The base population is respondents who
entail a marketing approach to communica- have heard or read about global warming.
carbon labeling and smart meters—have varies with social characteristics and exter-
long been proven. A U.S.-based survey nal pressures. Evidence from Peru shows
found that one of the main factors respon- that farmers with limited access to credit
sible for the public’s negative perceptions and insurance and with weak property
of cap-and-trade schemes is not the fear rights have higher discount rates—and
of additional costs but the limited knowl- that steeper discounting increases individ-
edge of their effectiveness, reducing public uals’ incentives to deforest.34 Institutional
trust in them.32 Similarly, opposition to reforms to improve credit access and prop-
environmental taxes seems to fall once the erty rights can affect inner behavioral driv-
public fully understands that they are a way ers of discounting. So can education (box
not simply to raise money but to change 8.6).
behavior.33 Similarly, interventions that rely on
individuals and businesses facing up-front
Institutional measures. Beyond com- costs but gaining long-term benefits (such
munication, a key issue for climate policy as those deriving from energy-efficiency
is designing interventions that take into investments) should consider providing
account the social and psychological con- immediate payoffs in tax rebates or subsi-
straints to positive action. Effective adap- dies. Giving private actors a sense of long-
tation interventions should reduce the term policy direction is also useful. An
transaction costs for individuals in making international survey of business leaders
decisions and enhance the ownership of the conducted in 2007 found that 81 percent of
information available. This requires that those polled believed that the government
adaptation strategies be informed by com- needs to provide clear long-term policy sig-
munity perceptions of risk, vulnerability, nals to help companies fi nd the incentives
and capacity (see box 8.5). Institutional- to change and plan investments.35 (Ways
izing participatory self-assessments for for government to signal long-term direc-
national and local disaster preparedness, tion are explored below.)
adaptation planning, and mitigation can Climate policy should also heed the ten-
be useful here. dency of individuals to favor local, visible,
Limiting the tendency of individuals to and privately securable outcomes. Miti-
discount the value of the future is another gation actions produce benefits that are
area for action. Although discounting the global and diffuse, and the direct benefits
future is an innate mental propensity, it of adaptation measures may or may not be
Overcoming Behavioral and Institutional Inertia 329
Harnessing the power of social norms power producers were politically acceptable
implies increasing the visibility of behavior because taxes were fully rebated to produc-
and its implications. Individual decisions ers on the basis of how much electricity they
and actions that have a bearing on energy produced.44
consumption today are largely invisible to These measures are obviously not
the public and even to restricted circles of enough to ensure the success of climate
family and friends. In these cases human policy. But they might well prove necessary.
action cannot benefit from patterns of reci- Encouraging behavior change for mitiga-
procity, peer pressure, and group behavior tion and adaptation goes beyond providing
normally at play in more visible cases of additional information, finance, or technol-
behavior change and compliance, such as ogy. Traditional measures can be comple-
compliance with traffic control. mented by alternative interventions, often
Research on cooperation leads to the at low cost. Rather than simply treat these
same conclusion. Unless information about social and psychological drivers of behav-
other players’ behavior is available, people ior as barriers to adaptation and mitigation,
tend not to cooperate.41 Farmers within a policy makers can use them to build more
river basin should receive information not effective and sustainable policy.
only about their water use but also about
whether they are below or above the stan- Bringing the state back in
dard set by their peers. Residents of flood- Over the past 30 years the role of the state
prone areas can be encouraged to adopt has been cut back in various domains key
protection measures by exposing them to to addressing the climate challenge, such
the rapid uptake of such measures by oth- as energy research. The retreat from direct
ers in their community. Conversely, appeals intervention occurred with a switch from
stressing that too many people have not yet “government” to “governance” and an
installed basic energy-efficiency measures emphasis on the state’s role in steering and
are bound to lead to even less adoption of enabling the private sector.45 This general
such measures, not more. trend hides a complex picture. Twentieth-
Social norms can complement tradi- century Europe saw various forms and
tional public policy approaches and mea- degrees of state capitalism. The rise of East
sures, such as regulation, taxation, and Asian economies, including China’s, dem-
pricing. Thinking about group behavior onstrated the preeminence of the state in
can ameliorate the impact of these mea- “governing the market” to deliver the most
sures, opening opportunities for combining successful example of accelerated develop-
different instruments. But some policies ment.46 Most recently, the 2008 fi nancial
based on economic incentives might do crisis showed the pitfalls of deregulation
more harm than good by weakening the and unrestrained markets—and triggered
effect of social norms. Pricing pollution or renewed emphasis on bringing back the
emissions might give polluters the impres- state.
sion that it is all right to pollute, as long as Climate change requires public inter-
they pay their fair share. Similarly, imper- ventions to address the multiple market
fectly enforced regulation, or perceptions failures driving it—the failures of pricing;
that formal rules can be eluded, can favor of research and technology development;
more self-interested behavior and weaken and of coordination and collective action,
cooperation.42 global, national, and local.47 As providers of
More radical calls for social norms focus public goods and correctors of externalities,
on alternative parameters of progress, such as governments are expected to address these
stressing a shift toward notions of well-being market failures. But there are more specific
decoupled from consumption.43 And politi- drivers of government intervention.
cal opposition to instruments such as green First, the private sector’s role in solv-
taxes can be overcome through tax-rebate ing the climate challenge is crucial, but
schemes—in Sweden, for example, very high overplaying it would be unwise. Despite
tax rates on nitrogen oxide emissions from the enthusiasm for the private sector’s
Overcoming Behavioral and Institutional Inertia 331
issue or because of institutional flaws. Take can be a potent tool for greater government
responses to natural disaster. Unless a coun- accountability—and to ensure continu-
try is regularly hit by severe weather events, ity of action beyond a government’s short
disaster avoidance and response usually time frame. An independent expert advi-
fall through the cracks of the government sory body can make recommendations to
agenda. Leaders fi nd it unlikely they will government and report to parliament.
be scrutinized, rewarded, or sanctioned for
actions that the public did not even know Leveraging local government action
their governments were supposed to take Local and regional governments can pro-
(avoiding disasters). If the relationship vide political and administrative space
between efforts and outcomes is not clear closer to the sources of emissions and the
to the public, governments lack clear incen- impacts of climate change. Charged with
tives for action. implementing and articulating national
Government accountability for climate policies, they have policy-making, regula-
policy can be enhanced by making line tory, and planning functions in sectors key
agencies more accountable to core govern- to mitigation (transportation, construction,
ment ministries, such as the treasury or the public service provision, local advocacy)
prime minister—and by making the entire and adaptation (social protection, disaster
government more accountable to parlia- risk reduction, natural resource manage-
ment, the public, and autonomous bodies ment). Closer to citizens, subnational gov-
(box 8.9). Parliaments can conduct hear- ernments can raise public awareness and
ings, monitor performance, educate the mobilize nonstate actors. And because they
public, and require government to engage are at the intersection of government and
in regular reporting on climate objectives, the public, they become the space where
policy, and achievements. Inscribing cli- government accountability for appropriate
mate policy targets and objectives into law responses plays out.58
Overcoming Behavioral and Institutional Inertia 335
(continues)
Overcoming Behavioral and Institutional Inertia 337
slightly more than a third were subsidiz- politicians keep fearing the electorate,
ing diesel fuel. More than two-thirds of assuming that voters are likely to be less sup-
low- and lower-middle-income countries portive of climate action once policies affect
were subsidizing kerosene.61 Clearly, coun- them personally through direct and visible
tries with large fossil-based energy sectors personal costs (carbon and energy taxes,
or highly energy-intensive economies face price increases, job losses).69 This might
major resistance to change.62 The result is explain why it is harder to achieve emissions
that worldwide the sources and drivers of reductions through restrictions that affect
carbon emissions are often tied to govern- individual choices. Intervening in personal
ments’ political legitimacy. mobility choices is politically tougher than
Each political system presents advantages targeting power plants.70
and obstacles in addressing climate change. In political terms, climate action faces a
Take democracy. Strong evidence shows “proximity limit.” People’s tendency to first
that democracies outperform autocracies in address visible and direct concerns translates
environmental policy.63 Political freedoms into a political bias favoring the solution of
improve environmental performance, par- local environmental problems (sanitation
ticularly in poorer nations.64 Greater civil infrastructure, water and air quality, risks
liberties are linked with better air and water associated with toxic releases, and local
quality, such as reduced sulfur dioxide and habitat protection) over transboundary
particulates in air and lower coliform and issues (such as biodiversity loss, overfishing,
dissolved oxygen levels in water.65 Democ- or climate change).71 The proximity limit
racies are more likely to join international has a temporal dimension too. Problems
environmental regimes and treaties, are with long time horizons, particularly those
generally faster at ratifying them, and have involving public goods, are tricky to resolve.
a track record of solving global commons Climate change is no exception.72 Intergen-
problems such as ozone depletion.66 erational problems require long-term policy
Yet democracies sometimes do better in frameworks at odds with government time
policy outputs (signing up to international frames and electoral cycles.
commitments) than policy outcomes (actual When policy issues are left without a
emission reductions), as with Kyoto.67 As public to champion them, shortsighted-
with individual consumers and voters, ness can produce perverse incentives.
democracies prove more responsive in com- Disaster risk management is an example of
mitting to solving a problem than in actually how standard adaptation measures can fail
solving it, with the “green gap” in consumer because the public (the voter) often fails
attitudes translating into a words-deeds to think in preventive terms. So decision
gap in government behavior (figure 8.7).68 makers neglect prevention and prepared-
There are several reasons for this. Despite ness because these issues do not win votes.
rising public concern about climate change, In turn, decision makers’ realization that
338 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
Figure 8.7 Democracies do better in climate policy outputs than policy outcomes
0.8
0.6
0.4
0.2
0
1 2 3 4 5 6 7
Democracy Index
0.8
0.6
0.4
0.2
0
1 2 3 4 5 6 7
Democracy Index
Source: Bättig and Bernauer 2009.
Note: Output is an index of cooperative behavior in climate change policy, spanning ratification of agreements, reporting, and financing—it ranges between 0 and 1, with higher
values indicating more cooperation. Outcome is an index of cooperative behavior in climate change policy, spanning emission trends and emission levels—it ranges between
0 and 1, with higher values indicating more cooperation. The Political Rights Index by Freedom House is a measure of democracy encompassing the degree of freedom in the
electoral process, political pluralism and participation, and functioning of government. Numerically, Freedom House rates political rights on a scale of 1 to 7, with 1 representing
the most free and 7 representing the least free. However, in this figure the scale of original data has been inverted and higher values indicate a higher level of democracy. Data
are 1990–2005 averages. The figure shows that there is a positive relationship between output and level of democracy, as represented by the Freedom House political rights index;
democratic countries have, in general, better output. Conversely no significant relationship has been found between level of democracy and climate outcomes in the form of emis-
sion reductions (using emissions reductions in 2003 compared to 1990 levels).
disaster relief has higher political payoffs Government crop insurance reduces farm-
than preparedness closes the circle of moral ers’ incentives to avoid weather damage.
hazard. This is far from purely theoreti- Disaster relief leads citizens and local gov-
cal. If the costs of disasters have increased ernments to expect compensation as an
dramatically, it is partly because govern- entitlement rather than take preventive
ments realize that providing compensa- measures.74
tion to groups and areas struck by severe Climate reforms depend on political
weather events provides major electoral support. Any policy change generally meets
benefits.73 This realization works against resistance, particularly when it involves vis-
policy change and reinforces bad policies. ible costs to large and diverse actors. Climate
Overcoming Behavioral and Institutional Inertia 339
policy is a perfect example, because its costs permits is often cited as a strategic measure
are going to be clearly visible to various eco- to get the longer-term buy-in of business,
nomic groups and the population at large. but the scheme also generates public resis-
Building public support for climate policy tance (box 8.11).
can take many avenues.
Rely on consensus processes and instruments.
Devise interventions that a maximum Obtaining the prior agreement of the main
number of (key) political actors can stakeholders on specific measures can reduce
agree on political damage. In addition to identifying
co-benefits, consensus policies involve set-
Design policies that yield co- benefits. ting up consultative systems and voluntary
Countries abiding by and implementing schemes that bind key actors such as indus-
international environmental obligations try groups to the principles of climate policy.
tend do so because of local incentives: Consultative political systems seem to be
air pollution, water quality degradation, more effective in environmental policy.77
direct and visible environmental threats.75
Individuals contribute to public goods Increase the public’s acceptance of
more easily when they see a direct benefit. reforms
Actively seeking overlapping goals and
benefits should be a core part of a politi- Pursue equity, fairness, and inclusion. A
cally sustainable climate policy.76 Not all decision maker’s aversion to inequity is a
climate-smart development policies are product of both ethics and politics, because
climate specific, and a range of actions redistributional outcomes normally lead to
can overcome the (perceived) tradeoffs political payoffs or sanctions by voters. The
between economic development and cli- public is more likely to accept policy change
mate action. The challenge is to frame cli- if it is seen as tackling a severe problem and
mate action in terms of local, private, and if its costs and benefits are perceived as equi-
near-term goals and co-benefits—such as tably distributed. This calls for designing
energy security, energy efficiency, public progressive and equitable climate policies
health, pollution abatement, and disaster involving transparent compensatory mea-
risk reduction. sures for the poorest. Green fiscal policies
can be progressive and play a strong equity
Target key constituencies. The co-benefits role.78 Revenue recycling from carbon taxes
of climate policy can win over oppos- or auctioned permits can support tax cuts
ing vested interests. Take labor. Where and provide economic stimulus. Earmark-
the short-term employment effect of cli- ing the proceeds of carbon permits and taxes
mate policy is negative, offsetting payoffs for social protection schemes can increase
for organized labor should be made clear.
Unions can be brought round by demon-
strating to them how a low-carbon economy B OX 8 . 1 1 Garnering support for cap-and-trade
is more labor intensive than a conventional The European Union recently cre- mechanism is set only for five-year
one; how energy savings can be turned into ated an emissions trading system to periods.
higher, labor-intensive expenditures; how meet its Kyoto obligations. Overall, These short allocation periods avoid
investments in technology development the system has many good features. giving away too much wealth through
and deployment will create jobs; and how One peculiarity is that EU countries rent creation and capture. But the
the revenues from energy taxes can offset are required to grandfather credits massive windfalls for major polluters
taxes on labor, increasing the demand for (give them freely) to firms despite drew media attention and alienated
the potentially huge rents associated the public. The five-year system also
workers. It is important to carefully assess with them and the clear economic created perverse incentives for strate-
whether policies are perceived to be unduly gains to be had from auctioning gic behavior to influence the next allo-
favorable to one key group or the other. credits. In part because of this cation rule and was protested by firms
Support for climate policy is strong among grandfathering rule and the implicit aiming to enter the industry.
groups that see a low-carbon economy as a recognition of the large rents
business opportunity, but legacy industries associated with it, the allocation Source: WDR team.
remain opposed. Grandfathering emission
340 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
the acceptance of energy-pricing reforms. In lic information campaigns have been key
several European countries revenues raised to successful subsidy reforms, even where
from charges on air pollutants, hazardous groups capturing the subsidies were bet-
wastes, and toxic chemicals reduce income ter organized and more powerful than the
taxes and social security contributions. beneficiaries of reform (consumers and
taxpayers). Communication should focus
Lead by example. Policy makers can set on filling the knowledge gap and addressing
social norms by changing the behavior of what can be rationally based opposition to
government. The greening of government reforms. For instance, demystifying some
can play an important communication role of the unsubstantiated perceptions of the
in addition to providing immediate ben- negative sides of climate policies can reduce
efits in reducing emissions and catalyzing uncertainty and opposition. Research
research and investments in new technolo- shows that fears of racing to the bottom
gies. Where feasible, government can also and losing competitiveness are exaggerated
revise instruments such as public procure- and that investing in new green technology
ment to support green objectives. can lead to the development of markets for
environmental goods and services.83 Simi-
Use weather-related natural disasters as larly, stressing that environmental taxes are
teaching moments. Disasters can provide not simply a source of revenue for the state
“focusing events” that lead to rapid policy but a key to changing behavior is central to
change, although the window of opportu- enhancing public acceptability.
nity is usually short.79 The 2003 heat wave in
Europe, Hurricane Katrina in 2005, and Aus- Address structural deficiencies of
tralia’s 2009 wildfires all increased attention political systems
to climate change. Such events can provide Reinforce political pluralism. Vested inter-
an opening for government to take actions ests, including those that fear climate poli-
unpopular in normal times.80 Postdisaster cies would harm their business or industry,
reconstruction also provides opportunities may have a stake in limiting the scope and
to depart from past practices and build more impact of climate policy. Measures to reduce
resilient communities and societies. interest group activity aimed at capturing or
hijacking climate policy include reinforcing
Increase the acceptability of policies. Swift political pluralism. This can have varying
and sudden government actions can circum- impacts on policy change. A large number of
vent groups that want to maintain the status veto players can produce a policy gridlock.84
quo and create a feeling of inevitability, if But political pluralism generally reduces
momentum is maintained.81 But gradual- behind-closed-door lobbying and corrup-
ism can also increase the acceptability of tion by giving access and voice to counter-
policies, because incremental policy changes vailing interests.85 Environmental interests
usually draw less attention and resistance. have overwhelmed business interests trying
This could explain why major economies to curtail the stringency of environmental
have been slow in starting to reduce emis- policies in food safety, renewable portfolio
sions. Small, incremental changes can estab- standards, and waste regulation.86 Political
lish platforms for advancing larger changes pluralism can also foster coalitions of envi-
later on. Here, establishing predictability— ronmental and business interests as drivers
setting the long-term orientation of govern- of change.
ment policy—allows stakeholders (in and
outside government) to identify the incen- Promote transparency. Clarifying the cost
tives they need to reorient their activities.82 of energy and its components (production,
imports, distribution subsidies, and taxes)
Improve communication. Well-designed can build support for reform of energy mar-
communication strategies not only can kets. In mitigation policy one major advan-
help change behaviors—they can also tage of transparent reporting of the cost of
mobilize political support for reform. Pub- energy is that the additional cost of carbon is
Overcoming Behavioral and Institutional Inertia 341
BOX 8.12 The private sector is changing practices even without national legislation
Private sector actors have stepped up gas- emitting companies and several non- This drive is pushing entire industries
their actions to reduce greenhouse gas governmental organizations, put forth a to shift their practices. In March 2009 the
emissions, even in countries lacking com- unified plan for federal legislative action U.S. insurance association implemented a
prehensive climate-change legislation. An that calls for an 80 percent reduction of first- of-its-kind requirement that all insur-
increasing number of firms have developed 2005 emission levels by 2050. The Busi- ers must evaluate the climate- change
voluntary emissions targets and reporting ness Roundtable, an association of lead- risks posed to the companies they insure
standards. In 2008 a record 57 climate- ing U.S. companies, has mapped ways and disclose their plans for managing
related shareholder resolutions were filed in to improve conservation, efficiency, and such risks. These include direct risks
U.S. boardrooms—double the number five domestic energy production between posed by climate- change impacts and
years earlier. Support for these measures now and 2025. The Prince of Wales Inter- indirect risks posed by policy initiatives
averaged more than 23 percent among national Business Leaders Forum, an to mitigate climate change. Similarly, the
shareholders—another all-time high. independent organization that supports financial investment industry is moving to
Carbon-intensive firms have also come more than 100 of the world’s leading increase the disclosure of climate risks in
together to discuss strategy for mitigat- businesses, launched the Business and publicly traded companies, while promot-
ing climate change. In early 2009 the U.S. the Environment program in recognition ing climate-smart investments.
Climate Action Partnership, an alliance of of the impact of climate change on busi-
more than two dozen major greenhouse- ness operations and liabilities. Source: WDR team.
put in relative terms. Transparency has been determinants. A study on the adoption
particularly useful in raising public aware- of renewable portfolio standards across
ness about the costs of energy subsidies, U.S. states shows that political liberalism,
assessing the tradeoffs, and identifying win- renewable energy potential, and concentra-
ners and losers. Some countries have subsidy tions of local air pollutants all increase the
reporting systems to enhance public under- probability that a state will adopt such stan-
standing of their costs and benefits.87 dards. On the other hand, carbon inten-
sity tends to decrease this probability.89
Make it difficult to reverse policy. Politi- International regimes influence domestic
cal and institutional arrangements can help policies, but the reverse also holds. A coun-
avoid shifting action on climate change try’s behavior in shaping, adhering to, and
from the living to the unborn by making implementing a climate deal depends on
it difficult to reverse climate policy. Such domestic incentives. Political norms, insti-
arrangements could include constitutional tutional structures, and vested interests
amendments and climate-change laws.88 influence the translation of international
But they can also involve the establish- norms into domestic political dialogue
ment of independent institutions that take and policy, while shaping the international
a longer-term view, in the same way that regime by driving the national actions.90
monetary institutions control inflation. A country’s wealth, its energy mix, and its
economic preferences—such as the pro-
Climate-smart development pensity for state-driven or market-driven
starts at home responses—will shape mitigation policy.
The quest for appropriate responses to cli- Cultural and political traditions are added
mate change has long focused on the need to economic and administrative consider-
for an international agreement—a global ations in choosing taxes or cap-and-trade.
deal. Although important, a global deal is And because of the lack of an international
only a part of the answer. Climate change sanctioning mechanism, the incentives for
is certainly a global market failure, but one meeting global commitments need to be
articulated according to locally defi ned found domestically, through concentrated
causes and effects and mediated by context- local benefits such as cleaner air, technol-
specific circumstances. ogy transfer, and energy security.
This means that climate policy—for Climate action is already taking place.
both mitigation and adaptation—has local Countries have shown different levels of
342 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
“Ever think of emigration outside the world? To the Moon, Mars, or Venus? But
our Earth is known to be the most beautiful planet of all. I still want to live in this
wonderful place—with birds singing everywhere, the aroma of flowers in the air,
green mountains, and blue icebergs. So everybody, please start to work together to
conserve the beauty of Mother Earth. Join me now in making the world better.”
—Giselle Lau Ching Yue, China, age 9
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Bibliographical note
Many people inside and outside the World Bank gave com- Johnson, Torkil Jonch-Clausen, Benjamin F. Jones, Ben Jones,
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who participated in consultations and provided comments. Mechler, Reinhard, Stefan Hochrainer, Georg Pflug, Keith Williges,
In addition, we thank guest bloggers and members of the and Alexander Lotsch. “Assessing Financial Vulnerability to
public who commented on our blog, “Development in a Climate-Related Natural Hazards.”
Changing Climate.” Norgaard, Kari. “Cognitive and Behavioral Challenges in
Other valuable assistance was provided by Gytis Responding to Climate Change.”
Kanchas, Polly Means, Nacer Mohamed Megherbi, Swati Ostrom, Elinor. “A Polycentric Approach for Coping with Climate
Mishra, Prianka Nandy, Rosita Najmi, and Kaye Schultz. Change.”
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Despite efforts to compile a comprehensive list, some who
contributed may have been inadvertently omitted. The team Shalizi, Zmarak, and Franck Lecocq. “Climate Change and the
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apologizes for any oversights and reiterates its gratitude to
Capital Stock.”
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Strand, Jon. “‘Revenue Management’ Effects of Climate Policy-
This Report draws on a wide range of World Bank docu-
Related Financial Flows.”
ments and on numerous outside sources. Background papers
Thornton, Philip. “The Inter-linkages between Rapid Growth in
commissioned for the Report are available either on the
Livestock Production, Climate Change, and the Impacts on
World Wide Web www.worldbank.org/wdr2010 or through
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the World Development Report office. The views expressed
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in these papers are not necessarily those of the World Bank
Development Mechanism: Too Flexible to Produce Sustainable
or of this Report. Development Benefits?”
Background papers
Background notes
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Benitez, Daniel, and Natsuko Toba. “Transactional Costs and
van der Mensbrugghe. “Trade in ‘Virtual Carbon’: Empirical
Marginal Abatement Costs.” “Review of Energy Efficiency
Results and Implications for Policy.”
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Barnett, Jon, and Michael Webber. “Accommodating Migration to Learned.”
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Quentin Wodon. “Assessing the Impact of Climate Change
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Affordability and Access.”
———. “What Do We Know Collectively about the Need to Deal
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“A note on the economic cost of climate change and the ratio- Agricultural Water Stress and Impact Mitigation Potential.”
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Bibliographical note 351
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Hamilton, Kirk. “Delayed Participation in a Global Climate Müller, Christoph, Alberte Bondeau, Alexander Popp, Katharina
Agreement.” Waha, and Marianela Fader. “Climate Change Impacts on
Harris, Nancy, Stephen Hagen, Sean Grimland, William Salas, Agricultural Yields.”
Sassan Saatchi, and Sandra Brown. “Improvement in Estimates Rabie, Tamer, and Kulsum Ahmed. “Climate Change and Human
of Land-Based Emissions.” Health.”
Heyder, Ursula. “Ecosystem Integrity Change as Measured by Ramanathan, N., I. H. Rehman, and V. Ramanathan. “Project
Biome Change.” Surya: Mitigation of Global and Regional Climate Change:
Hoornweg, Daniel, Perinaz Bhada, Mila Freire, and Rutu Dave. “An Buying the Planet Time by Reducing Black Carbon, Methane,
Urban Focus—Cities and Climate Change.” and Ozone.”
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and Michael Krause. “Competition for Land between Food, Westermeyer, William. “Observing the Climate for Development.”
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Resource Mobilization and Management.”
Glossary
on climate change beyond 2010 and to dioxide. CO2e expresses the quantity of a
reach an agreed outcome in Denmark in mixture of greenhouse gases in terms of
late 2009. The plan has four pillars: mitiga- the quantity of CO2 that would produce
tion, adaptation, finance, and technology. the same amount of warming as would the
mixture of gases. Both emissions (flows)
Biodiversity: Biodiversity is the variety of
and concentrations (stocks) of greenhouse
all forms of life, including genes, popula-
gases can be expressed in CO2e. A quantity
tions, species, and ecosystems.
of greenhouse gases can also be expressed
Biofuel: A fuel produced from organic mat- in terms of its carbon equivalent, by multi-
ter or combustible oils produced by plants. plying the quantity of CO2e by 12/44.
Examples of biofuel include alcohol, black
Carbon fertilization: The enhancement of
liquor from the paper-manufacturing pro-
the growth of plants as a result of increased
cess, wood, and soybean oil. Second-gener-
atmospheric carbon dioxide (CO2) concen-
ation biofuels: Products such as ethanol and
tration. Depending on their mechanism of
biodiesel derived from woody material by
photosynthesis, certain types of plants are
chemical or biological processes.
more sensitive to changes in atmospheric
Cap and trade: An approach to controlling CO2 concentration.
pollution emissions that combines market
Carbon footprint: The amount of carbon
and regulation. An overall emissions limit
emissions associated with a particular
(cap) is set for a specific time period and
activity or all the activities of a person or
individual parties receive permits (either
organization. The carbon footprint can be
through grant or auction) giving them the
measured in many ways, and may include
legal right to emit pollution up to the quan-
indirect emissions generated in the whole
tity of permits they hold. Parties are free to
chain of production of inputs into an
trade emission permits, and there will be
activity.
gains from trade if different parties have
different marginal pollution abatement Carbon intensity: Typically, the amount
costs. of economywide emissions of carbon or
CO2e per unit of GDP, that is, the carbon
Carbon capture and storage (CCS): A pro-
intensity of GDP. May also refer to the car-
cess consisting of separation of CO2 from
bon emitted per dollar of gross production
industrial and energy-related sources,
or dollar of value added by a given firm or
transport to a storage location, and long-
sector. Also used to describe the amount of
term isolation from the atmosphere.
carbon emitted per unit of energy or fuels
Carbon dioxide (CO2): A naturally occur- consumed, that is, the carbon intensity
ring gas that is also a by-product of burning of energy, which depends on the energy
fossil fuels (fossil carbon deposits such as sources, fuel mix, and efficiency of tech-
oil, gas, and coal), of burning biomass, of nologies. The carbon intensity of GDP is
land-use changes, and of several industrial simply the product of the economywide
processes. It is the principal anthropogenic average carbon-intensity of energy and
greenhouse gas that affects the Earth’s radi- energy-intensity of GDP.
ative balance. It is the reference gas against
Carbon lock-in: Actions which perpetu-
which other greenhouse gases are measured
ate a given level of carbon emissions. For
and therefore has a Global Warming Poten-
example, expansion of roads and highways
tial of 1.
will tend to lock in carbon emissions from
Carbon dioxide equivalent (CO2e): A way fossil fuels for decades unless there are
of expressing the quantity of a mixture of countervailing policies to limit fuel use or
different greenhouse gases. Equal amounts control vehicle use.
of the different greenhouse gases produce
Carbon sink: Any process, activity or
different contributions to global warming;
mechanism which removes carbon diox-
for example, an emission of methane to the
ide from the atmosphere. Forests and other
atmosphere has about 20 times the warm-
vegetation are considered sinks because
ing effect as the same emission of carbon
Glossary 355
effect. The most common greenhouse gases Land use, land-use change, and forestry
are carbon dioxide (CO2), methane (CH4), (LULUCF): A set of activities including
nitrous oxide (N2O), ozone (O3), and water human-induced land use, land-use change,
vapor (H2O). and forestry activities which lead to both
emissions and removals of greenhouse
Innovation: The creation, assimilation,
gases from the atmosphere. A category used
or exploitation of a new or significantly
in reporting greenhouse gas inventories.
improved good or service, process, or
method. Maladaptation: Activities or actions that
increase vulnerability to climate change.
Institutions: Structures and mechanisms
of social order and cooperation governing Market-pull: The allocation of research
the behavior of a set of individuals. and development (R&D) resources based
on market demand for products and ser-
Integrated assessment: A method of analy-
vices, rather than scientific interest or top-
sis that combines results and models from
down government policies.
the physical, biological, economic and social
sciences, and the interactions between these Mitigation: A human intervention to
components, in a consistent framework, to reduce the emissions or enhance the sinks
project the consequences of climate change of greenhouse gases.
and the policy responses to it.
National Adaptation Programs of Action
Intellectual property rights (IPRs): Legal (NAPAs): Documents prepared by least
property rights over artistic and commer- developed countries (LDCs) identifying the
cial creations of the mind, including patents activities to address urgent and immediate
on new technologies, and the correspond- needs for adapting to climate change.
ing fields of law.
No regrets project: In the climate change
Intergovernmental Panel on Climate context, a project that would generate net
Change (IPCC): Established in 1988 by the social and/or economic benefits irrespective
World Meteorological Organization and of whether the project affects the climate or
the United Nations Environment Program, whether the climate affects the project.
the IPCC surveys worldwide scientific and
Polluter pays principle: A principle in envi-
technical literature and publishes assess-
ronmental law whereby the polluter must
ment reports that are widely recognized as
bear the cost of the pollution. Thus the pol-
the most credible existing sources of infor-
luter is responsible for the cost of measures
mation on climate change. The IPCC also
to prevent and control pollution.
prepares methodologies and responds to
specific requests from the subsidiary bodies Positive feedback: When one variable in a
of the United Nations Framework Conven- system triggers changes in a second variable
tion on Climate Change (UNFCCC). The that in turn affect the original variable; a
IPCC is independent of the UNFCCC. positive feedback intensifies the initial
effect, and a negative feedback reduces the
Kyoto Protocol: An agreement under the
effect.
United Nations Framework Convention
on Climate Change (UNFCCC) that was Precautionary principle: A principle that
adopted in 1997 in Kyoto, Japan, by the holds that, in the absence of scientific cer-
parties to the UNFCCC. It contains legally tainty that serious or irreversible harm
binding commitments to reduce greenhouse would not occur as a result of an action
gas emissions by developed countries. or policy, the burden of proof lies with
those that favor the action or policy. In
Leakage: In the climate change context,
the United Nations Framework on Climate
the process whereby emissions outside of a
Change (UNFCCC), it is a provision under
mitigation project area increase as a result
Article 3 stipulating that the parties should
of emission reduction activities inside the
take precautionary measures to anticipate,
project area, thus reducing the effectiveness
prevent, or minimize the causes of climate
of the project.
Glossary 357
change and mitigate its adverse effects, and risk quantification, risk reduction, and risk
that a lack of full scientific certainty about mitigation.
possibly serious or irreversible damages
Robust decision making: In the face of
should not be used as a reason to postpone
uncertainty, choosing not the measure or
such measures—taking into account that
policy that would be optimal under the
policies and measures to deal with climate
most likely future world, but the one that
change should be cost-effective in order to
would be acceptable across a range of possi-
ensure global benefits at the lowest possible
ble futures. The process involves evaluating
cost.
options to minimize expected regret across
Public good: A good whose consumption a variety of models, assumptions, and loss
is non-exclusive (so that it is impossible to functions, rather than to maximize returns
prevent anyone from enjoying the benefit) under a unique likely future.
and non-rival (so that the enjoyment of the
Safety net: Mechanisms that aim to protect
benefit by one individual does not diminish
people from the impact of shocks such as
the quantity of benefits available to others).
flood, drought, unemployment, illness, or
Climate change mitigation is an example
the death of a household’s primary income
of a public good as it would be impossible
earner.
to prevent any one individual or state from
enjoying the benefit of a stabilized climate, Sequestration: In the climate context, the
and the enjoyment of this stabilized climate process of removing carbon from the atmo-
by one individual or state would not dimin- sphere and storing it in reservoirs such as
ish the ability of others to benefit from it. new forests, soil carbon or underground
storage. Biological sequestration: The
RDD&D: Research, development, demon-
removal of CO2 from the atmosphere and
stration, and deployment of new methods,
storing it in organic matter through land-
technologies, equipment, and products.
use change, afforestation, reforestation,
Reduced Emissions from Deforestation carbon storage in landfi lls, and practices
and forest Degradation (REDD): REDD that enhance soil carbon in agriculture.
refers to a suite of actions aimed at reduc-
Social learning: Social learning is the pro-
ing greenhouse gas emissions from forested
cess by which people learn new behavior
land. Financial incentives for REDD are
through overt reinforcement or punish-
potentially a part of the policy response to
ment, or via observing other social actors in
climate change.
their environment. If people observe posi-
Reforestation: Planting of forests on lands tive, desired outcomes for others exhibiting
that were previously forested but that have a particular behavior, they are more likely
been converted to another use. to model, imitate, and adopt the behavior
themselves.
Reinsurance: The transfer of a portion of
primary insurance risks to a secondary tier Social norms: Implicit or explicit values,
of insurers (reinsurers); essentially “insur- beliefs, and rules adopted by a group to self-
ance for insurers.” regulate behavior through peer pressure;
the yardstick individuals use to assess what
Resilience: The ability of a social or eco-
is acceptable or unacceptable behavior.
logical system to absorb disturbances while
retaining the same basic structure and ways Social protection: The set of public inter-
of functioning, the capacity for self-organi- ventions aimed at supporting the poorer
zation, and the capacity to adapt to stress and more vulnerable members of society,
and change. as well as helping individuals, families,
and communities manage risk—for exam-
Return period: The average time between
ple, unemployment insurance programs,
occurrences of a defined event.
income support, and social services.
Risk assessment: A standardized meth-
Solar photovoltaics (PV): The field of
odology consisting of risk identification,
technology and research related to the
358 G LO S S A RY
conversion of sunlight, including ultra vio- methods of manufacture to ensure that sci-
let radiation, directly into electricity; the entific and technological developments are
technology applied in the creation and use accessible to a wider range of users.
of solar cells, which make up solar panels.
Technology-push: The allocation of R&D
SRES scenarios: A set of descriptions or resources motivated largely by inher-
storylines of possible futures used in cli- ent scientific interest, rather than market
mate change related modeling developed for demand.
the IPCC. The scenarios are used to project
Threshold: In the climate change con-
future emissions based on assumptions
text, the level above which sudden or rapid
about changes in population, technology,
change occurs.
and societal development. Four scenario
families comprise the SRES scenario set: Transaction costs: Costs associated with
A1, A2, B1 and B2. A1 represents a future the exchange of goods or services that are
world of very rapid economic growth, global additional to the monetary cost or price
population that peaks in mid-century and of the good or service. Examples include
declines thereafter, and rapid introduction search and information costs or policing
of new and more efficient technologies. A2 and enforcement costs.
represents a very heterogeneous world with
Uncertainty: An expression of the degree
continuously increasing global population
to which a value (such as the future state
and regionally oriented economic growth
of the climate system) is unknown. Uncer-
that is more fragmented and slower than in
tainty can result from lack of information
other storylines. B1 represents a convergent
or from disagreement about what is known
world with the same global population as
or even knowable. It may have many types
in the A1 storyline but with rapid changes
of sources, from quantifiable errors in the
in economic structures toward a service
data to uncertain projections of human
and information economy, reductions in
behavior. Uncertainty can therefore be
material intensity, and the introduction of
represented by quantitative measures, for
clean and resource-efficient technologies.
example, a range of values calculated by
Finally, B2 represents a world in which the
various models, or by qualitative state-
emphasis is on local solutions to economic,
ments, for example, reflecting expert judg-
social, and environmental sustainability,
ment. However, in economics, uncertainty
with continuously increasing population
refers to Knightian uncertainty, which is
(lower than A2) and intermediate economic
immeasurable. This is in contrast to risk,
development.
wherein the occurrence of certain events
Stationarity: The idea that natural sys- is associated with a knowable probability
tems f luctuate within an unchanging distribution.
envelope of variability, delimited by the
United Nations Framework Convention
range of past experiences.
on Climate Change (UNFCCC): A conven-
Supplementarity: The Kyoto Protocol states tion adopted in May 1992 with the ultimate
that emissions trading and Joint Implemen- objective of the “stabilization of greenhouse
tation activities are to be supplemental to gas concentrations in the atmosphere at a
domestic policies (e.g. energy taxes, fuel level that would prevent dangerous anthro-
efficiency standards) taken by developed pogenic interference with the climate
countries to reduce their GHG emissions. system.”
Under some proposed defi nitions of sup-
Virtual water: The amount of water that is
plementarity, developed countries could be
directly or indirectly consumed in the pro-
required to achieve a given share of their
duction of a good or service.
reduction targets domestically. This is a
subject for further negotiation and clarifi- Vulnerability (also climate vulnerability):
cation by the parties. The degree to which a system is suscep-
tible to, and unable to cope with, adverse
Technology transfer: The process of shar-
effects of climate change, including climate
ing of skills, knowledge, technologies, and
Glossary 359
361
Table A1 Energy-related emissions and carbon intensity
Non-CO 2 emissions
Carbon dioxide (CO 2 ) emissions (CH 4, N 2O) Carbon intensity
Share of Cumulative
annual emissions
Annual total Change Per capita world total since 1850 Annual total Energy Income
Metric tons Metric tons Metric tons of CO 2 Metric tons of CO 2 per Metric tons of CO 2 per
(millions) % Metric tons % (billions) equivalent (millions) ton of oil equivalent thousand $ of GDP
1990 2005 1990–2005 a 1990 2005 2005 1850–2005 1990 2005 1990 2005 1990 2005
Algeria 68 91 33.3 2.7 2.8 0.34 2.8 9.6 15.5 2.86 2.63 0.44 0.39
Argentina 105 142 35.3 3.2 3.7 0.54 5.6 10.0 19.1 2.28 2.24 0.43 0.34
Australia 260 377 45.0 15.2 18.5 1.42 12.5 27.5 38.8 2.97 3.12 0.65 0.58
Austria 58 77 33.6 7.5 9.4 0.29 4.3 1.4 1.4 2.31 2.27 0.28 0.28
Belarus 108 61 –43.8 10.6 6.2 0.23 4.0 2.9 3.3 2.55 2.26 1.65 0.73
Belgium 109 112 2.7 10.9 10.7 0.42 10.4 2.8 2.4 2.19 1.81 0.44 0.34
Brazil 195 334 70.8 1.3 1.8 1.26 8.8 10.9 14.7 1.40 1.54 0.18 0.21
Bulgaria 75 46 –38.7 8.6 6.0 0.17 3.0 6.0 4.8 2.61 2.30 1.13 0.64
Canada 433 552 27.5 15.6 17.1 2.08 23.8 41.0 57.8 2.07 2.02 0.58 0.49
Chile 32 59 81.7 2.5 3.6 0.22 1.8 2.4 3.4 2.30 1.99 0.37 0.30
China 2,211 5,060 128.9 1.9 3.9 19.06 94.3 192.9 218.7 2.56 2.94 1.77 0.95
Colombia 45 61 34.0 1.4 1.4 0.23 2.2 5.1 7.1 1.83 2.12 0.26 0.23
Czech Republic 154 118 –23.3 14.9 11.5 0.44 10.7b 10.9 7.2 3.14 2.61 0.92 0.57
Denmark 51 48 –5.9 9.9 8.8 0.18 3.4 0.9 1.6 2.84 2.43 0.39 0.26
Egypt, Arab Rep. of 81 149 83.3 1.5 2.0 0.56 3.2 8.5 16.0 2.54 2.43 0.45 0.45
Finland 55 55 0.7 11.0 10.6 0.21 2.3 1.4 1.8 1.92 1.61 0.47 0.35
France 355 388 9.3 6.3 6.4 1.46 31.7 16.3 13.2 1.56 1.41 0.25 0.21
Germany 968 814 –15.9 12.2 9.9 3.06 117.8c 47.8 28.9 2.72 2.36 0.49 0.32
Greece 71 96 35.6 6.9 8.6 0.36 2.6 4.6 5.8 3.18 3.08 0.34 0.29
Hungary 71 58 –18.3 6.8 5.7 0.22 4.1 6.0 5.4 2.47 2.07 0.55 0.34
India 597 1,149 92.6 0.7 1.1 4.33 28.6 53.1 89.2 1.87 2.14 0.58 0.47
Indonesia 151 349 131.7 0.8 1.6 1.31 6.8 41.2 58.8 1.46 1.98 0.41 0.49
Iran, Islamic Rep. of 178 431 142.3 3.3 6.2 1.62 8.6 24.4 64.9 2.58 2.73 0.52 0.67
Iraq 61 99 62.0 3.3 3.5 0.37 2.2 4.1 3.3 3.21 3.31 .. ..
Ireland 31 44 41.7 8.8 10.5 0.16 1.6 1.3 1.8 3.00 2.89 0.50 0.28
Israel 34 60 78.3 7.2 8.6 0.23 1.5 0.2 0.4 2.77 2.83 0.41 0.38
Italy 398 454 14.0 7.0 7.7 1.71 17.9 16.8 18.5 2.69 2.44 0.30 0.28
Japan 1,058 1,214 14.8 8.6 9.5 4.57 46.1 10.0 7.1 2.38 2.30 0.33 0.31
Kazakhstan 233 155 –33.6 14.3 10.2 0.58 9.9d 28.8 13.2 3.17 2.73 2.01 1.17
Korea, Dem. Rep. of 114 73 –35.5 5.6 3.1 0.28 5.9e 26.9 27.3 3.43 3.42 .. ..
Korea, Rep. of 227 449 97.6 5.3 9.3 1.69 9.0e 6.6 7.7 2.43 2.11 0.50 0.44
Kuwait 27 76 184.0 12.7 30.1 0.29 1.6 5.4 9.1 3.36 2.71 .. 0.67
Libya 37 47 28.8 8.4 7.9 0.18 1.3 .. .. 3.16 2.65 .. 0.63
Malaysia 52 138 163.9 2.9 5.4 0.52 2.7e .. .. 2.24 2.09 0.43 0.46
Mexico 293 393 33.9 3.5 3.8 1.48 12.5 47.9 86.1 2.38 2.22 0.38 0.33
Morocco 20 41 111.2 0.8 1.4 0.16 0.9 .. .. 2.72 3.08 0.29 0.39
Netherlands 158 183 15.6 10.6 11.2 0.69 8.3 3.3 2.6 2.36 2.22 0.41 0.32
Nigeria 68 97 43.0 0.7 0.7 0.36 2.3 25.8 66.2 0.95 0.92 0.49 0.39
Norway 30 38 27.9 7.0 8.2 0.14 1.9 0.9 1.7 1.39 1.15 0.22 0.17
Pakistan 61 118 94.1 0.6 0.8 0.45 2.4e 7.5 12.5 1.40 1.55 0.34 0.35
Philippines 36 77 113.1 0.6 0.9 0.29 1.9 3.6 2.6 1.38 1.76 0.24 0.31
Poland 349 296 –15.3 9.2 7.8 1.11 22.6 23.5 20.9 3.50 3.19 1.14 0.57
Portugal 40 63 59.1 4.0 6.0 0.24 1.7 1.1 1.7 2.30 2.32 0.26 0.30
Qatar 14 44 202.1 30.8 54.6 0.16 0.9 .. .. 2.21 2.71 .. 0.77
Romania 167 91 –45.5 7.2 4.2 0.34 6.9 24.5 13.2 2.67 2.37 0.91 0.45
Russian Federation 2,194 1,544 –29.6 14.8 10.8 5.81 92.5d 406.4 206.4 2.50 2.35 1.17 0.91
Saudi Arabia 169 320 89.6 10.3 13.8 1.21 7.4 2.3 3.9 2.75 2.28 0.54 0.65
Serbia 59 50 –14.3 7.8 6.8 0.19 .. .. .. 3.02 3.13 .. 0.78
Singapore 29 43 49.7 9.5 10.1 0.16 1.4 0.2 0.8 2.16 1.39 0.39 0.23
Slovak Republic 57 38 –32.8 10.8 7.1 0.14 3.2b 1.7 1.6 2.67 2.03 0.86 0.45
South Africa 255 331 29.9 7.2 7.1 1.25 14.1 10.6 12.5 2.79 2.59 0.93 0.83
Spain 208 342 64.7 5.3 7.9 1.29 10.0 5.3 6.6 2.28 2.36 0.27 0.29
Sweden 53 51 –4.5 6.2 5.7 0.19 4.1 2.1 2.2 1.12 0.98 0.25 0.18
Switzerland 41 45 9.0 6.2 6.1 0.17 2.4 0.7 0.6 1.67 1.67 0.18 0.17
Syrian Arab Republic 32 48 51.6 2.5 2.6 0.18 1.2 .. .. 2.72 2.62 0.85 0.64
Thailand 79 214 172.6 1.4 3.4 0.81 3.9 13.0 19.2 1.79 2.13 0.35 0.48
Turkey 129 219 70.3 2.3 3.0 0.82 5.3 26.1 56.6 2.43 2.56 0.31 0.29
Turkmenistan 47 42 –11.3 12.8 8.6 0.16 2.1d 19.7 46.4 2.38 2.51 .. ..
Ukraine 681 297 –56.4 13.1 6.3 1.12 22.6d 139.7 118.4 2.68 2.07 1.63 1.13
United Arab Emirates 52 112 114.1 28.0 27.3 0.42 2.2 20.1 40.0 2.26 2.45 0.60 0.57
United Kingdom 558 533 –4.4 9.7 8.8 2.01 68.1 36.9 27.0 2.63 2.27 0.42 0.28
United States 4,874 5,841 19.9 19.5 19.7 22.00 324.9 298.8 242.8 2.53 2.49 0.61 0.47
Uzbekistan 120 110 –8.4 5.9 4.2 0.41 6.9d 28.1 40.3 2.59 2.34 2.93 2.10
Venezuela, R. B. de 112 150 33.4 5.7 5.6 0.56 5.3 30.5 46.3 2.56 2.48 0.59 0.57
Vietnam 17 81 376.5 0.3 1.0 0.31 1.5e 3.5 4.9 0.70 1.58 0.28 0.45
World 20,693t 26,544t 28.3w 4.0w 4.2w 100.00w 1,169.1s 1,861.0t 1,978.9t 2.39w 2.35w 0.57w 0.47w
Low income 549 707 28.9 0.7 0.6 2.66 24.0 115.5 256.4 1.38 1.26 0.46 0.38
Middle income 9,150 12,631 38.0 2.6 3.0 47.59 395.1 1,168.3 1,279.4 2.41 2.49 0.80 0.61
High income 10,999 13,207 20.1 11.8 12.7 49.75 750.1 577.2 557.1 2.44 2.32 0.47 0.39
European Union 15 3,122 3,271 4.8 8.6 8.5 12.32 284.8 142.1 115.7 2.36 2.11 0.36 0.28
OECD 11,121 12,946 16.4 10.7 11.1 48.77 764.7 644.6 651.4 2.46 2.33 0.47 0.37
a. Denotes percent change in CO2 emissions between 1990 and 2005. b. Share of cumulative emissions for Czech Republic and Slovak Republic prior to 1992 were calculated based on their
share of total combined emissions in during 1992–2006. c. Share of cumulative emissions for Germany prior to 1991 were calculated based on total for German Democratic Republic and
the Federal Republic of Germany and were combined with emissions for Germany between 1991 and 2006. d. Share of cumulative emissions for Belarus, Russian Federation, Kazakhstan,
Turkmenistan, Ukraine, and Uzbekistan prior to 1992 were calculated based on the share of combined emissions of former Soviet Union countries during 1992–2006. e. Emissions for the
Democratic Republic of Korea and the Republic of Korea are based on data for United Korea prior to 1950. Emissions for Pakistan and Bangladesh are based on data for East and West Pakistan
before 1971. Emissions for Malaysia and include Malaysia’s share of emissions from the Federation of Malaya. Emissions for Vietnam include emissions for the Democratic Republic of Vietnam
and the Republic of South Vietnam.
Selected indicators 363
Table A2b Non-CO2 emissions (Methane (CH4), Nitrous Oxide (N2O)) from agriculture
Annual total Share of total Per capita
Hydro, solar,
Tons of oil equivalent Natural wind, and Biomass kilowatt-
(millions) Coal gas Oil geothermal and waste % of total hours % change % of population
a
1990 2006 2006 2006 2006 2006 2006 2006 2006 1990–2006 2000–2006 b
Albania 2.7 2.3 1.1 0.6 66.8 19.1 10.1 0.0 961 84.0 ..
Algeria 23.9 36.7 1.9 65.2 32.6 0.1 0.2 0.0 870 60.6 98
Angola 6.3 10.3 0.0 6.4 27.5 2.2 63.9 0.0 153 155.5 15
Argentina 46.1 69.1 1.1 49.3 38.0 4.7 3.7 2.9 2,620 100.7 95
Armenia 7.9 2.6 0.0 53.1 15.2 6.1 0.0 26.6 1,612 –40.7 ..
Australia 87.7 122.5 43.9 19.1 31.6 1.3 4.1 0.0 11,309 34.6 100
Austria 25.1 34.2 11.8 21.8 42.0 9.6 13.1 0.0 8,090 32.5 100
Azerbaijan 26.1 14.1 0.0 63.5 34.4 1.5 0.0 0.0 2,514 –2.7 ..
Bahrain 4.8 8.8 0.0 75.4 24.6 0.0 0.0 0.0 12,627 92.1 99
Bangladesh 12.8 25.0 1.4 46.6 17.8 0.5 33.7 0.0 146 221.2 32
Belarus 42.3 28.6 0.1 60.3 31.5 0.0 4.9 0.0 3,322 –24.2 ..
Belgium 49.7 61.0 7.8 24.6 40.1 0.1 5.9 19.9 8,688 36.2 100
Benin 1.7 2.8 0.0 0.0 37.1 0.0 61.1 0.0 69 104.5 22
Bolivia 2.8 5.8 0.0 27.5 55.5 3.2 13.8 0.0 485 76.9 64
Bosnia and Herzegovina 7.0 5.4 62.4 5.9 22.3 9.3 3.4 0.0 2,295 –24.6 ..
Botswana 1.3 2.0 32.5 0.0 36.6 0.0 23.2 0.0 1,419 96.0 39
Brazil 140.0 224.1 5.7 7.8 40.2 13.4 29.6 1.6 2,060 41.5 97
Brunei Darussalam 1.8 2.8 0.0 73.1 26.9 0.0 0.0 0.0 8,173 87.7 99
Bulgaria 28.8 20.7 34.1 14.0 24.7 1.9 3.9 24.6 4,315 –9.3 ..
Cambodia 0.0 5.0 0.0 0.0 28.4 0.1 71.3 0.0 88 .. 20
Cameroon 5.0 7.1 0.0 0.0 16.3 4.5 79.2 0.0 186 –3.1 47
Canada 209.5 269.7 10.2 29.5 35.3 11.4 4.7 9.5 16,766 3.8 100
Chile 14.1 29.8 13.3 21.9 38.3 9.9 15.9 0.0 3,207 157.3 99
China 863.2 1,878.7 64.2 2.5 18.3 2.2 12.0 0.8 2,040 299.1 99
Hong Kong, China 10.7 18.2 38.6 13.2 44.9 0.0 0.3 0.0 5,883 40.8 ..
Colombia 24.7 30.2 8.2 20.3 45.0 12.2 14.9 0.0 923 11.6 86
Congo, Dem. Rep. of 11.9 17.5 1.5 0.0 3.1 3.9 92.4 0.0 96 –19.9 6
Congo, Rep. of 0.8 1.2 0.0 1.6 35.2 2.7 57.5 0.0 155 –8.2 20
Costa Rica 2.0 4.6 0.9 0.0 47.6 35.8 15.5 0.0 1,801 65.7 99
Côte d’Ivoire 4.4 7.3 0.0 18.8 16.9 1.8 63.8 0.0 182 21.3 ..
Croatia 9.1 9.0 7.0 26.2 51.5 5.8 4.1 0.0 3,635 21.5 ..
Cuba 16.8 10.6 0.2 8.3 79.5 0.1 11.9 0.0 1,231 1.6 96
Cyprus 1.6 2.6 1.4 0.0 96.4 1.7 0.5 0.0 5,746 78.9 ..
Czech Republic 49.0 46.1 45.2 16.4 21.4 0.5 4.0 14.8 6,511 16.6 ..
Denmark 17.9 20.9 26.2 21.7 39.4 2.6 12.9 0.0 6,864 15.5 100
Dominican Republic 4.1 7.8 6.4 3.5 70.4 1.5 18.0 0.0 1,309 242.1 93
Ecuador 6.1 11.2 0.0 5.0 83.2 5.5 5.2 0.0 759 58.5 90
Egypt, Arab Rep. of 32.0 62.5 1.4 44.4 50.0 1.9 2.3 0.0 1,382 100.2 98
El Salvador 2.5 4.7 0.0 0.0 44.0 24.4 31.6 0.0 721 95.9 80
Eritrea .. 0.7 0.0 0.0 26.9 0.0 73.1 0.0 49 .. 20
Estonia 9.6 4.9 57.0 16.5 15.1 0.2 10.7 0.0 5,890 0.0 ..
Ethiopia 15.0 22.3 0.0 0.0 8.8 1.3 90.0 0.0 38 91.5 15
Finland 28.7 37.4 13.7 10.4 28.2 2.7 20.4 15.9 17,178 37.6 100
France 227.6 272.7 4.8 14.5 33.3 1.9 4.4 43.0 7,585 26.9 100
Gabon 1.2 1.8 0.0 5.8 33.4 4.5 56.4 0.0 1,083 13.9 48
Georgia 12.3 3.3 0.3 41.3 23.5 14.0 19.3 0.0 1,549 –42.1 ..
Germany 355.6 348.6 23.6 22.8 35.4 1.4 4.6 12.5 7,175 8.0 100
Ghana 5.3 9.5 0.0 0.0 31.7 5.1 63.3 0.0 304 –1.1 49
Greece 22.2 31.1 27.0 8.8 57.3 2.5 3.3 0.0 5,372 69.0 100
Guatemala 4.5 8.2 4.8 0.0 39.7 4.0 51.6 0.0 529 136.8 79
Haiti 1.6 2.6 0.0 0.0 23.3 0.9 75.8 0.0 37 –36.2 36
Honduras 2.4 4.3 2.7 0.0 50.6 5.1 41.5 0.0 642 72.2 62
Hungary 28.6 27.6 11.1 41.5 27.6 0.4 4.3 12.8 3,883 13.2 ..
Iceland 2.2 4.3 1.8 0.0 22.9 75.3 0.1 0.0 31,306 94.0 100
India 319.9 565.8 39.4 5.5 24.1 1.9 28.3 0.9 503 82.3 56
Indonesia 102.8 179.1 15.5 18.6 33.0 3.7 29.2 0.0 530 228.3 54
Iran, Islamic Rep. of 68.8 170.9 0.7 51.5 46.3 0.9 0.5 0.0 2,290 134.9 97
Iraq 19.1 32.0 0.0 8.9 90.5 0.1 0.1 0.0 1,161 –7.6 15
Ireland 10.3 15.5 11.0 26.0 54.8 1.3 1.4 0.0 6,500 72.1 100
Israel 12.1 21.3 36.0 8.8 52.4 3.4 0.0 0.0 6,893 65.1 97
Italy 148.1 184.2 9.1 37.6 44.1 4.6 2.6 0.0 5,762 39.0 100
Jamaica 2.9 4.6 0.5 0.0 88.7 0.3 10.5 0.0 2,450 178.8 87
Japan 443.9 527.6 21.3 14.7 45.6 2.1 1.3 15.0 8,220 26.7 100
Jordan 3.5 7.2 0.0 28.0 70.0 1.4 0.0 0.0 1,904 81.2 100
Kazakhstan 73.6 61.4 49.3 30.6 18.8 1.1 0.1 0.0 4,293 –27.3 ..
Kenya 11.2 17.9 0.4 0.0 20.2 5.9 73.6 0.0 145 16.3 14
Korea, Dem. Rep. of 33.2 21.7 86.9 0.0 3.3 5.0 4.8 0.0 797 –36.1 22
Korea, Rep. 93.4 216.5 24.3 13.3 43.2 0.2 1.1 17.9 8,063 239.8 100
Kuwait 8.0 25.3 0.0 38.3 61.7 0.0 0.0 0.0 16,314 101.2 100
Kyrgyz Republic 7.6 2.8 18.3 22.9 20.8 45.5 0.1 0.0 2,015 –12.9 ..
Latvia 7.9 4.6 1.8 30.5 31.9 5.1 25.9 0.0 2,876 –15.1 ..
Lebanon 2.3 4.8 2.8 0.0 91.5 1.4 2.7 0.0 2,142 354.9 100
Libya 11.5 17.8 0.0 29.4 69.7 0.0 0.9 0.0 3,688 130.1 97
Lithuania 16.2 8.5 3.1 28.7 30.3 0.4 8.8 27.0 3,232 –19.7 ..
Luxembourg 3.5 4.7 2.3 26.2 63.3 0.4 1.3 0.0 16,402 20.1 100
Selected indicators 365
Hydro, solar,
Tons of oil equivalent Natural wind, and Biomass kilowatt-
(millions) Coal gas Oil geothermal and waste % of total hours % change % of population
1990 2006 2006 2006 2006 2006 2006 2006 2006 1990–2006 a 2000–2006 b
Macedonia, FYR 2.7 2.8 45.4 2.4 35.0 5.5 6.0 0.0 3,496 25.3 ..
Malaysia 23.3 68.3 12.0 44.4 38.8 0.9 4.1 0.0 3,388 187.5 98
Malta 0.8 0.9 0.0 0.0 100.0 0.0 0.0 0.0 4,975 79.1 ..
Mexico 123.0 177.4 4.9 27.4 56.8 4.8 4.6 1.6 1,993 50.3 ..
Moldova 9.9 3.4 2.5 66.7 19.4 0.2 2.2 0.0 1,516 –44.4 ..
Mongolia 3.4 2.8 71.7 0.0 24.0 0.0 3.8 0.0 1,297 –19.1 65
Morocco 7.2 14.0 27.8 3.4 63.3 1.1 3.2 0.0 685 85.8 85
Mozambique 6.0 8.8 0.0 0.3 6.6 14.4 81.6 0.0 461 1,040.4 6
Myanmar 10.7 14.3 0.8 12.4 12.7 2.0 72.1 0.0 93 104.5 11
Namibia .. 1.5 1.9 0.0 65.4 8.8 12.7 0.0 1,545 .. 34
Nepal 5.8 9.4 2.7 0.0 8.6 2.4 86.2 0.0 80 129.2 33
Netherlands 67.1 80.1 9.7 42.7 40.4 0.3 3.3 1.1 7,057 35.2 100
Netherlands Antilles 1.5 1.7 0.0 0.0 100.0 0.0 0.0 0.0 5,651 59.2 ..
New Zealand 13.8 17.5 11.9 18.7 39.4 24.0 6.0 0.0 9,746 14.5 100
Nicaragua 2.1 3.5 0.0 0.0 39.0 8.7 52.2 0.0 426 44.7 69
Nigeria 70.9 105.1 0.0 8.6 11.2 0.6 79.6 0.0 116 32.6 46
Norway 21.4 26.1 2.7 18.2 34.0 39.6 5.1 0.0 24,295 4.0 100
Oman 4.6 15.4 0.0 67.6 32.4 0.0 0.0 0.0 4,457 107.3 96
Pakistan 43.4 79.3 5.4 31.6 23.9 3.5 34.9 0.8 480 73.6 54
Panama 1.5 2.8 0.0 0.0 71.7 11.1 17.4 0.0 1,506 76.4 85
Paraguay 3.1 4.0 0.0 0.0 30.5 116.5 52.0 0.0 900 78.4 86
Peru 10.0 13.6 5.9 12.3 50.3 14.0 17.4 0.0 899 64.1 72
Philippines 26.2 43.0 13.4 5.8 31.8 22.9 26.1 0.0 578 60.7 81
Poland 99.9 97.7 58.5 12.7 24.1 0.2 5.5 0.0 3,586 9.3 ..
Portugal 17.2 25.4 13.0 14.3 53.8 5.1 11.9 0.0 4,799 89.0 100
Qatar 6.5 18.1 0.0 82.2 17.8 0.0 0.0 0.0 17,188 75.7 71
Romania 62.5 40.1 23.5 36.4 25.3 4.0 8.1 3.7 2,401 –17.9 ..
Russian Federation 878.9 676.2 15.7 53.0 20.6 2.3 1.1 6.1 6,122 –8.3 ..
Saudi Arabia 61.3 146.1 0.0 36.7 63.3 0.0 0.0 0.0 7,079 77.8 97
Senegal 1.8 3.0 3.4 0.3 55.7 0.7 39.6 0.0 150 52.3 33
Serbia 19.5 17.1 51.0 11.7 27.5 5.5 4.7 0.0 4,026 13.9 ..
Singapore 13.4 30.7 0.0 20.9 79.0 0.0 0.0 0.0 8,363 72.1 100
Slovak Republic 21.3 18.7 23.9 28.8 18.3 2.1 2.6 25.4 5,136 –7.3 ..
Slovenia 5.6 7.3 20.3 12.4 36.5 4.3 6.5 19.9 7,123 39.9 ..
South Africa 91.2 129.8 71.7 2.9 12.4 0.3 10.5 2.4 4,810 8.5 70
Spain 91.2 144.6 12.4 21.5 49.0 3.0 3.6 10.8 6,213 76.3 100
Sri Lanka 5.5 9.4 0.7 0.0 40.7 4.2 54.3 0.0 400 159.5 66
Sudan 10.7 17.7 0.0 0.0 21.8 0.7 77.5 0.0 95 91.5 30
Sweden 47.6 51.3 4.7 1.7 28.5 10.5 18.4 34.0 15,230 –3.8 100
Switzerland 24.8 28.2 0.6 9.6 46.0 10.1 7.2 25.8 8,279 11.7 100
Syrian Arab Republic 11.7 18.9 0.0 27.0 71.2 1.8 0.0 0.0 1,466 117.6 90
Tajikistan 5.6 3.6 1.3 13.4 44.7 39.1 0.0 0.0 2,241 –33.0 ..
Tanzania 9.8 20.8 0.2 1.5 6.6 0.6 91.0 0.0 59 15.0 11
Thailand 43.9 103.4 12.1 25.8 44.4 0.7 16.6 0.0 2,080 181.4 99
Togo 1.3 2.4 0.0 0.0 13.4 0.3 84.5 0.0 98 12.6 17
Trinidad and Tobago 6.0 14.3 0.0 87.7 12.1 0.0 0.2 0.0 5,008 87.0 99
Tunisia 5.1 8.7 0.0 39.4 47.2 0.1 13.3 0.0 1,221 91.2 99
Turkey 52.9 94.0 28.1 27.6 33.4 5.5 5.5 0.0 2,053 130.2 ..
Turkmenistan 19.6 17.3 0.0 71.3 29.4 0.0 0.0 0.0 2,123 –7.4 ..
Ukraine 253.8 137.4 29.1 42.4 10.8 0.8 0.4 17.1 3,400 –29.0 ..
United Arab Emirates 23.2 46.9 0.0 72.0 28.0 0.0 0.0 0.0 14,569 66.2 92
United Kingdom 212.3 231.1 17.9 35.1 36.3 0.3 1.7 8.5 6,192 15.6 100
United States 1,926.3 2,320.7 23.7 21.6 40.4 1.6 3.4 9.2 13,515 15.6 100
Uruguay 2.3 3.2 0.1 3.2 64.6 9.7 14.9 0.0 2,042 63.9 95
Uzbekistan 46.4 48.5 2.2 85.8 10.9 1.1 0.0 0.0 1,691 –29.1 ..
Venezuela, R. B. de 43.9 62.2 0.1 37.6 50.6 11.0 0.9 0.0 3,175 28.9 99
Vietnam 24.3 52.3 16.8 9.5 23.4 3.9 46.4 0.0 598 511.2 84
Yemen, Rep. of 2.6 7.1 0.0 0.0 98.9 0.0 1.1 0.0 190 58.9 36
Zambia 5.5 7.3 1.4 0.0 9.7 11.0 78.2 0.0 730 –3.2 19
Zimbabwe 9.4 9.6 22.2 0.0 7.1 5.0 63.3 0.0 900 4.5 34
World 8,637.3t 11,525.2t 26.6w 21.0w 35.7w 2.8w 9.8w 6.3w 2,750w 29.6w ..
Low income 400.2 575.5 7.3 19.1 7.8 3.1 53.8 0.1 311 18.7 ..
Middle income 3,797.2 5,348.7 35.8 19.2 29.9 3.2 12.3 2.0 1,647 58.2 ..
High income 4,479.4 5,659.1 13.9 22.9 43.7 2.5 3.4 11.0 9,675 27.5 ..
European Union 15 1,324.2 1,542.8 20.5 24.5 40.9 2.4 5.0 15.1 7,058 25.5 ..
OECD 4,521.8 5,537.4 20.5 21.9 39.7 2.8 3.8 11.1 8,413 24.4 ..
a. Denotes percent change in value of the variable within the given period. b. Data are for the most recent year available.
366 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
Number of people
Number of people (thousands) % $ (thousands) % of GDP kilometers % %
a a a a a a a b
1971–2008 1971–2008 1971–2008 1971–2008 1971–2008 1971–2008 1971–2008 1961–2008 2008 2000 2000
Angola 2 7 69 18 2.2 0 263 .. 1,600 5.3 0.3
Argentina 0 13 0 355 1.1 3,158 229,348 0.8 4,989 10.9 1.9
Australia 0 10 186 108 4.8 262,447 390,461 3.2 25,760 12.1 1.6
Bahamas, The 0 1 0 1 0.2 0 67,116 9.8 3,542 87.6 93.2
Bangladesh 0 5,673 658 8,751 9.1 0 445,576 9.8 580 45.6 40.0
Belize 0 2 0 8 3.6 0 14,862 200.2 386 40.3 15.6
Benin 0 3 58 56 5.3 17 214 .. 121 21.0 1.6
Bolivia 0 22 92 62 2.4 25,411 43,050 18.7 0 0.0 0.0
Brazil 1 102 993 384 1.4 124,289 157,849 1.2 7,491 6.7 1.4
Cambodia 0 30 172 251 5.8 3,632 8,634 9.2 443 23.9 7.4
Chad 0 8 62 18 6.0 2,184 30 .. 0 0.0 0.0
China 93 1,304 9,642 53,460 5.2 522,350 4,791,624 2.9 14,500 11.4 2.0
Costa Rica 0 5 0 39 1.0 632 19,668 2.4 1,290 2.4 3.5
Cuba 0 6 22 331 3.1 4,819 287,436 .. 3,735 13.3 21.1
Czech Republic 0c 2c 0c 8c 0.1c 0c 122,263c 3.2 0 0.0 0.0
Djibouti 0 6 26 18 8.5 0 151 .. 314 40.6 1.9
Dominica 0 1 0 3 3.5 0 7,412 100.8 148 6.7 4.5
Dominican Republic 0 75 0 111 1.6 0 71,240 36.4 1,288 3.3 4.7
Ecuador 0 21 1 43 0.5 0 40,972 3.3 2,237 14.0 3.2
Ethiopia 10,536 51 1,361 59 6.6 2,411 424 .. 0 0.0 0.0
Fiji 0 8 8 26 4.8 789 18,078 17.1 1,129 17.6 10.6
Georgia 0 3 18 1 0.8 5,263 15,259 26.8 310 6.2 2.2
Ghana 0 7 329 94 8.1 3 882 4.5 539 3.7 1.0
Grenada 0 1 0 2 1.6 0 23,803 205.1 121 6.4 6.5
Guatemala 1 73 5 24 0.2 632 48,434 3.9 400 1.4 2.1
Guyana 0 1 16 12 5.7 763 16,692 56.3 459 54.6 3.7
Haiti 0 225 55 131 2.8 0 21,707 62.6 1,771 9.2 5.1
Honduras 0 621 19 109 2.9 447 130,421 72.9 820 4.6 5.6
India 8 2,489 25,294 22,314 7.2 61,608 1,055,375 2.5 7,000 6.3 2.5
Indonesia 35 182 121 206 0.3 4,216 62,572 9.3 54,716 19.6 9.3
Iran, Islamic Rep. of 0 102 974 101 4.8 86,842 202,133 3.5 2,440 2.1 1.6
Italy 0 8 0 2 0.1 21,053 597,289 2.7 7,600 9.3 6.3
Jamaica 0 7 0 56 2.4 158 68,304 26.1 1,022 7.9 6.9
Jordan 0 1 9 0 0.2 0 26 7.5 26 0.0 0.0
Kenya 5 23 960 56 9.7 39 588 .. 536 0.9 0.4
Korea, Dem. Rep. of 0 49 0 314 1.4 0 622,156 .. 2,495 10.2 3.8
Korea, Rep. of 0 116 0 76 0.2 0 391,754 1.2 2,413 6.2 5.0
Lao PDR 0 5 112 123 6.3 26 8,657 22.8 0 0.0 0.0
Lebanon 0 1 0 3 0.1 0 4,342 2.8 225 13.7 1.6
Madagascar 5 54 74 231 3.6 0 55,337 14.8 4,828 5.5 2.7
Malawi 13 16 518 50 12.3 0 837 .. 0 0.0 0.0
Malaysia 0 12 0 15 0.1 0 28,039 0.9 4,675 23.5 6.2
Mauritius 0 1 0 26 2.9 4,605 16,352 21.3 177 9.4 6.1
Mongolia 0 5 12 53 3.7 0 2,376 145.3 0 0.0 0.0
Mozambique 2,633 65 455 328 13.8 1,316 22,846 9.9 2,470 11.8 3.2
Nepal 0 137 121 87 2.0 263 25,804 24.6 0 0.0 0.0
Nicaragua 0 105 15 53 1.4 474 46,256 27.7 910 2.1 6.2
Niger 0 3 335 10 13.2 0 295 .. 0 0.0 0.0
Pakistan 4 273 58 1,163 1.3 6,500 120,942 10.5 1,046 2.9 2.8
Peru 0 55 87 75 0.7 7,526 1,916 5.2 2,414 1.8 0.5
Philippines 0 743 172 2,743 4.5 1,696 164,362 11.0 36,289 17.7 7.7
Puerto Rico 0 15 0 5 0.1 53 82,789 3.2 501 18.4 10.8
Russian Federation 0c 32c 26c 58c 0.1c 0c 147,461c 6.9 37,653 2.4 1.7
Samoa 0 1 0 7 4.6 0 13,858 248.4 403 23.6 8.4
Senegal 0 6 199 18 11.3 9,863 1,168 13.6 531 31.5 7.5
South Africa 0 34 460 22 1.1 26,316 50,502 0.7 2,798 1.0 0.1
Spain 0 22 158 21 2.5 280,526 245,471 2.4 4,964 7.7 1.3
Sri Lanka 0 45 165 282 3.1 0 12,049 3.7 1,340 11.8 8.3
St. Lucia 0 2 0 2 1.9 0 29,731 365.0 158 4.3 4.1
Sudan 3,947 19 611 155 6.0 0 14,505 1.1 853 0.6 0.1
Swaziland 13 1 43 24 18.3 46 1,426 10.7 0 0.0 0.0
Tajikistan 0c 39c 100c 19c 2.9c 1,500c 12,037c 15.7 0 0.0 0.0
Tanzania 0 15 210 22 2.0 0 179 .. 1,424 2.3 0.3
Thailand 0 95 618 929 2.2 11,166 132,709 .. 3,219 26.3 6.9
Tunisia 0 8 1 7 0.1 0 8,889 7.8 1,148 14.8 3.3
United States 0 272 0 672 0.1 187,763 12,104,146 1.0 19,924 8.1 2.6
Vanuatu 0 3 0 6 4.4 0 5,395 139.9 2,528 4.5 7.4
Venezuela, R. B. de 0 801 0 20 0.1 0 84,697 3.3 2,800 6.8 3.6
Vietnam 0 393 161 1,749 3.0 17,082 157,603 .. 3,444 55.1 20.2
Zimbabwe 0 4 365 9 10.7 67,105 7,308 29.3 0 0.0 0.0
a. Denotes annual average values for variables during the period 1971–2008. b. Denotes largest per-event loss in the period 1961–2008. c. Data prior to 1990 are based on detailed EM-DAT
disaster information in Yugoslavia, Czechoslovakia, and the Soviet Union.
Selected indicators 367
hectares number
(millions) % of cropland $ (millions) °C of days % change % change
a a
2005 2003 2007 2000–2050 2000–2050 2000–2050 2000–2050 2000–2080 a 2000–2050 a
Algeria 7.5 6.9 0.9 1.9 22.2 –4.9 7.2 –36.0 –6.7
Argentina 28.5 .. 16.7 1.2 5.9 0.7 3.5 –11.1 –13.8
Australia 49.4 5.0 478.8 1.5 10.9 –1.4 2.1 –26.6 –16.4
Bangladesh 8.0 56.1 1,522.6 1.4 8.7 1.4 5.4 –21.7 8.9
Belarus 5.5 2.0 1.8 1.7 28.8 2.7 4.9 .. 29.6
Bolivia 3.1 4.1 2.0 1.6 16.4 –0.9 2.5 .. –13.7
Brazil 59.0 4.4 598.0 1.5 13.5 –2.0 3.0 –16.9 –16.1
Bulgaria 3.2 16.6 18.2 1.7 27.2 –4.3 3.0 .. –7.0
Burkina Faso 4.8 0.5 0.9 1.4 5.7 0.3 0.0 –24.3 –4.4
Cambodia 3.7 7.0 7.6 1.2 4.0 3.3 1.7 –27.1 –19.3
Cameroon 6.0 0.4 0.8 1.3 2.0 0.9 3.0 –20.0 –6.6
Canada 45.7 1.5 788.2 2.1 28.2 8.5 4.9 –2.2 19.5
Chile 2.0 81.0 5,314.5 1.2 4.9 –3.5 1.2 –24.4 47.7
China 143.3 35.6 44,935.2 1.7 16.1 4.5 5.4 –7.2 8.4
Colombia 2.0 24.0 277.2 1.4 4.0 1.2 2.4 –23.2 –3.3
Congo, Dem. Rep. of 6.7 0.1 7.4 1.4 2.0 0.8 3.1 –14.7 –7.0
Côte d’Ivoire 3.5 1.1 2.2 1.3 1.9 –0.3 –0.2 –14.3 –12.9
Cuba 3.7 19.5 35.0 1.1 2.0 –12.0 –0.9 –39.3 –18.1
Czech Republic 3.0 0.7 49.5 1.7 20.3 0.3 4.6 .. 14.3
Denmark 2.2 9.0 11.4 1.4 11.0 5.0 5.8 .. 16.1
Egypt, Arab Rep. of 3.0 100.0 1,192.6 1.6 14.7 –7.0 –1.6 11.3 –27.9
Ethiopia 13.1 2.5 .. 1.4 3.1 2.4 5.0 –31.3 0.5
Finland 2.2 2.9 63.8 2.1 29.6 5.6 4.4 .. 15.7
France 18.5 13.3 757.2 1.5 12.3 –3.5 3.2 –6.7 –2.6
Germany 11.9 4.0 191.1 1.5 14.8 2.4 5.0 –2.9 9.5
Ghana 4.2 0.5 2.5 1.3 1.3 –1.0 0.8 –14.0 –10.1
Greece 2.6 37.9 533.3 1.7 16.0 –10.9 1.8 –7.8 –3.5
Hungary 4.6 3.1 4.6 1.9 25.0 –1.3 6.5 .. –10.8
India 159.7 32.9 4,383.5 1.6 10.8 1.9 2.7 –38.1 –12.2
Indonesia 23.0 12.4 2,854.9 1.2 0.4 1.8 2.5 –17.9 –17.7
Iran, Islamic Rep. of 16.5 47.0 451.1 1.8 19.9 –15.6 4.2 –28.9 –7.3
Iraq 5.8 58.6 35.8 1.8 22.3 –13.3 6.1 –41.4 –18.5
Italy 7.7 25.8 757.4 1.5 12.3 –7.0 4.6 –7.4 –2.7
Japan 4.4 35.1 4,279.9 1.4 4.0 0.5 3.8 –5.7 0.6
Kazakhstan 22.4 15.7 0.9 1.8 28.5 5.6 5.0 11.4 7.7
Kenya 5.3 1.8 6.3 1.2 2.5 7.5 8.0 –5.5 6.1
Korea, Dem. Rep. of 2.8 50.3 32.6 1.7 10.0 6.0 7.0 –7.3 –0.7
Madagascar 3.0 30.6 47.5 1.2 2.1 –4.1 1.1 –26.2 –0.5
Malawi 2.6 2.2 3.6 1.4 7.5 –0.1 2.4 –31.3 –3.0
Mali 4.8 4.9 0.6 1.7 16.1 8.4 3.8 –35.6 –9.6
Mexico 25.0 22.8 535.5 1.6 16.8 –7.2 1.6 –35.4 –0.5
Morocco 8.5 15.4 6.9 2.1 21.1 –16.8 5.3 –39.0 –25.2
Mozambique 4.4 2.6 4.6 1.3 5.9 –2.7 1.4 –21.7 –10.4
Myanmar 10.1 17.0 1,862.4 1.3 8.6 1.9 3.7 –39.3 –15.4
Nepal 2.4 47.1 43.7 1.7 21.8 3.6 4.9 –17.3 –10.6
Niger 14.5 0.5 0.9 1.6 16.1 5.6 2.5 –34.1 –1.7
Nigeria 32.0 0.8 24.8 1.3 4.1 0.6 1.1 –18.5 –9.9
Pakistan 21.3 82.0 214.2 1.8 19.8 –3.0 3.5 –30.4 –32.9
Peru 3.7 27.8 271.8 1.5 5.0 1.2 3.3 –30.6 0.6
Philippines 5.7 14.5 1,371.4 1.2 1.3 2.1 1.7 –23.4 –14.3
Poland 12.1 .. 15.0 1.7 21.6 1.8 4.4 –4.7 16.7
Romania 9.3 5.8 22.5 1.7 28.9 –4.2 5.3 –6.6 –8.1
Russian Federation 121.8 3.7 326.1 2.2 29.5 8.8 5.5 –7.7 11.0
Saudi Arabia 3.5 42.7 186.4 1.8 13.9 –10.5 1.8 –21.9 –28.3
Senegal 2.6 4.8 0.2 1.6 6.0 –1.9 3.1 –51.9 –19.3
South Africa 14.8 9.5 33.3 1.5 9.5 –4.5 1.4 –33.4 –5.2
Spain 13.7 20.3 384.2 1.6 15.2 –11.9 0.9 –8.9 –1.3
Sudan 19.4 10.2 3.8 1.6 9.5 –0.6 –0.1 –56.1 –7.0
Sweden 2.7 4.3 21.4 1.8 22.0 5.1 5.3 .. 19.8
Syrian Arab Republic 4.9 24.3 24.8 1.7 23.4 –13.6 3.7 –27.0 –4.5
Tanzania 9.2 1.8 0.1 1.3 2.3 4.4 6.0 –24.2 –2.0
Thailand 14.2 28.2 2,432.8 1.2 8.1 2.7 2.2 –26.2 –15.9
Togo 2.5 0.3 12.0 1.3 1.5 –2.0 –0.5 .. –14.0
Turkey 23.8 20.0 64.6 1.7 24.3 –10.2 1.0 –16.2 –1.0
Uganda 5.4 0.1 115.7 1.3 1.7 3.4 6.6 –16.8 –5.0
Ukraine 32.5 6.6 76.9 1.7 28.5 –0.7 4.0 –5.2 –7.4
United Kingdom 5.7 3.0 927.9 1.1 5.1 2.5 3.7 –3.9 3.2
United States 174.4 12.5 944.6 1.8 24.4 2.7 4.0 –5.9 –1.7
Uzbekistan 4.7 84.9 2.4 1.7 21.5 –0.1 3.4 –12.1 –2.8
Venezuela, R. B. de 2.7 16.9 65.8 1.6 10.3 –6.4 1.1 –31.9 –9.8
Vietnam 6.6 33.7 4,544.8 1.2 7.3 3.6 1.7 –15.1 –11.4
Zambia 5.3 2.9 8.7 1.5 8.1 0.6 3.9 –39.6 1.3
Zimbabwe 3.2 5.2 5.1 1.5 12.3 –3.7 4.8 –37.9 –10.6
a. Denotes percentage change in the value of the variable within the given period.
368 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
$ per capita $ per capita $ per capita $ per capita $ per capita $ per capita $ per capita $ per capita $ per capita $ per capita
2000 2000 2000 2000 2000 2000 2000 2000 2000 2000
Algeria 18,491 8,709 –3,418 13,200 426 859 161 16 68 11,670
Argentina 139,232 19,111 109,809 10,312 2,754 3,632 350 219 105 3,253
Australia 371,031 58,179 288,686 24,167 5,590 4,365 1,421 551 748 11,491
Austria 493,080 73,118 412,789 7,174 2,008 1,298 2,410 144 829 485
Bangladesh 6,000 817 4,221 961 52 810 9 2 4 83
Belgium 451,714 60,561 388,123 3,030 2,161 575 0 20 254 20
Bolivia 18,141 2,110 11,248 4,783 541 1,550 232 1,426 100 934
Brazil 86,922 9,643 70,528 6,752 1,311 1,998 402 724 609 1,708
Bulgaria 25,256 5,303 16,505 3,448 1,108 1,650 217 102 126 244
Burkina Faso 5,087 821 3,047 1,219 191 547 100 142 239 0
Cameroon 10,753 1,749 4,271 4,733 179 2,748 187 357 348 914
Canada 324,979 54,226 235,982 34,771 1,631 2,829 5,756 1,264 4,724 18,566
Chad 4,458 289 2,307 1,861 316 787 80 366 311 0
Chile 77,726 10,688 56,094 10,944 1,001 2,443 1,095 231 986 5,188
China 9,387 2,956 4,208 2,223 146 1,404 27 29 106 511
Colombia 44,660 4,872 33,241 6,547 978 1,911 253 266 134 3,006
Côte d’Ivoire 14,243 997 10,125 3,121 72 2,568 11 102 367 2
Dominican Republic 33,410 5,723 24,511 3,176 386 1,980 461 37 27 286
Ecuador 33,745 2,841 17,788 13,117 1,065 5,263 1,057 193 335 5,205
Egypt, Arab Rep. of 21,879 3,897 14,734 3,249 0 1,705 0 0 0 1,544
Ethiopia 1,965 177 992 796 197 353 167 16 63 0
France 468,024 57,814 403,874 6,335 2,091 2,747 1,026 77 307 87
Germany 496,447 68,678 423,323 4,445 1,586 1,176 1,113 39 263 269
Ghana 10,365 686 8,343 1,336 43 855 7 76 290 65
Greece 236,972 28,973 203,445 4,554 573 3,424 57 101 82 318
Guatemala 30,480 3,098 24,411 2,971 218 1,697 181 57 517 301
Haiti 8,235 601 6,840 793 112 668 3 3 8 0
Hungary 77,072 15,480 56,645 4,947 1,131 2,721 366 42 152 536
India 6,820 1,154 3,738 1,928 192 1,340 122 14 59 201
Indonesia 13,869 2,382 8,015 3,472 50 1,245 167 115 346 1,549
Iran, Islamic Rep. of 24,023 3,336 6,581 14,105 611 1,989 109 26 0 11,370
Italy 372,666 51,943 316,045 4,678 1,083 2,639 543 51 0 361
Japan 493,241 150,258 341,470 1,513 316 710 364 56 38 28
Kenya 6,609 868 4,374 1,368 529 361 113 129 235 1
Korea, Rep. of 141,282 31,399 107,864 2,020 275 1,241 441 30 0 33
Madagascar 5,020 395 2,944 1,681 345 955 36 171 174 0
Malawi 5,200 542 3,873 785 45 474 26 56 184 0
Malaysia 46,687 13,065 24,520 9,103 24 1,369 161 188 438 6,922
Mali 5,241 621 2,463 2,157 295 1,420 44 276 121 0
Mexico 61,872 18,959 34,420 8,493 721 1,195 176 128 199 6,075
Morocco 22,965 3,435 17,926 1,604 453 993 7 24 22 106
Mozambique 4,232 478 2,695 1,059 57 261 9 392 340 0
Nepal 3,802 609 1,964 1,229 111 767 81 38 233 0
Netherlands 421,389 62,428 352,222 6,739 3,090 1,035 527 7 27 2,053
Niger 3,695 286 1,434 1,975 187 1,598 152 28 9 1
Nigeria 2,748 667 –1,959 4,040 78 1,022 6 24 270 2,639
Pakistan 7,871 975 5,529 1,368 448 549 94 4 7 265
Peru 39,046 5,562 29,908 3,575 341 1,480 98 570 153 934
Philippines 19,351 2,673 15,129 1,549 45 1,308 59 17 90 30
Portugal 207,477 31,011 172,837 3,629 934 1,724 385 107 438 41
Romania 29,113 8,495 16,110 4,508 1,154 1,602 175 65 290 1,222
Russian Federation 38,709 15,593 5,900 17,217 1,342 1,262 1,317 1,228 292 11,777
Rwanda 5,670 549 3,055 2,066 98 1,849 27 9 81 2
Senegal 10,167 975 7,920 1,272 196 608 78 147 238 4
South Africa 59,629 7,270 48,959 3,400 637 1,238 51 46 310 1,118
Spain 261,205 39,531 217,300 4,374 971 2,806 360 105 81 50
Sri Lanka 14,731 2,710 11,204 817 84 485 166 24 58 0
Sweden 513,424 58,331 447,143 7,950 1,676 1,120 1,549 908 2,434 263
Syrian Arab Republic 10,419 3,292 –1,598 8,725 730 1,255 0 6 0 6,734
Thailand 35,854 7,624 24,294 3,936 96 2,370 855 55 92 469
Tunisia 36,537 6,270 26,328 3,939 736 1,546 8 12 27 1,610
Turkey 47,859 8,580 35,774 3,504 861 2,270 86 34 64 190
United Kingdom 408,753 55,239 346,347 7,167 1,291 583 495 14 44 4,739
United States 512,612 79,851 418,009 14,752 1,665 2,752 1,651 238 1,341 7,106
Venezuela, R. B. de 45,196 13,627 4,342 27,227 581 1,086 1,793 464 0 23,302
Zambia 6,564 694 4,091 1,779 98 477 78 716 276 134
Zimbabwe 9,612 1,377 6,704 1,531 258 350 70 341 211 301
World 95,860 16,850 74,998 4,011 536 1,496 322 104 252 1,302
Low income 7,532 1,174 4,434 1,925 189 1,143 111 48 109 325
Middle income 27,616 5,347 18,773 3,426 407 1,583 129 120 169 1,089
High income (OECD) 439,063 76,193 353,339 9,531 1,552 2,008 1,215 183 747 3,825
Selected indicators 369
Symbols and aggregates Houghton, R. A. 2009. “Emissions of Carbon from Land Manage-
ment.” Background note for the WDR 2010.
.. Denotes that data are not available or that aggre-
gates cannot be calculate because of missing data IEA (International Energy Agency). 2002. World Energy Outlook
2002. Paris: IEA.
in the years shown.
———. 2006. World Energy Outlook 2006. Paris: IEA.
0 or 0.0 Denotes zero or less than half the unit shown. ———. 2008a. Energy Balances of Non-OECD Countries—2008
Aggregate measures for regions and income groups are Edition. Paris: IEA.
calculated by simple addition when they are expressed in ———. 2008b. Energy Balances of OECD Countries—2008 Edition.
levels. Aggregate rates and ratios are computed as weighted Paris: IEA.
averages. ———. 2008c. Energy Statistics of Non-OECD Countries—2008
Summary measures are either totals (indicated by t if Edition. Paris: IEA.
the aggregates include estimates for missing data and non- ———. 2008d. Energy Statistics of OECD Countries—2008 Edition.
reporting countries or by an s for simple sums of the data Paris: IEA.
available), weighted averages (w), or median values (m) Mechler, R., S. Hochrainer, G. Pflug, K. Williges, and A. Lotsch.
calculated for groups of economies. Data for the countries 2009. “Assessing the Financial Vulnerability to Climate-Related
Natural Hazards.” Background paper for the WDR 2010.
excluded from the main tables have been included while cal-
culating the summary measures. Müller, C., A. Bondeau, A. Popp, K. Waha, and M. Fader. 2009.
“Climate Change Impacts on Agricultural Yields.” Background
note for the WDR 2010.
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(accessed July 2009).
Selected World Development
Indicators 2010
I
n this year’s edition, development data are presented in from differences in the capabilities and resources devoted
six tables presenting comparative socioeconomic data to basic data collection and compilation. For some topics,
for more than 130 economies for the most recent year competing sources of data require review by World Bank
for which data are available and, for some indicators, staff members to ensure that the most reliable data available
for an earlier year. An additional table presents basic indica- are presented. In some instances, where available data are
tors for 78 economies with sparse data or with populations deemed too weak to provide reliable measures of levels and
of less than 3 million. trends or do not adequately adhere to international stan-
The indicators presented here are a selection from more dards, the data are not shown.
than 800 included in World Development Indicators 2009. The data presented are generally consistent with those in
Published annually, World Development Indicators (WDI) World Development Indicators 2009. However, data have been
reflects a comprehensive view of the development process. revised and updated wherever new information has become
The WDI’s six sections recognize the contribution of a wide available. Differences may also reflect revisions to historical
range of factors: progress on the Millennium Development series and changes in methodology. Thus data of different
Goals and human capital development, environmental sus- vintages may be published in different editions of World
tainability, macroeconomic performance, private sector Bank publications. Readers are advised not to compile data
development and the investment climate, and the global series from different publications or different editions of
links that influence the external environment for develop- the same publication. Consistent time-series data are avail-
ment. Note that this year’s poverty table (table 2) includes able on World Development Indicators 2009 CD-ROM and
poverty estimates using the international poverty lines of through WDI Online.
$1.25 a day and $2 a day that are based on new purchasing All dollar figures are in current U.S. dollars unless other-
power parity (PPP) estimates benchmarked to 2005. wise stated. The various methods used to convert from national
World Development Indicators is complemented by a sep- currency figures are described in the Technical notes.
arately published database that gives access to more than Because the World Bank’s primary business is provid-
800 time-series indicators for 227 economies and regions. ing lending and policy advice to its low- and middle-income
This database is available through an electronic subscription members, the issues covered in these tables focus mainly on
(WDI Online) or as a CD-ROM. these economies. Where available, information on the high-
income economies is also provided for comparison. Readers
Data sources and methodology may wish to refer to national statistical publications and pub-
Socioeconomic and environmental data presented here lications of the OECD and the European Union (EU) for more
are drawn from several sources: primary data collected by information on the high-income economies.
the World Bank, member country statistical publications;
research institutes; and international organizations such as Classification of economies and
the United Nations (UN) and its specialized agencies, the summary measures
International Monetary Fund (IMF), and the Organisation The summary measures at the bottom of most tables
for Economic Co-operation and Development (OECD) (see include economies classified by income per capita and by
the Data Sources following the Technical notes for a com- region. gross national income (GNI) per capita is used to
plete listing). Although international standards of cover- determine the following income classifications: low-income,
age, defi nition, and classification apply to most statistics $975 or less in 2008; middle-income, $976 to $11,905; and
reported by countries and international agencies, there are high-income, $11,906 or more. A further division at GNI
inevitably differences in timeliness and reliability arising per capita $3,855 is made between lower-middle-income
375
376 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
Table 2 Poverty
National poverty line International poverty line
Table 2 Poverty
National poverty line International poverty line
a. Expenditure base. b. Covers urban area only. c. Income base. d. Adjusted by spatial consumer price index information. e. Due to security concerns, the survey covered only 56 percent of
rural villages and 65 percent of the rural population. f. Weighted average of urban and rural estimates. g. Covers rural area only. h. Due to change in survey design, the most recent survey is not
strictly comparable with the previous one. i. Survey covers Asunción metropolitan area.
Table 3 Millennium Development Goals: eradicating poverty and improving lives
Develop a
Achieve global
universal Promote Reduce Improve partnership
primary gender child maternal Combat HIV/AIDS Ensure environmental for
Eradicate extreme poverty and hunger education equality mortality health and other diseaes sustainability development
Ratio of
Share of girls to boys
poorest enrolllments Maternal Carbon Access to
quintile in Prevalence in primary Under- mortality HIV dioxide improved
national Vulnerable of child Primary and fi ve rate per prevalence Incidence of emissions sanitation Internet
consumption employment malnutrition completion secondary mortality 100,000 % of tuberculosis per capita facilities users
or income % of % of children rate school rate per live population per 100,000 metric % of per 100
% employment under 5 % % 1,000 births ages 15–49 people tons population peoplea
b b
1990–2007 2007 2000–07 2007 2007 2007 2005 2007 2007 2005 2006 2008
382
Table 3 Millennium Development Goals: eradicating poverty and improving lives
Develop a
Achieve global
universal Promote Reduce Improve partnership
primary gender child maternal Combat HIV/AIDS Ensure environmental for
Eradicate extreme poverty and hunger education equality mortality health and other diseaes sustainability development
Ratio of
Share of girls to boys
poorest enrolllments Maternal Carbon Access to
quintile in Prevalence in primary Under- mortality HIV dioxide improved
national Vulnerable of child Primary and fi ve rate per prevalence Incidence of emissions sanitation Internet
consumption employment malnutrition completion secondary mortality 100,000 % of tuberculosis per capita facilities users
or income % of % of children rate school rate per live population per 100,000 metric % of per 100
% employment under 5 % % 1,000 births ages 15–49 people tons population peoplea
b b
1990–2007 2007 2000–07 2007 2007 2007 2005 2007 2007 2005 2006 2008
383
384 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
Technical notes Bank publications. Consistent time series are available from
These technical notes discuss the sources and methods used the World Development Indicators 2009 CD-ROM and in
to compile the indicators included in this edition of Selected WDI Online.
World Development Indicators. The notes follow the order
in which the indicators appear in the tables. Ratios and growth rates
For ease of reference, the tables usually show ratios and rates
Sources of growth rather than the simple underlying values. Values
The data published in the Selected World Development in their original form are available from the World Devel-
Indicators are taken from World Development Indicators opment Indicators 2009 CD-ROM. Unless otherwise noted,
2009. Where possible, however, revisions reported since growth rates are computed using the least-squares regres-
the closing date of that edition have been incorporated. In sion method (see Statistical methods). Because this method
addition, newly released estimates of population and GNI takes into account all available observations during a period,
per capita for 2008 are included in table 1 and table 6. the resulting growth rates reflect general trends that are not
The World Bank draws on a variety of sources for the sta- unduly influenced by exceptional values. To exclude the
tistics published in the World Development Indicators. Data on effects of inflation, constant price economic indicators are
external debt for developing countries are reported directly used in calculating growth rates. Data in italics are for a year
to the World Bank by developing member countries through or period other than that specified in the column heading—
the Debtor Reporting System. Other data are drawn mainly up to two years before or after for economic indicators and
from the United Nations and its specialized agencies, from up to three years for social indicators, because the latter tend
the IMF, and from country reports to the World Bank. Bank to be collected less regularly and change less dramatically
staff estimates are also used to improve currentness or con- over short periods.
sistency. For most countries, national accounts estimates are
obtained from member governments through World Bank Constant price series
economic missions. In some instances these are adjusted by An economy’s growth is measured by the increase in value
staff numbers to ensure conformity with international defi- added produced by the individuals and enterprises operat-
nitions and concepts. Most social data from national sources ing in that economy. Thus, measuring real growth requires
are drawn from regular administrative files, special surveys, estimates of GDP and its components valued in constant
or periodic censuses. prices. The World Bank collects constant price national
For more detailed notes about the data, please refer to the accounts series in national currencies and recorded in the
World Bank’s World Development Indicators 2009. country’s original base year. To obtain comparable series
of constant price data, it rescales GDP and value added by
Data consistency and reliability industrial origin to a common reference year, 2000 in the
Considerable effort has been made to standardize the data, current version of the World Development Indicators. This
but full comparability cannot be assured, and care must process gives rise to a discrepancy between the rescaled GDP
be taken in interpreting the indicators. Many factors affect and the sum of the rescaled components. Because allocating
data availability, comparability, and reliability: statistical the discrepancy would give rise to distortions in the growth
systems in many developing economies are still weak; sta- rate, it is left unallocated.
tistical methods, coverage, practices, and definitions differ
widely; and cross-country and intertemporal comparisons Summary measures
involve complex technical and conceptual problems that The summary measures for regions and income groups, pre-
cannot be unequivocally resolved. Data coverage may not sented at the end of most tables, are calculated by simple
be complete because of special circumstances or for econo- addition when they are expressed in levels. Aggregate growth
mies experiencing problems (such as those stemming from rates and ratios are usually computed as weighted averages.
conflicts) affecting the collection and reporting of data. For The summary measures for social indicators are weighted
these reasons, although the data are drawn from the sources by population or subgroups of population, except for infant
thought to be most authoritative, they should be construed mortality, which is weighted by the number of births. See
only as indicating trends and characterizing major differ- the notes on specific indicators for more information.
ences among economies rather than offering precise quan- For summary measures that cover many years, calcula-
titative measures of those differences. Discrepancies in data tions are based on a uniform group of economies so that
presented in different editions reflect updates by countries the composition of the aggregate does not change over
as well as revisions to historical series and changes in meth- time. Group measures are compiled only if the data avail-
odology. Thus readers are advised not to compare data series able for a given year account for at least two-thirds of the
between editions or between different editions of World full group, as defined for the 2000 benchmark year. As long
Selected World Development Indicators 2010 391
as this criterion is met, economies for which data are miss- round of price surveys covering 146 countries conducted by
ing are assumed to behave like those that provide estimates. the International Comparison Program. For OECD coun-
Readers should keep in mind that the summary measures tries, data come from the most recent round of surveys,
are estimates of representative aggregates for each topic and completed in 2005. Estimates for countries not included in
that nothing meaningful can be deduced about behavior at the surveys are derived from statistical models using avail-
the country level by working back from group indicators. In able data. For more information on the 2005 International
addition, the estimation process may result in discrepancies Comparison Program, go to www.worldbank.org/data/icp.
between subgroup and overall totals. (World Bank, Eurostat/OECD)
PPP GNI per capita is PPP GNI divided by midyear pop-
Table 1. Key indicators of development ulation. (World Bank, Eurostat/OECD)
Population is based on the de facto definition, which counts Gross domestic product per capita growth is based on
all residents, regardless of legal status or citizenship, except GDP measured in constant prices. Growth in GDP is con-
for refugees not permanently settled in the country of asy- sidered a broad measure of the growth of an economy. GDP
lum, who are generally considered part of the population of in constant prices can be estimated by measuring the total
the country of origin. The values shown are midyear esti- quantity of goods and services produced in a period, valuing
mates. (Eurostat, United Nations Population Division, and them at an agreed set of base year prices, and subtracting the
World Bank) cost of intermediate inputs, also in constant prices. See the
Average annual population growth rate is the exponen- section on Statistical methods for details of the least-squares
tial rate of change for the period (see the section on Sta- growth rate. (World Bank, Eurostat/OECD)
tistical methods). (Eurostat, United Nations Population Life expectancy at birth is the number of years a new-
Division, and World Bank) born baby would live if patterns of mortality prevailing at its
Population density is midyear population divided by birth were to stay the same throughout its life. Data are pre-
land area in square kilometers. Land area is a country’s total sented for males and females separately. (Eurostat, United
area, excluding area under inland water bodies. (Eurostat, Nations Population Division, World Bank)
United Nations Population Division, and World Bank) Adult literacy rate is the percentage of persons aged 15
Population age composition, ages 0–14 refers to the per- and older who can, with understanding, read and write a
centage of the total population that is ages 0–14. (Eurostat, short, simple statement about their everyday life. In practice,
United Nations Population Division, and World Bank) literacy is difficult to measure. To estimate literacy using
Gross national income (GNI) is the broadest measure such a defi nition requires census or survey measurements
of national income. It measures total value added from under controlled conditions. Many countries estimate the
domestic and foreign sources claimed by residents. GNI number of literate people from self-reported data. Some use
comprises GDP plus net receipts of primary income from educational attainment data as a proxy but apply different
foreign sources. Data are converted from national currency lengths of school attendance or level of completion. Because
to current U.S. dollars using the World Bank Atlas method. definition and methodologies of data collection differ across
This involves using a three-year average of exchange rates to countries, data need to be used with caution. (UNESCO
smooth the effects of transitory exchange rate fluctuations. Institute for Statistics)
(See the section on Statistical methods for further discus-
sion of the Atlas method.) (World Bank) Table 2. Poverty
GNI per capita is GNI divided by midyear population. It The World Bank periodically prepares poverty assessments
is converted into current U.S. dollars by the Atlas method. of countries in which it has an active program, in close col-
The World Bank uses GNI per capita in U.S. dollars to clas- laboration with national institutions, other development
sify economies for analytical purposes and to determine agencies, and civil society groups, including poor people’s
borrowing eligibility. (World Bank) organizations. Poverty assessments report the extent and
PPP gross national income is GNI converted into inter- causes of poverty and propose strategies to reduce it. Since
national dollars using purchasing power parity (PPP) con- 1992 the World Bank has conducted about 200 poverty
version factors, is included. Because exchange rates do not assessments, which are the main source of the poverty esti-
always reflect differences in price levels between countries, mates using national poverty lines presented in the table.
this table converts GNI and GNI per capita estimates into Countries report similar assessments as part of their Poverty
international dollars using PPP rates. PPP rates provide Reduction Strategies.
a standard measure allowing comparison of real levels of The World Bank also produces poverty estimates using
expenditure between countries, just as conventional price international poverty lines to monitor progress in poverty
indexes allow comparison of real values over time. The reduction globally. The fi rst global poverty estimates for
PPP conversion factors used here are derived from the 2005 developing countries were produced for World Development
392 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
Report 1990: Poverty using household survey data for 22 the latest information on the cost of living in developing
countries (Ravallion, Datt, and van de Walle 1991). Since countries.
then there has been considerable expansion in the number
of countries that field household income and expenditure Quality and availability of survey data. Poverty estimates
surveys. are derived using surveys fielded to collect, among other
things, information on income or consumption from a sam-
National and international poverty lines. National poverty ple of households. To be useful for poverty estimates, sur-
lines are used to make estimates of poverty consistent with veys must be nationally representative and include sufficient
the country’s specific economic and social circumstances information to compute a comprehensive estimate of total
and are not intended for international comparisons of pov- household consumption or income (including consumption
erty rates. The setting of national poverty lines reflects local or income from own production), from which it is possible
perceptions of the level of consumption or income needed to construct a correctly weighted distribution of consump-
not to be poor. The perceived boundary between poor and tion or income per person. Over the past 20 years there has
not poor rises with the average income of a country and so been considerable expansion in the number of countries that
does not provide a uniform measure for comparing pov- field surveys and in the frequency of the surveys. The quality
erty rates across countries. Nevertheless, national poverty of their data has improved greatly as well. The World Bank’s
estimates are clearly the appropriate measure for setting poverty monitoring database now includes more than 600
national policies for poverty reduction and for monitoring surveys representing 115 developing countries. More than
their results. 1.2 million randomly sampled households were interviewed
International comparisons of poverty estimates entail in these surveys, representing 96 percent of the population
both conceptual and practical problems. Countries have of developing countries.
different definitions of poverty, and consistent comparisons
across countries can be difficult. Local poverty lines tend to Measurement issues using survey data. Besides the fre-
have higher purchasing power in rich countries, where more quency and timeliness of survey data, other data issues arise
generous standards are used, than in poor countries. Inter- in measuring household living standards. One relates to the
national poverty lines attempt to hold the real value of the choice of income or consumption as a welfare indicator.
poverty line constant across countries, as is done when mak- Income is generally more difficult to measure accurately,
ing comparisons over time, regardless of average income of and consumption comes closer to the notion of standard
countries. of living. And income can vary over time even if the stan-
Since World Development Report 1990 the World Bank dard of living does not. But consumption data are not always
has aimed to apply a common standard in measuring available: the latest estimates reported here use consump-
extreme poverty, anchored to what poverty means in the tion for about two-thirds of countries. Another issue is that
world’s poorest countries. The welfare of people living in even similar surveys may not be strictly comparable because
different countries can be measured on a common scale by of differences in number of consumer goods they identify,
adjusting for differences in the purchasing power of cur- a difference in the length of the period over which respon-
rencies. The commonly used $1 a day standard, measured dents must recall their expenditures, or differences in the
in 1985 international prices and adjusted to local currency quality and training of enumerators. Selective nonresponse
using PPPs, was chosen for World Development Report 1990 are also a concern in some surveys.
because it was typical of the poverty lines in low-income Comparisons of countries at different levels of develop-
countries at the time. Later this $1 a day line was revised to ment also pose a potential problem because of differences
be $1.08 a day measured in 1993 international prices. More in the relative importance of the consumption of nonmar-
recently, the international poverty lines were revised using ket goods. The local market value of all consumption in
the new data on PPPs compiled by the 2005 round of the kind (including own production, particularly important
International Comparison Program, along with data from in underdeveloped rural economies) should be included in
an expanded set of household income and expenditure sur- total consumption expenditure, but may not be. Surveys
veys. The new extreme poverty line is set at $1.25 a day in now routinely include imputed values for consumption
2005 PPP terms, which represents the mean of the poverty in-kind from own-farm production. Imputed profit from
lines found in the poorest 15 countries ranked by per capita the production of nonmarket goods should be included in
consumption. The new poverty line maintains the same income, but is not always done (such omissions were a big-
standard for extreme poverty—the poverty line typical of ger problem in surveys before the 1980s). Most survey data
the poorest countries in the world—but updates it using now include valuations for consumption or income from
own production, but valuation methods vary.
Selected World Development Indicators 2010 393
Maternal mortality rate is the number of women who simple but protected pit latrines to flush toilets with a sewer-
die from pregnancy-related causes during pregnancy and age connection. To be effective, facilities must be correctly
childbirth per 100,000 live births. The values are modeled constructed and properly maintained. (WHO and UNICEF)
estimates. The modeled estimates are based on an exercise by Internet users are people with access to the worldwide
WHO, United Nations Children’s Fund (UNICEF), United network. (International Telecommunications Division)
Nations Population Fund (UNFPA), and World Bank. For
countries with complete vital registration systems with good Table 4. Economic activity
attribution of cause of death information, the data are used Gross domestic product is gross value added, at purchas-
as reported. For countries with national data, either from ers’ prices, by all resident producers in the economy plus
complete vital registration systems with uncertain or poor any taxes and minus any subsidies not included in the
attribution of cause of death information, or from household value of the products. It is calculated without deducting for
surveys, reported maternal mortality was adjusted usually depreciation of fabricated assets or for depletion or degra-
by a factor of underenumeration and misclassification. For dation of natural resources. Value added is the net output
countries with no empirical national data (about 35 per- of an industry after adding up all outputs and subtracting
cent of countries), maternal mortality was estimated with a intermediate inputs. The industrial origin of value added is
regression model using socioeconomic information, includ- determined by the International Standard Industrial Clas-
ing fertility, birth attendants, and GDP. (WHO, UNICEF, sification (ISIC) revision 3. The World Bank conventionally
UNFPA, World Bank) uses the U.S. dollar and applies the average official exchange
Prevalence of HIV is the percentage of people ages 15–49 rate reported by the IMF for the year shown. An alterna-
who are infected with HIV. Adult HIV prevalence rates tive conversion factor is applied if the official exchange rate
reflect the rate of HIV infection in each country’s popula- is judged to diverge by an exceptionally large margin from
tion. Low national prevalence rates can be very misleading, the rate effectively applied to transactions in foreign cur-
however. They often disguise serious epidemics that are rencies and traded products. (World Bank, OECD, United
initially concentrated in certain localities or among specific Nations)
population groups and threaten to spill over into the wider Gross domestic product average annual growth rate is
population. In many parts of the developing world, most calculated from constant price GDP data in local currency.
new infections occur in young adults, with young women (World Bank, OECD, United Nations)
especially vulnerable. (Joint United Nations Programme on Agricultural productivity is the ratio of agricultural
HIV/AIDS [UNAIDS] and WHO) value added, measured in 2000 U.S. dollars, to the num-
Incidence of tuberculosis is the estimated number of ber of workers in agriculture. Agricultural productivity is
new tuberculosis cases (pulmonary, smear positive, and measured by value added per unit of input. Agricultural
extrapulmonary). Tuberculosis is one of the main causes of value added includes that from forestry and fishing. Thus
death from a single infectious agent among adults in devel- interpretations of land productivity should be made with
oping countries. In high-income countries tuberculosis has caution. (FAO)
reemerged largely as a result of cases among immigrants. Value added is the net output of an industry after add-
The estimates of tuberculosis incidence in the table are ing up all outputs and subtracting intermediate inputs. The
based on a approach in which reported cases are adjusted industrial origin of value added is determined by the ISIC
using the ratio of case notifications to the estimated share of revision 3. (World Bank)
cases detected by panels of 80 epidemiologists convened by Agriculture value added corresponds to ISIC divisions
the WHO. (WHO) 1–5 and includes forestry and fishing. (World Bank)
Carbon dioxide emissions are those stemming from the Industry value added comprises mining, manufactur-
burning of fossil fuels and the manufacture of cement and ing, construction, electricity, water, and gas (ISIC divisions
include carbon dioxide produced during consumption of 10–45). (World Bank, OECD, United Nations)
solid, liquid, and gas fuels and gas flaring divided by midyear Services value added correspond to ISIC divisions 50–99.
population (Carbon Dioxide Information Analysis Center, (World Bank, OECD, United Nations)
World Bank). Household final consumption expenditure is the market
Access to improved sanitation facilities is the percent- value of all goods and services, including durable products
age of the population with at least adequate access to excreta (such as cars, washing machines, and home computers), pur-
disposal facilities (private or shared, but not public) that can chased by households. It excludes purchases of dwellings but
effectively prevent human, animal, and insect contact with includes imputed rent for owner-occupied dwellings. It also
excreta (facilities do not have to include treatment to render includes payments and fees to governments to obtain per-
sewage outflows innocuous). Improved facilities range from mits and licenses. Here, household consumption expenditure
Selected World Development Indicators 2010 395
includes the expenditures of nonprofit institutions serving Manufactured exports comprise the commodities in
households, even when reported separately by the country. Standard Industrial Trade Classification (SITC) sections
In practice, household consumption expenditure may include 5 (chemicals), 6 (basic manufactures), 7 (machinery and
any statistical discrepancy in the use of resources relative to transport equipment), and 8 (miscellaneous manufactured
the supply of resources. (World Bank, OECD) goods), excluding division 68 (United Nations Statistics
General government fi nal consumption expenditure Division Commodity Trade statistics database).
includes all government current expenditures for purchases High technology exports are products with high R&D
of goods and services (including compensation of employ- intensity. They include high-technology products such as in
ees). It also includes most expenditures on national defense aerospace, computers, pharmaceuticals, scientific instru-
and security, but excludes government military expendi- ments, and electrical machinery. (United Nations Statistics
tures that are part of government capital formation. (World Division Commodity Trade statistics database)
Bank, OECD) Current account balance is the sum of net exports of goods
Gross capital formation consists of outlays on additions and services, net income, and net current transfers. (IMF)
to the fi xed assets of the economy plus net changes in the Foreign direct investment net inflows (FDI) is net inflows
level of inventories and valuables. Fixed assets include land of investment to acquire a lasting management interest (10
improvements (fences, ditches, drains, and so on); plant, percent or more of voting stock) in an enterprise operating in
machinery, and equipment purchases; and the construction an economy other than that of the investor. It is the sum of
of buildings, roads, railways, and the like, including com- equity capital, reinvestment of earnings, other long-term cap-
mercial and industrial buildings, offices, schools, hospitals, ital, and short-term capital, as shown in the balance of pay-
and private dwellings. Inventories are stocks of goods held ments. (Data on FDI are based on balance of payments data
by firms to meet temporary or unexpected fluctuations in reported by the IMF, supplemented by World Bank staff esti-
production or sales, and “work in progress.” According to mates using data reported by the United Nations Conference
the 1993 SNA, net acquisitions of valuables are also consid- on Trade and Development and official national sources.)
ered capital formation. (World Bank, OECD) Net official development assistance (ODA) from the
External balance of goods and services is exports of high-income members of the OECD is the main source of
goods and services less imports of goods and services. Trade official external finance for developing countries, but ODA
in goods and services comprise all transactions between is also disbursed by some important donor countries that
residents of a country and the rest of the world involving are not members of OECD’s DAC. DAC has three criteria for
a change in ownership of general merchandise, goods sent ODA: it is undertaken by the official sector; it promotes eco-
for processing and repairs, nonmonetary gold, and services. nomic development or welfare as a main objective; and it is
(World Bank, OECD) provided on concessional terms, with a grant element of at
GDP implicit deflator reflects changes in prices for all least 25 percent on loans (calculated at a 10 percent discount
final demand categories, such as government consumption, rate).
capital formation, and international trade, as well as the Official development assistance comprises grants and
main component, private final consumption. It is derived as loans, net of repayments, that meet the DAC defi nition
the ratio of current to constant price GDP. The GDP deflator of ODA and are made to countries and territories on the
may also be calculated explicitly as a Paasche price index in DAC list of aid recipients. The new DAC list of recipients
which the weights are the current period quantities of output. is organised on more objective needs-based criteria than
(National accounts indicators for most developing countries its predecessors and includes all low- and middle-income
are collected from national statistical organizations and cen- countries, except those that are members of the G8 or the
tral banks by visiting and resident World Bank missions. Data European Union (including countries with a fi rm date for
for high-income economies come from the OECD.) EU admission). (OECD DAC)
Total external debt is debt owed to nonresidents repayable
Table 5. Trade, aid, and finance in foreign currency, goods, or services. It is the sum of public,
Merchandise trade exports show the free on board (f.o.b.) publicly guaranteed, and private nonguaranteed long-term
value of goods provided to the rest of the world valued in U.S. debt, use of IMF credit, and short-term debt. Short-term debt
dollars. includes all debt having an original maturity of one year or
Merchandise trade imports show the c.i.f. value of goods less and interest in arrears on long-term debt. (World Bank)
(the cost of the goods including insurance and freight) pur- Present value of external debt is the sum of short-term
chased from the rest of the world valued in U.S. dollars. external debt plus the discounted sum of total debt service
(Data on merchandise trade come from the World Trade payments due on public, publicly guaranteed, and private non-
Organization (WTO) in its annual report.) guaranteed long-term external debt over the life of existing
396 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0
loans. (Data on external debt are mainly from reports to the In this equation, X is the variable, t is time, and a = log Xo
World Bank through its Debtor Reporting System from mem- and b = ln (1 + r ) are the parameters to be estimated. If b* is
ber countries that have received International Bank for Recon- the least-squares estimate of b, the average annual growth rate,
struction and Development (IBRD) loans or International r, is obtained as [exp(b* )–1] and is multiplied by 100 to express
Development Association (IDA) credits, with additional infor- it as a percentage.
mation from the files of the World Bank, the IMF, the Afri- The calculated growth rate is an average rate that is repre-
can Development Bank and African Development Fund, the sentative of the available observations over the entire period.
Asian Development Bank and Asian Development Fund, and It does not necessarily match the actual growth rate between
the Inter American Development Bank. Summary tables of the any two periods.
external debt of developing countries are published annually
in the World Bank’s Global Development Finance.) Exponential growth rate
Domestic credit provided by banking sector includes all The growth rate between two points in time for certain
credit to various sectors on a gross basis, with the exception demographic data, notably labor force and population, is
of credit to the central government, which is net. The banking calculated from the equation
sector includes monetary authorities, deposit money banks, r = ln (pn /p1)/n,
and other banking institutions for which data are avail-
where pn and p1 are the last and fi rst observations in the
able (including institutions that do not accept transferable
period, n is the number of years in the period, and ln is the
deposits but do incur such liabilities as time and savings
natural logarithm operator. This growth rate is based on
deposits). Examples of other banking institutions include
a model of continuous, exponential growth between two
savings and mortgage loan institutions and building and
points in time. It does not take into account the intermediate
loan associations. (Data are from the IMF’s International
values of the series. Note also that the exponential growth
Finance Statistics.)
rate does not correspond to the annual rate of change mea-
Net migration is the net total of migrants during the
sured at a one-year interval which is given by
period. It is the total number of immigrants less the total
number of emigrants, including both citizens and nonciti- (pn – pn–1)/pn–1.
zens. Data are five-year estimates. (Data are from the United
Nations Population Division’s World Population Prospects: World Bank Atlas method
The 2008 Revision.) In calculating GNI and GNI per capita in U.S. dollars for
certain operational purposes, the World Bank uses the Atlas
Table 6. Key indicators for other economies conversion factor. The purpose of the Atlas conversion factor
See Technical notes for Table 1. Key indicators of development. is to reduce the impact of exchange rate fluctuations in the
cross-country comparison of national incomes. The Atlas
Statistical methods conversion factor for any year is the average of a country’s
This section describes the calculation of the least-squares exchange rate (or alternative conversion factor) for that year
growth rate, the exponential (endpoint) growth rate, and the and its exchange rates for the two preceding years, adjusted
World Bank’s Atlas methodology for calculating the conver- for the difference between the rate of inflation in the country
sion factor used to estimate GNI and GNI per capita in U.S. and that in Japan, the United Kingdom, the United States,
dollars. and the Euro area. A country’s inflation rate is measured by
the change in its GDP deflator. The inflation rate for Japan,
Least-squares growth rate the United Kingdom, the United States, and the Euro area,
representing international inflation, is measured by the
Least-squares growth rates are used wherever there is a suf-
change in the special drawing right (SDR) deflator. (SDRs
ficiently long-time series to permit a reliable calculation. No
are the IMF’s unit of account.) The SDR deflator is calcu-
growth rate is calculated if more than half the observations
lated as a weighted average of these countries’ GDP defla-
in a period are missing.
tors in SDR terms, the weights being the amount of each
The least-squares growth rate, r, is estimated by fitting a
country’s currency in one SDR unit. Weights vary over time
linear regression trendline to the logarithmic annual values
because both the composition of the SDR and the relative
of the variable in the relevant period. The regression equa-
exchange rates for each currency change. The SDR deflator
tion takes the form
is calculated in SDR terms first and then converted to U.S.
ln Xt = a + bt, dollars using the SDR to dollar Atlas conversion factor. The
which is equivalent to the logarithmic transformation of the Atlas conversion factor is then applied to a country’s GNI.
compound growth equation, The resulting GNI in U.S. dollars is divided by the midyear
population to derive GNI per capita.
Xt = Xo (1 + r) t.
Selected World Development Indicators 2010 397
When official exchange rates are deemed to be unreliable in year t, Yt is current GNI (local currency) for year t, and Nt
or unrepresentative of the effective exchange rate during a is the midyear population for year t.
period, an alternative estimate of the exchange rate is used
in the Atlas formula (see below). Alternative conversion factors
The following formulas describe the calculation of the The World Bank systematically assesses the appropriateness
Atlas conversion factor for year t : of official exchange rates as conversion factors. An alterna-
tive conversion factor is used when the official exchange
1⎡ ⎛ p ps$ ⎞ ⎛ p ps$ ⎞ ⎤
et* = ⎢et − 2 ⎜ t / st$ ⎟ + et −1 ⎜ t / st$ ⎟ + et ⎥ rate is judged to diverge by an exceptionally large margin
3 ⎢⎣ ⎝ pt − 2 pt − 2 ⎠ ⎝ pt −1 pt −1 ⎠ ⎥⎦ from the rate effectively applied to domestic transactions
of foreign currencies and traded products. This applies to
and the calculation of GNI per capita in U.S. dollars for year t: only a small number of countries, as shown in primary data
documentation table in World Development Indicators 2009.
Yt $ = (Yt /Nt)/et*
Alternative conversion factors are used in the Atlas meth-
where et* is the Atlas conversion factor (national currency to odology and elsewhere in the Selected World Development
the U.S. dollar) for year t, et is the average annual exchange Indicators as single-year conversion factors.
rate (national currency to the U.S. dollar) for year t, pt is the
GDP deflator for year t, ptS$ is the SDR deflator in U.S. dollar
terms for year t, Yt $ is the Atlas GNI per capita in U.S. dollars
Index
Boxes, figures, maps, notes, and tables are indicated by b, f, m, n, and t following page numbers.
399
400 INDEX
indigenous people and forest management in, 106–7 car ownership. See automobiles
innovation and new technologies in, 220, 310 Casablanca, flooding risks in, 93b
in Kyoto negotiations, 238b cash-for-work options, 101b
palm oil cultivation in, 148b cash transfer payments, 108
poverty in, 42f catastrophic risk, 51–52, 88
urban planning and infrastructure in, 93b CDM. See Clean Development Mechanism
weather forecasting in, 162 Central America, agriculture in, 17
zero-tillage in, 17b, 154 Central Asia. See Eastern Europe and Central Asia
BRIICS countries, 292 cereal and grains
building code enforcement, 12, 104, 213, 214t, 276 experiments in, 151
building sector and CO2 emissions, 26n5, 203, 213, 223n20, grain trade, 160, 160b, 161m
224n56, 275, 291 pricing, 160, 168, 168f
Bulgaria and financing energy efficiency, 216b productivity, 146, 150
bulk water, 141 C40 Cities Climate Leadership Group, 21b, 210b
burden sharing and opportunistic early action, 236–37, 238b CGIAR. See Consultative Group on International Agricultural
business environment Research
enabling innovation, 307–10 change management. See adaptative management
voluntary programs, 341b Chicago Climate Exchange, 25b, 171
Business Roundtable, 341b children
death rates, 39, 95, 98
C disproportionate consequences of climate change on, 105
Cairo and urban planning, 92 Chile, tradable water rights in, 141, 142
California China
energy-efficiency and renewable energy programs in, 15, 192b, agency for climate change in, 20, 333b
215b, 329 aquaculture in, 157
water resource management in, 140b building stock in, 203
Canada carbon capture and storage technology in, 51
biodiversity management in, 127 carbon dioxide emissions in, 11, 192b
climate education in schools in, 329b CDM revenues to, 262t, 265
emissions reduction in, 192b cities encouraging energy efficiency in, 21b
timber industry in, 40 clean cooking fuel in, 311, 312b
carbon cap-and-trade system, 208, 268b, 269, 270, 339b competitive tendering of renewable energy in, 219
carbon capture and storage (CSS) technology, 16, 51, 134, 189, crop decrease due to climate change, 40
198, 204, 209b, 289, 298, 299b, 312n4 disproportionate consequences of climate change on, 6b
carbon credits, 23–24, 171, 261 emissions reduction in, 192b, 291
carbon cycle, 71b, 174n54 energy demand reductions in, 202b, 238b
carbon dioxide (CO2) concentration, 4, 4f, 71, 71b. See also energy-efficiency investment in, 292
greenhouse gases energy-efficiency laws in, 213
from burning biomass, 146 ESCO industry in, 216
cities encouraging carbon neutral behavior, 21b flood information in, 100
from coal consumption, 191 Ganges water allocation in, 176n174
economic growth and changing carbon footprints, 44–45, government regulation in, 330
61n43 greenhouse gas reduction and premature deaths in, 212
long-term effects of, 10, 11f, 81 green taxes in, 47
loss in consumption relative to non-warming, 8b innovation and new technologies in, 21, 220, 291, 301, 308,
low-carbon technologies. See low-carbon technologies 310
carbon labeling, 253–54, 328 institutional reform for climate change in, 333b
carbon leakage, 253 migration in, 110b
Carbon Partnership Facility, 302 renewable energy patenting in, 292
carbon price and markets, 134, 169–71, 170f, 172b, 271–72, 294, stimulus packages and green spending in, 59, 59f
306–7 transportation by e-bikes in, 307, 307f
carbon sequestration, 169–71, 172b, 177n231, 274b, 290b transportation collapse due to January 2008 storm in, 45, 45f
carbon sinks, 71b, 78 water management and monitoring in, 165–66
carbon tax. See taxation weather forecasting systems in, 162
cardiovascular illness, 41 wind energy in, 219b, 254, 287
Caribbean. See Latin America and the Caribbean Chinese Academy of Social Sciences, 238b
Caribbean Catastrophe Risk Insurance Facility, 13, 103, 105b cinnamon, 152b
402 INDEX
cities. See also local government response to climate change Climate Change Partnership (London), 90
at-risk locations in coastal zones. See coastal zones at risk climate finance. See finance
energy consumption in, 194 climate-friendly products, 254
improving urban design, 60, 91–95, 93b, 104 “climate insurance,” 8b, 9, 27n33, 101–2
fostering synergies between mitigation and adaptation, 95, Climate Investment Funds, 275
95b climate regime. See international climate regime
mitigation and development co-benefits, 210b climate shocks, 40, 44, 107, 176n189
smart urban planning, 211 climate-smart development policy, 19–20, 44, 88, 95b, 190, 206,
Kyoto Protocol and, 21b, 210b 207f, 207t, 292
migration to, 92, 110b climate-smart government, 331–32, 332f
population growth in, 40, 91, 194 climate-smart technologies, 16, 95, 292–93, 298. See also
response to climate change, 20, 21b, 91–95, 93b, 96b, 96m innovation and new technologies; low-carbon
water consumption in, 141 technologies
world in 2050 and after, 88 climate system, workings of, 70–73
Cities for Climate Protection Campaign, 21b coal consumption, 11, 51, 72, 191, 193f. See also fossil fuel
civil liability for climate change, 53b Coalition for Rainforests, 25b
Clean Development Mechanism (CDM), 21, 23–24, 25b, 245–46, coastal zones at risk, 91–95, 91m, 93b, 112n30, 158, 302b
254 co-benefits
activity-based, 272–73 CDM, 266b
administrative improvements to, 273 design policies and, 339
afforestation and reforestation, coverage of, 274 urban mitigation and development, 210b
agricultural soil carbon sequestration projects, 169 coffee production, 152b, 153
assessing co-benefits of, 266b collective action, 11–14, 161. See also international cooperation
changes to, 272–73 Colombia
ecosystem services payments, 128 integrated land use in, 153, 153f
financing of low-carbon projects, 301 migration in, 109
potential regional delivery and carbon revenues of, 261–62, stimulus packages and green spending in, 60
262t, 281n6 Common Agricultural Policy (EU), 172
shortcomings of, 233, 257, 265–66, 272 communicable diseases, 39, 41, 95–98, 97m. See also specific
inefficient contribution to sustainable development, 265 diseases
limited scope, 257, 265–66, 301 communicating about climate change, 323b, 327–28, 328b, 340
questionable environmental integrity, 265 community-based conservation, 127
weak governance, 265 community involvement. See participatory design and
weakness of incentive, 266 implementation
tax levy on, 266–67, 267t, 278 competition and new technologies, 291–92, 299
trend-changing market mechanism, 273 conditionality and position of developing countries, 239–40
clean technology and energy, 21–22, 203, 223n2, 224n65 conflicts and migration, 109
cooking. See cooking with clean fuels “conservation agriculture,” 154
prize competitions for, 300 conservation easements, 154, 175n113
tariffs on, 308 Conservation Reserve Program (U.S.D.A.), 170
trade potential for, 254, 281n8 conservation reserves, 126–27
Clean Technology Fund, 21, 221b, 302 Consultative Group on International Agricultural Research
Climate Action Partnership, 341b (CGIAR), 305, 306b
Climate Analysis Indicators Tool, 26n9 consumers and energy efficiency, 322–30, 322f, 323f. See also
climate change. See also temperature individual behavior
awareness of, 19–20, 73–76, 322–24, 323f, 324f, 326f carbon labeling, 253–54, 328
communicating about, 323b, 327–28, 328b, 340 education initiatives, 208, 214t, 216–17
crossing thresholds of irreversible catastrophe, 78–79 financial incentives, 213–14, 224n78
economics of, 7–10, 8b contingent financing, 104
effect on development and poverty alleviation, 1, 7–10, 26n5, 37 controlled-release nitrogen, 17b
global threat of, 4–7, 75–76, 76f, 78–79 Convention on International Trade in Endangered Species, 253
green federalism and, 336–37b Convention on the Law of the Non-Navigational Uses of
major factors affecting since Industrial Revolution, 72–73, 73f International Watercourses (UN), 158–59
need for immediate action, 3, 4, 10–11. See also mitigation actions cooking with clean fuels, 48, 191, 273, 311, 312b
rate of change, 1, 11f, 40, 70, 71, 73–76 Copenhagen, encouraging energy efficiency in, 21b
science of, 70–81 coral reefs, 76, 78b, 127, 157
temperature changes, 74, 75m Cordillera Blanca in Peru and water management, 137
wealth increases, effect on concern about, 327f Costa Rica, agricultural policies protecting biodiversity in, 153
Index 403
cost-benefit analysis, 7, 9, 48–53, 49b, 329 agriculture in, 17, 146, 172
alternative decision-making frameworks for, 54–55 assistance for climate change in, 2–3, 22, 257–85. See also
weather forecasting services, 162 finance
costs. See mitigation costs amount of funding, 257
cost-sharing agreements for technological innovation, 289, 294t, during disasters, 13
297–301 for emissions control promotion, 38, 55–56, 203–4, 221
Côte d’Ivoire, weather patterns and education in, 43 for national adaptation strategies, 247
credits for new technology. See innovation and new technologies
carbon credits, 23–24, 171, 261 support for mitigation efforts of, 244, 245–46
development of policy-based crediting, 246 Bali Action Plan’s treatment of, 244
renewable energy tax credits, 219b biodiversity management in, 127
CSS. See carbon capture and storage (CSS) technology carbon footprint in, 44, 61n43
Cuba, evacuation due to hurricanes in, 92 carbon labeling, effect on, 253–54
cultural services, 124b, 125t climate-smart technologies in, 16
Curitibia, Brazil, and urban planning and infrastructure, 93b cooking with clean fuels in, 191
cyclones. See storms, intensity of disaster and emergency communication in, 100b
disproportionate consequences of climate change on, 5, 5m, 6b,
D 27n26, 37, 40, 55
dams, 17–18, 92, 125, 128, 143 economic growth in, 40, 61n19
dangerous climate change, 27n15, 48, 70, 73 emission rates in, 1, 2f, 3f, 38, 39f, 146
death for emissions control promotion, 38, 55–56, 203–4
child death rates, 39, 95, 98 emission sources in, 194, 195f
climate change responsible for, 95, 98f energy demand in, 51, 191, 193–94, 194f, 203, 235
heat wave (2003) as cause of death in Europe, 40, 41m energy-efficient equipment not available in, 212b
natural disasters as cause of, 98, 113n70 energy subsidies in, 15, 47–48
premature deaths from greenhouse gases, 212 energy transformation in, 190, 195, 203–4, 208, 221, 237, 244
Dechezleprêtre, A., 266b equity issues for. See equity
decision-making processes. See also cost-benefit analysis; food insecurity in, 107, 176n194
information forest management in, 106
adaptative management of, 14f, 18, 60–61, 90 hydropower in, 45
alternative frameworks for, 54–55 innovation and new technologies in, 21, 45, 51, 220–21, 289,
natural resources management, 134 292, 293, 303t, 310
reversible and flexible options, 89–90, 101 insurance availability in, 102, 103f
on water availability, 163 integrating into global architecture, 240–45
weather forecasting and, 162 Kyoto Protocol and, 241
women’s involvement in, 43b land trusts and conservation easements in, 175n112
Declaration of Indigenous Peoples on Climate Change, 128b low-carbon technologies in, 2, 237–38, 239
deforestation. See also Reduced Emissions from Deforestation and marine ecosystem management in, 157
Degradation (REDD) middle-class lifestyle in, 44
agriculture and, 16 mitigation costs for, 9, 9t, 12, 56, 57f
climate change and, 25b, 71, 71b in multitrack climate framework, 22, 241–42
in Japan, 53 population growth in, 40
national and multilateral initiatives to reduce, 273t, 275 risk assessment in, 99b
reduction of, 24, 71b stimulus packages and green spending in, 59
delay in action. See inertia, effects of development. See economic growth
demand side development assistance. See aid finance
energy efficiency, 208 diarrheal diseases, 41, 70, 95, 112n66
tradable green and white certificates schemes, 281n5 digital maps, use of, 164
utility demand-side management, funding of, 216 disability-adjusted life years, loss of, 41
democracies, 322, 337, 338f disaster risk management programs, 20, 43b, 99, 99b
den Elzen, M. G. J., 8b disasters. See natural disasters; specific type of disaster (e.g.,
Denmark floods)
cities encouraging energy efficiency in, 21b “discounted utilitarianism,” 53b
economic growth while cutting emissions in, 218, 218b discount rate in cost-benefit analysis, 48–49, 49b, 53b, 62n69
desalination, 18, 143–44, 174n40 diseases. See communicable diseases; specific diseases
developed countries. See high-income countries dislocations of ecosystems, 4
developing countries diversification in crops, 19b, 151–52, 152b
affordable energy for, 191 Doha Development Agenda (WTO), 162, 251, 254
404 INDEX
domestic policy, 19–20, 288. See also local government response to protection of, 17
climate change resilience of, 74
drinking water, 139–40, 142–43. See also water resources threats to, 16, 70, 74, 76
droughts, 4, 41, 78. See also disaster risk management programs uncertainty in responses of, 40, 136
communities adapting to, 105 world in 2050 and after, 88
drought-tolerant maize, 155b ecosystem services, 124–29, 124b, 125t
increased frequency of, 73, 79, 137–38, 137–38m payment for, 127–28, 128b
Malawi’s weather-based risk management and, 103–4 education
thermal and nuclear energy production and, 191 climate education in schools, 329b
world in 2050 and after, 88 climate shocks and, 43–44, 340
climate-smart practices, teaching of, 95, 208
E consumer education on energy efficiency, 208, 214t, 216–17
early warning systems, 90, 92, 97–98, 99b, 104–5, 162 in engineering, 304, 304f
Earth Fund, 300 health information, teaching of, 98
East Asia and the Pacific. See also specific countries innovation and knowledge infrastructure, 304–6, 305b
aquaculture in, 157 technology absorption and, 303, 304
disability-adjusted life years, loss of, 41 efficiency cost of adaptation funding, 266–69
disproportionate consequences of climate change on, 6b efficient use of energy. See energy
Eastern Europe and Central Asia. See also specific countries Egypt
crop decrease due to climate change in, 40 ancient history and environmental change, 37
disproportionate consequences of climate change on, 6b food, access to markets in, 161
financing energy efficiency in, 216b innovation funding to, 302
green taxes in, 47 tariffs on clean energy technology in, 308
natural gas in, 220 urban planning around Cairo, 92
vector-borne diseases in, 97 water resources in, 139, 143
e-bike transportation, 307, 307f electric cars, 209b, 218, 222, 292
eChoupals (India), 164–65 electricity. See energy
ecoagricultural landscapes, 17, 19b, 25b El Niño Southern Oscillation (ENSO), 79, 162
economic growth, 1, 7, 7b, 26, 26n5, 37–61 El Salvador, women’s empowerment in, 43b
alternative frameworks for decision making and, 54–55 emergency preparedness, 96b, 100–101, 291
balancing with climate change policies, 44–48 emission rates. See also greenhouse gases; headings starting with
empowerment of women and, 43b “carbon”
energy policies and, 191 advocates of more gradual reduction, 8–9, 8b
fiscal recovery packages including green initiatives, 26, 29n93, carbon labeling and, 253–54
58–59, 190b changing from high use, 192b, 193–95, 193f, 198, 198t
green spending, 59–60 in cities, 210b
green taxes and, 47–48 developing countries and, 1, 2f, 3f, 38, 39f
inertia and, 52, 55–58 guardrails and mitigation goals, 54
international climate regime and, 233–40 high-income countries and, 2, 3f, 38, 39f, 192b
lifetime earnings, effect of disaster shocks on, 44 increase (1997–2006), 233, 248
losses caused by natural disasters, 98–99 inertia’s effect on, 10, 81. See also inertia, effects of
normative choices on aggregation and values, 52–53 medium-term emission objectives, 239, 289, 335b
reversal due climate change, 39–44 multitrack framework for international agreements on, 22
savings from energy efficiency, 209–17 negative emissions, 81, 196, 198, 205b, 223n21
sustainable development, 39–48 employment guarantee program (Bangladesh), 13b
tradeoffs, evaluation of, 48–55 empowerment
uncertainties, accounting for, 51–52, 89 of communities to self-protect, 105–11
economics of climate change, 7–10, 8b. See also finance; mitigation of women, 43b
costs energy, 189–222. See also renewable energy; specific types
ecosystems adaptative management of, 14–16, 14f, 80f, 189
agricultural use of, 150, 151f comparing costs, problems in, 217b
carbon cycle and, 71b, 78 competing objectives of energy policies, 191–95
developing countries and, 5 doubling of consumption, 193–95, 193f
economic models and, 49 efficiency, 190, 191, 208, 212–17
ecosystem-based adaptation, 4, 7, 19, 70, 91, 128–29 California programs, 15, 192b, 215b
guardrail approach and, 54 consumer education, 208, 214t, 216–17
marine ecosystems, 78b, 156–57 development benefits of efficient and clean energy, 192b
population growth and, 40 financial incentives, 208, 213–14, 214t, 218–19
Index 405
goals for, 196, 197f, 198, 198t energy demands of, 191
guidelines for measuring when land-related, 25b impact of climate change on, 6, 7b
heat-trapping potential of, 26n8, 71–72 innovation and new technologies in, 220, 287, 293, 301, 303t, 308
increasing emissions (1970–2004), 71–72, 72f migration to, 110b
from land-use change, 146, 194, 224n42, 273 reducing emissions in, 2, 3f, 21, 38, 44, 55, 190, 237
long-term targets for, 81 binding targets, 241, 243
“natural greenhouse effect,” 71 in multitrack climate framework, 22, 241–42
past benefits of, 53b stringent targets and offsets, 280, 282n34
premature deaths from, 212 relocation of carbon-intensive industries from, 253
share of emissions, 196 stimulus packages and green spending in, 59, 59f
historic and 2005, 3f zero-tillage in, 17b
by sector, 195f Hof, A. F., 8b
sources of, 194, 195f Honduras
transition costs to lower emissions, 7 hurricane damage (1998) in, 42, 43b
types of, 70–71, 72f women’s empowerment in, 43b
Greenland ice sheet, 50b, 70, 73, 74f, 78 Hong Kong, car use in, 194
Green Revolution, 150–51, 306b human rights, 53, 53b
green spending, 59–60, 59f Hungary Energy Efficiency Guarantee Fund, 216b
in government procurement, 311 hunger
recovery packages including, 26, 29n93, 58–59 as development priority, 1
green taxes, 47–48, 330 food-for-work program (Bangladesh), 13b
Grenada and Hurricane Ivan, 13, 103 impact of climate change on, 5, 168
gross domestic product (GDP). See economic growth malnutrition, 95
groundwater, 142–43, 163. See also water resources vulnerable-group feeding program (Bangladesh), 13b
Group on Earth Observation, 296b Hurricane Ivan, 13, 103
guardrails and mitigation goals, 54 Hurricane Katrina, 45, 50b, 102
Guatemala, women’s empowerment in, 43b Hurricane Mitch, 17, 42, 43b, 153
Gulf of Mexico, 6b hurricanes, 12, 92, 100, 302b
Guyana and urban flooding, 93 hybrid approaches, 235
hybrid cars. See automobiles
H hydrological cycle, 136f, 137–38
“habitat banking,” 127, 129n14 hydropower, 45, 191, 204, 205b, 217
Haites, E., 266b Hyogo Framework of Action (UN), 99
halocarbon compounds, 81n10
harmonization issues, 264, 289, 294–95, 294t, 297 I
health IAASTD. See Integrated Assessment of Agricultural Knowledge,
air pollution reduction and, 208, 212 Science, and Technology for Development
climate shocks and, 43–44 IDA. See International Development Association
diseases. See communicable diseases; specific diseases IEA. See International Energy Agency
system adaptation, 19b, 88, 95–98, 112n66 IFC. See International Finance Corporation
vaccine program of GAVI Alliance and World Bank, 299–300 Ilo, Peru, and urban planning, 92
women’s empowerment and, 43b IMAGE energy-climate model, 201b, 223–24n28
heat waves incandescent light bulbs, 294
as climate change consequence, 70 incentives
heat-health warning systems, 95, 96b to developing countries for lower carbon paths, 258
impact of, 19b, 40, 41m for private finance, 276, 304, 306–7
thermal and nuclear energy production and, 191 for renewable energy, 218–19
“hedging actions,” 54, 89 for resource users, 172–73
high-income countries India
aid to developing countries, 13, 38, 257–85. See also developing agency for climate change in, 20, 333b
countries, subheading: assistance for climate change in agriculture in
Bali Action Plan’s treatment of, 244 crop decrease due to climate change, 40–41
carbon footprint in, 21, 44, 61n43 eChoupals and soybean crops, 164–65
carbon pricing in, 212 genetic modification of crops in, 155b
criticisms of exempting developing countries from emission inequality and climatic risk, 43
standards, 253 seed development, 308
emission rates in, 1, 2, 2f, 3f, 38, 39f, 44, 61n46 zero-tillage, 17b, 154
emission sources in, 194, 195f CDM revenues to, 262t, 265
408 INDEX
Integrated Assessment of Agricultural Knowledge, Science, and irrigation systems, 17b, 18, 135, 141, 144–45, 149
Technology for Development (IAASTD), 154, 168 Israel and venture capital, 301
intellectual property rights, 298, 309–10, 309f. See also patents ITER, 297–98, 298b
interagency coordination, 333
Inter-American Institute for Global Change Research, 297 J
intergenerational equity, 53b Japan
Intergovernmental Panel on Climate Change (IPCC) car use in, 194
on black carbon, 312b crop decrease due to climate change, 40
on costs of emission reductions, 259 deforestation in, 53
creation and purpose of, 81n1 job creation. See also stimulus packages and green spending
on dangerous climate change, 27n15 flood risk, creating jobs to reduce, 100–101, 101b
on developing countries’ share of global mitigation, 28n47 food-for-work program (Bangladesh), 13b
Fourth Assessment Report, 4, 70 in renewable energy industry, 192b
guidelines for measuring land-related greenhouse gases, 25b Workfare programs, 13b, 108, 109b
on observed warming, 74, 237 Joint Global Change Research Institute (Battelle Memorial
on vulnerability, 277 Institute), 242b
worst-case scenario projection by, 199
international climate regime, 233–48. See also multitrack climate K
framework Kazakhstan
adaptation efforts, 246–47 effect of climate change in, 146
burden sharing and opportunistic early action, 236–37, export controls in, 160
238b Kenya
environment and equity, 235–36 agricultural carbon finance in, 171, 172b
financing, 239–40 Farm Inputs Promotion program in, 156
integrated multitrack climate framework, 241–42, 242b feed-in laws in, 218
market-based mechanisms, 245–46 soil carbon pilot project in, 25b
predictable climate outcome and unpredictable development knowledge-sharing, 294t, 295–97, 303. See also information
process, 237–39 Korea, Republic of
public finance, 245 Energy Management Corporation, 214
tensions between climate and development, 233–40 green spending in, 59, 59f
International Coffee Organization, 152b “Innovation Cities,” 92
International Convention for the Prevention of Pollution from venture capital in, 301
Ships, 241 Kyoto Protocol, 4. See also Clean Development Mechanism
international cooperation, 20–22, 158–62 (CDM)
fisheries, 159 Adaptation Fund, 23, 107, 233, 247, 257
in food and water security, 13–14, 158–62 carbon leakage and, 253
importance of, 12, 20, 288–89 cities and, 21b, 210b
in innovation and new technologies, 21–22, 288–89, 293–303 contents of, 234b, 251
knowledge-sharing and coordination agreements, 295–97 land-use, land-use change, and forestry, 273
lessons from aid effectiveness and international agreements, 22, limits on greenhouse gas emissions, 233, 251
28n89 mitigation commitment of, 241
“tragedy of the commons” and, 56 reconciling with UNFCCC, 251
treaties, need for, 14 revisions to, 272
world in 2050 and after, 88 U.S. nonparticipation in, 12, 21b
International Development Association (IDA), 277, 277b wealthy countries’ reductions, 81
International Energy Agency (IEA), 295, 313n22
International Finance Corporation (IFC), 216b, 300 L
International Research Institute for Climate and Society labor organizations, 339
(Columbia University), 305 land use
International Scientific Congress on Climate Change (2009), adaptative management of, 14f, 16–18, 25b
27n15 climate change and, 25b, 55, 62n102, 71
International Scientific Steering Committee (2005), 27n15 decisions on, 10
International Strategy for Disaster Reduction (UN), 162 ecoagriculture and, 153, 153f
International Union for Conservation of Nature, 127, 152 greenhouse gas emissions from land-use change, 146, 194,
Inuit adjustment to climate change, 105–6 224n42, 273
investments in energy. See mitigation costs national and multilateral initiatives to reduce degradation,
IPCC. See Intergovernmental Panel on Climate Change 273t, 275
Ireland, competitive tendering of renewable energy in, 219 protected areas, 152–54, 153f, 175n112
410 INDEX
Latin America and the Caribbean. See also specific countries Malawi and weather-based risk management, 103–4
agricultural innovation in, 17, 17b, 150, 151 Malaysia, palm oil cultivation in, 148b
aquaculture in, 158 Maldives, disproportionate consequences of climate change on, 6b
biofuel production in, 147 malnutrition, 95
Caribbean Catastrophe Risk Insurance Facility, 13, 103, 105b mangroves, 45, 129, 158
Caribbean common insurance pool, 101 Maosheng, D., 266b
dengue recurrence in, 97m marine ecosystems, 78b, 127, 156–57. See also fisheries
disproportionate consequences of climate change on, 6b, 77f market-based mechanisms, 245–46. See also Clean Development
food pricing in, 168 Mechanism (CDM)
green taxes in, 47 market-pull inducements, 298–300, 311
landslide risk reduction in Caribbean, 327b mass procurement of energy-efficient products, 216, 224n83
mitigation of greenhouse gases in, 2 mass transit. See public transport systems
public transit in, 208 maya nut trees planted in Latin America, 43b
stimulus packages and green spending in, 59 Mayors’ Climate Protection agreement, 21b
urban planning in, 93 McKinsey and Company, 9, 56
women’s empowerment in, 43b McKinsey Global Institute, 248n11
Law of the Sea, 127 “measurable, reportable, and verifiable” (MRV), 244–45, 275
laws for energy efficiency, 213, 218, 219b. See also regulations Mediterranean Solar Plan, 221, 221b
least-cost allocation and global mitigation, 28n47, 55, 62n105 medium-term emission objectives, 239, 289, 335b
Lebanon, climate education in schools in, 329b meningitis, 41
lessons learned men’s experiences in climate change, 43b
from aid effectiveness and international agreements, 22, 28n89 Mercy Corps, 101b
from natural disasters, 340 Mesopotamian history and environmental change, 37
Liberia and flooding, 101b MESSAGE energy-climate model, 201b, 223n28
lifetime earnings, effect of disaster shocks on, 44 methane emissions. See greenhouse gases
lighting, energy efficiency in, 294, 298 Mexico
livestock production, 146, 147–48, 149f, 174n69, 175nn74–75 agency for climate change in, 20
local government response to climate change, 20, 21b, 330–35. See carbon mitigation strategy in, 240
also cities coffee production in, 152b
climate-smart development at local level, 341–42 emissions reduction in, 192b
London’s climate-change strategy, 20, 90 energy and power capacity in, 211
Long-Range Transboundary Air Pollution regime, 241 indigenous people and forest management in, 106–7
long-term strategies. See mitigation actions innovation funding to, 302
Louisiana. See Hurricane Katrina Low Carbon Study, 224n51
low-carbon technologies market instruments for financial risk management in, 113n96
building stocks and, 203 Progresa–Oportunidades, 60, 63n137
finance policies conducive to, 278, 280 protected areas for biodiversity in, 152
integrated policy and, 222 urban development in, 211
investment needs for, 190, 191 wood-fired stoves in, 48
long-term process in developing countries, 237–38, 240, 272, microfinance institutions, 101
282n27 Middle East and North Africa. See also specific countries
scaling up, 190, 208, 212, 217–18 coastal cities in North Africa, 92, 93b
status of, 207f, 207t, 293, 293f disproportionate consequences of climate change on, 6b
supply-side, 208 food imports in, 159
tailored approaches for different country circumstances, 204t hydropower in, 45
low-income countries. See developing countries natural gas in, 220
Luxenbourg and greenhouse gases, 2 solar power in, 221b
middle-income countries
M carbon footprint in, 44, 61n43
Madagascar emissions in, 2f, 55, 62n102
forest lands in, 154 emission sources in, 195f
green taxes in, 47 energy demands of, 191
palm oil cultivation in, 148b energy subsidies in, 108
Major Economies Forum on Energy and Climate (July 2009 income change in, 1
meeting), 27n15 innovation and new technologies in, 288–89, 301, 303t, 309f
Makati City, Philippines, and disaster risk management, 95 funding for, 311
Makerere University, 305b research institutions’ role in, 304
malaria, 41, 95, 97, 304 risk assessment in, 99b
Index 411
Technology Development Foundation (Turkey), 311 tropical cyclones. See storms, intensity of
technology transfer, 254, 266b, 289, 294t, 301, 307–10 Tunis
telemedicine, 19b antidesertification program in, 43b
temperature flooding risks, 93b
global average, 72–73, 73f Tunisia and water management, 143b
holding change to 2ºC warming, 3, 8, 10, 10f, 27n15, 70, 79–81 Turkey
effect of failure of, 76–78 innovation funding to, 302
energy change needed for, 14–16, 15f, 80f, 189, 196, 199–204 Technology Development Foundation, 311
gap to cover costs of, 22, 23f
global change needed for, 200–201b, 204f, 206f, 223n22 U
innovation and new technology for, 220, 289 Uganda
regional change needed for, 202–3b health education in, 305b
impact of changes in, 74, 75m mass procurement in, 216
world in 2050 and after, 88 Ukraine
Thailand climate change’s effect on, 146
Department of Alternative Energy Development and Efficiency, export controls in, 46, 160
214 uncertainties, 40, 51–52, 89, 102, 261b
environmental monitoring in, 304 UN Climate Change Conference (2008), 245
threshold effects, 49–51, 50b, 62n75 UN Common Fund for Commodities, 152b
timber industry, 40, 152b UNFCCC. See United Nations Framework Convention on Climate
tipping points, 49–51, 50b, 62n75, 78b, 79m, 80t Change
“tolerable windows” approach, 48 unions, 339
tradable development rights, 154, 175n113 United Kingdom
tradable green and white certificates schemes, 281n5 agency for climate change in, 20
tradable water rights, 135, 141–42, 142b carbon tax in, 47
trade. See also carbon price and markets energy-efficiency quotas in, 213
agricultural carbon trading, 171 government accountability for climate change in, 335b
agricultural commodity trading, 159–61, 161m United Nations
carbon labeling, effect of, 253–54 Convention on the Law of the Non-Navigational Uses of
climate change and, 251–55 International Watercourses, 158–59
liberalization for climate-friendly goods, 254 Hyogo Framework of Action, 99
mitigation policies and, 46–47 International Strategy for Disaster Reduction, 162
multilateral environmental agreements (MEAs) and, 253 World Water Development Report, 139
regulation, 162 United Nations Development Programme, 274
technology transfer and, 254, 308 United Nations Environment Programme, 274, 301
virtual carbon tariffs, 252b United Nations Framework Convention on Climate Change
tradeoffs for warming and carbon dioxide concentrations, 8–9, 8b, (UNFCCC), 2, 21b, 233. See also Bali Action Plan; Clean
48–55, 191, 200–201b Development Mechanism (CDM)
Trade-Related Aspects of Intellectual Property Rights (TRIPS), 310 on adaptation costs and funding needs, 259
trade sanctions on environmental grounds, 251–52 adaptation efforts under, 246–48
“tragedy of the commons,” 56 Article 2, 26n3, 70
transition costs to lower carbon emissions, 7 carbon market and, 171
transparency, 276–78, 340–41 “common but differentiated responsibilities” in, 55, 239
transportation. See also automobiles compensation of developing countries, 55
adaptative management of, 14f contents of, 234b, 251
e-bikes, 307, 307f global climate agreement negotiations and, 24, 26
emissions from, 194 land-use change and forestry accounting, 25b
tax on international transport emissions, 270, 278 proposal for new body to take leadership role, 248
financing climate-proofing of, 276 reconciling with Kyoto Protocol, 251
public transit, 194–95, 208 REDD scheme, 127–28
weatherproofing of, 161–62 U.S. and EU on commitments of developing countries, 249n22
treaties. See international cooperation United States
trees. See also forests agricultural education in, 305b
integrated land use with, 152b, 153, 175n105 biofuel production in, 45–46, 47f, 308
species migration, 124 climate education in schools in, 329b
tropical countries Conservation Reserve Program, 170
farmers and product/market diversification, 152b emissions reduction in, 192b
land-use emissions in, 55, 62n102 energy demand reductions in, 202b
416 INDEX
X
X-Prize Foundation, 299
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Estimates are that developing countries would bear some 75 to 80 percent of the costs of anticipated
damages caused by the changing climate. Developing countries simply cannot afford to ignore
climate change, nor can they focus on adaptation alone. So action to reduce vulnerability and lay the
groundwork for a transition to low-carbon growth paths is imperative.
The World Development Report 2010 explores how public policy can change to better help people
cope with new or worsened risks, how land and water management must adapt to better protect a
threatened natural environment while feeding an expanding and more prosperous population, and
how energy systems will need to be transformed.
The authors examine how to integrate development realities into climate policy—in international
agreements, in instruments to generate carbon finance, and in steps to promote innovation and the
diffusion of new technologies.
The World Development Report 2010 is an urgent call for action, both for developing countries that
strive to ensure policies are adapted to the realities and dangers of a hotter planet, and for high-income
countries that need to undertake ambitious mitigation while supporting developing countries’ efforts.
The authors argue that a climate-smart world is within reach if we act now to tackle the substantial
inertia in the climate, in infrastructure, and in behaviors and institutions; if we act together to reconcile
needed growth with prudent and affordable development choices; and if we act differently by investing
in the needed energy revolution and taking the steps required to adapt to a rapidly changing planet.
ISBN 978-0-8213-7987-5
SKU 17987