53077 world development report +3° +2° Development and Climate Change +1° 1000 1500 2000 2100 Headed toward the danger zone Human activity is warming the planet. For data for the past 150 years or so docu- minimal vegetative cover and light greens the past millennium the Earth's average ment a global temperature increase of through dark greens indicating ever more temperature varied within a range of less nearly 1°C since the preindustrial period. dense vegetation. Biological processes on than 0.7°C (shown in green); however, Global climate models that estimate the land and in the oceans play a key role in man-made greenhouse gas emissions effect of different future emission sce- regulating Earth's temperature and car- have resulted in a dramatic increase in narios on Earth's climate predict a range bon cycle, and information such as pre- the planet's temperature over the past of possible global temperatures for this sented in these global maps is essential century (shown in yellow). The projected century. These estimates show that even to manage limited natural resources in an future increase over the next 100 years the most aggressive mitigation efforts increasingly populous world. (shown in red) due to growing emissions may lead to warming of 2°C or more (a could possibly warm the planet by 5°C level already considered dangerous), and Sources: relative to the preindustrial period. Such most models project that less mitigation Jones, P. D., and M. E. Mann. 2004. "Climate warming has never been experienced would lead to warming of 3°C or even Over Past Millennia." Reviews of Geophysics by mankind and the resulting physical up to 5°C and beyond (though with less 42(2): doi:10.1029/2003RG000143. impacts would severely limit develop- certainty around these higher amounts of Jones, P. D., D. E. Parker, T. J. Osborn, and ment. Only through immediate and warming). K. R. Briffa. 2009. "Global and Hemispheric Temperature Anomalies--Land and Marine ambitious actions to curb greenhouse gas The three globes on the cover are com- Instrumental Records." In Trends: A Com- emissions may dangerous warming be posites of data collected by satellites dur- pendium of Data on Global Change. Carbon avoided. ing the summer months of 1998 through Dioxide Information Analysis Center, Oak The evolution of the planet's tempera- 2007. The colors of the ocean represent Ridge National Laboratory, U.S. Depart- ture for the past 1,000 years is based on chlorophyll concentration, which is a ment of Energy, Oak Ridge, TN. doi: 10.3334/ a range of proxy estimates (such as tree measure of the global distribution of CDIAC/cli.002 ring analysis or ice core sampling) that oceanic plant life (phytoplankton). Deep IPCC (Intergovernmental Panel on Climate Change). 2007. Climate Change 2007: Synthe- define the envelope of long-term tem- blue colors are areas of low chlorophyll sis Report. Contribution of Working Groups I, II perature variation. With modern weather concentration while green, yellow, and and III to the Fourth Assessment Report of the observations starting in the nineteenth red indicate ever higher concentration. Intergovernmental Panel on Climate Change. century, global temperature could be The colors on land show vegetation, with Geneva: IPCC. estimated more precisely; thermometer whites, browns, and tans representing Temperature relative to the preindustrial era (°C) 5 Historical Observed 4 Future 3 2 1 0 ­1 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 2100 Year 2010 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 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: feedback@worldbank.org All rights reserved 1 2 3 4 13 12 11 10 This volume is a product of the staff of the International Bank for Reconstruction and Development / The World Bank. 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Contents Foreword xiii Acknowledgments xv Abbreviations and Data Notes xvii Main Messages xx Overview: Changing the Climate for Development 1 The case for action 4 A climate-smart world is within reach if we act now, act together, and act differently 10 Making it happen: New pressures, new instruments, and new resources 18 1 Understanding the Links between Climate Change and Development 37 Unmitigated climate change is incompatible with sustainable development 39 Evaluating the tradeoffs 48 The costs of delaying the global mitigation effort 55 Seizing the moment: Immediate stimulus and long-term transformations 58 Focus A: The Science of Climate Change 70 Part One 2 Reducing Human Vulnerability: Helping People Help Themselves 87 Adaptive management: Living with change 89 Managing physical risks: Avoiding the avoidable 90 Managing financial risks: Flexible instruments for contingencies 101 Managing social risks: Empower communities to protect themselves 105 Looking ahead to 2050: Which world? 111 Focus B: Biodiversity and Ecosystem Services in a Changing Climate 124 v vi CONTENTS 3 Managing Land and Water to Feed Nine Billion People and Protect Natural Systems 133 Put in place the fundamentals for natural resource management 134 Produce more from water and protect it better 137 Producing more in agriculture while protecting the environment 145 Produce more and protect better in fisheries and aquaculture 156 Building flexible international agreements 158 Reliable information is fundamental for good natural resource management 162 Pricing carbon, food, and energy could be the springboard 166 4 Energizing Development without Compromising the Climate 189 Balancing competing objectives 191 Where the world needs to go: Transformation to a sustainable energy future 195 Realizing the savings from energy efficiency 209 Scaling up existing low-carbon technologies 217 Accelerating innovation and advanced technologies 220 Policies have to be integrated 222 Part Two 5 Integrating Development into the Global Climate Regime 233 Building the climate regime: Transcending the tensions between climate and development 233 Options for integrating developing-country actions into the global architecture 240 Support for developing-country mitigation efforts 245 Promoting international efforts to integrate adaptation into climate-smart development 246 Focus C: Trade and Climate Change 251 6 Generating the Funding Needed for Mitigation and Adaptation 257 The financing gap 259 Inefficiencies in existing climate-finance instruments 263 Increasing the scale of climate-change finance 267 Ensuring the transparent, efficient, and equitable use of funds 276 Matching financing needs and sources of funds 278 Contents vii 7 Accelerating Innovation and Technology Diffusion 287 The right tools, technologies, and institutions can put a climate-smart world well within our reach 289 International collaboration and cost sharing can leverage domestic efforts to promote innovation 293 Public programs, policies, and institutions power innovation and accelerate its diffusion 303 8 Overcoming Behavioral and Institutional Inertia 321 Harnessing individuals' behavioral change 322 Bringing the state back in 330 Thinking politically about climate policy 335 Climate-smart development starts at home 341 Bibliographical Note 349 Glossary 353 Selected Indicators 361 Table A1 Energy-related emissions and carbon intensity 362 Table A2 Land-based emissions 363 Table A3 Total primary energy supply 364 Table A4 Natural disasters 366 Table A5 Land, water, and agriculture 367 Table A6 Wealth of nations 368 Table A7 Innovation, research, and development 369 Definitions and notes 370 Symbols and aggregates 374 Selected World Development Indicators 375 Data sources and methodology 375 Classification of economies and summary measures 375 Terminology and country coverage 376 Technical notes 376 Symbols 376 Classification of economies by region and income, FY2010 377 Table 1 Key indicators of development 378 Table 2 Poverty 380 Table 3 Millennium Development Goals: eradicating poverty and improving lives 382 Table 4 Economic activity 384 viii CONTENTS Table 5 Trade, aid, and finance 386 Table 6 Key indicators for other economies 388 Technical notes 390 Statistical methods 396 World Bank Atlas method 396 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, 1880­2007 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 1850­2006. 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, Nebojsa Nakic ´, ´enovic 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 Niño­Southern Oscillation ESCO energy service company ETF­IW Environmental Transformation Fund­International 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 IDA International Development Association IEA International Energy Agency IFC International Finance Corporation IFCI International Forest Carbon Initiative IIASA International Institute for Applied Systems Analysis IMERS International Maritime Emission Reduction Scheme IPCC Intergovernmental Panel on Climate Change IPR intellectual property rights kWh kilowatt-hour JI Joint Implementation LDCF Least Developed Country Fund LECZ low-elevation coastal zones LPG liquefied petroleum gas MEA multilateral environmental agreement MRGRA Midwestern Regional GHG Reduction Accord MRV measurable, reportable, and verifiable NAPA National Adaptation Program of Action N2O nitrous oxide NGO nongovernmental organization O3 ozone O&M operation and maintenance OECD Organisation for Economic Co-operation and Development PaCIS Pacific Climate Information System ppb parts per billion PPCR Pilot Program for Climate Resistance ppm parts per million PPP purchasing power parity R&D research and development RD&D research, development, and deployment RDD&D research, development, demonstration, and deployment REDD reduced emissions from deforestation and forest degradation RGGI Regional Greenhouse Gas Initiative SCCF Strategic Climate Change Fund SDII simple daily intensity index SD-PAMs sustainable development policies and measures SO2 sulfur dioxide SUV sports utility vehicle toe tons of oil equivalent TRIPS Trade-Related Aspects of Intellectual Property Rights Tt trillion tons UN United Nations UNFCCC United Nations Framework Convention on Climate Change UN-REDD United Nations Collaborative Program on Reduced Emissions from Deforestation and forest Degradation WCI Western Climate Initiative WGI World Governance Indicator WMO World Meteorological Organization WTO World Trade Organization Abbreviations and Data Notes xix 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 Poverty reduction and sustainable development remain core global priorities. A quarter of the population of developing countries still lives on less than $1.25 a day. One billion people lack clean drinking water; 1.6 billion, electricity; and 3 billion, adequate sanitation. A quarter of all developing-country children are mal- nourished. Addressing these needs must remain the priorities both of developing countries and of development aid--recognizing that development will get harder, not easier, with climate change. Yet climate change must urgently be addressed. Climate change threatens all countries, with developing countries the most vulnerable. Estimates are that they would bear some 75 to 80 percent of the costs of damages caused by the changing climate. Even 2°C warming above preindustrial temperatures--the minimum the world is likely to experience--could result in permanent reductions in GDP of 4 to 5 percent for Africa and South Asia. Most developing countries lack sufficient fi nancial and technical capacities to manage increasing climate risk. They also depend more directly on climate-sensitive natural resources for income and well- being. And most are in tropical and subtropical regions already subject to highly variable climate. Economic growth alone is unlikely to be fast or equitable enough to counter threats from climate change, particularly if it remains carbon intensive and accel- erates global warming. So climate policy cannot be framed as a choice between growth and climate change. In fact, climate-smart policies are those that enhance development, reduce vulnerability, and finance the transition to low-carbon growth paths. A climate-smart world is within our reach if we act now, act together, and act differently than we have in the past: · 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 Report 2010 Chapter Title Goes 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 20­30 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 productivity would likely decline through- on developing countries. Warming of 2°C out the world, particularly in the tropics, could result in a 4 to 5 percent permanent even with changes in farming practices. reduction in annual income per capita in And over 3 million additional people could Africa and South Asia, 24 as opposed to die from malnutrition each year.21 minimal losses in high-income countries Even 2°C warming above preindus- and a global average GDP loss of about trial temperatures would result in new 1 percent.25 These losses would be driven by weather patterns with global consequences. impacts in agriculture, a sector important Increased weather variability, more fre- to the economies of both Africa and South quent and intense extreme events, and Asia (map 1). greater exposure to coastal storm surges It is estimated that developing coun- would lead to a much higher risk of cata- tries will bear most of the costs of the strophic and irreversible impacts. Between damages--some 75­80 percent.26 Several 100 million and 400 million more people factors explain this (box 1). Developing could be at risk of hunger.22 And 1 billion countries are particularly reliant on ecosys- to 2 billion more people may no longer have tem services and natural capital for produc- enough water to meet their needs.23 tion in climate-sensitive sectors. Much of their population lives in physically exposed Developing countries are more exposed and locations and economically precarious less resilient to climate hazards. These conditions. And their financial and institu- consequences will fall disproportionately tional capacity to adapt is limited. Already Map 1 Climate change will depress agricultural yields in most countries in 2050, given current agricultural practices and crop varieties EUROPE AND CENTRAL ASIA 7% CANADA AND WESTERN THE UNITED STATES EUROPE 1% 2% MIDDLE EAST AND NORTH AFRICA 11% SOUTH SUB-SAHARAN ASIA AFRICA 18% EAST ASIA 15% AND PACIFIC 12% LATIN AMERICA AND THE CARIBBEAN 6% AUSTRALIA AND NEW ZEALAND 2.7% Percentage change in yields between present and 2050 No data -50 -20 0 20 50 100 Sources: Müller and others 2009; World Bank 2008c. Note: The coloring in the figure shows the projected percentage change in yields of 11 major crops (wheat, rice, maize, millet, field pea, sugar beet, sweet potato, soybean, groundnut, sunflower, and rapeseed) from 2046 to 2055, compared with 1996­2005. The yield-change values are the mean of three emission scenarios across five global climate models, assuming no CO2 fertilization (a possible boost to plant growth and water-use efficiency from higher ambient CO2 concentrations). The numbers indicate the share of GDP derived from agriculture in each region. (The share for Sub-Saharan Africa is 23 percent if South Africa is excluded.) Large negative yield impacts are projected in many areas that are highly dependent on agriculture. 6 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 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 20­25 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 Growth is necessary for greater resilience, but is not sufficient. Economic growth B OX 2 Economic growth: Necessary, but not sufficient is necessary to reduce poverty and is at the heart of increasing resilience to climate Richer countries have more resources community-based early warning sys- change in poor countries. But growth alone to cope with climate impacts, and tem for cyclones and a flood forecast- better educated and healthier popu- ing and response program drawing is not the answer to a changing climate. lations are inherently more resilient. on local and international expertise. Growth is unlikely to be fast enough to help But the process of growth may But the scope of possible adaptation the poorer countries, and it can increase exacerbate vulnerability to climate is limited by resources--its annual vulnerability to climate hazards (box 2). change, as in the ever-increasing per capita income is $450. Mean- Nor is growth usually equitable enough extraction of water for farming, while, the Netherlands government to ensure protection for the poorest and industry, and consumption in the is planning investments amounting most vulnerable. It does not guarantee that drought-prone provinces around Bei- to $100 for every Dutch citizen every jing, and as in Indonesia, Madagascar, year for the next century. And even key institutions will function well. And if Thailand, and U.S. Gulf Coast, where the Netherlands, with a per capita it is carbon intensive, it will cause further protective mangroves have been income 100 times that of Bangladesh, warming. cleared for tourism and shrimp farms. has begun a program of selective But there is no reason to think that a Growth is not likely to be fast relocation away from low-lying areas low-carbon path must necessarily slow enough for low-income countries because continuing protection every- economic growth: many environmental to afford the kind of protection that where is unaffordable. regulations were preceded by warnings of the rich can afford. Bangladesh and the Netherlands are among the Sources: Barbier and Sathirathai 2004; massive job losses and industry collapse, few Deltacommissie 2008; FAO 2007; Gov- countries most exposed to rising sea of which materialized.28 Clearly, however, levels. Bangladesh is already doing a ernment of Bangladesh 2008; Guan and Hubacek 2008; Karim and Mimura the transition costs are substantial, notably lot to reduce the vulnerability of its 2008; Shalizi 2006; and Xia and others in developing low-carbon technologies and population, with a highly effective 2007. infrastructure for energy, transport, hous- ing, urbanization, and rural development. Two arguments often heard are that these thresholds or tipping points beyond which transition costs are unacceptable given catastrophic impacts occur (see Science the urgent need for other more immedi- focus). The comparison is also complicated ate investments in poor countries, and that by distributional issues across time (mitiga- care should be taken not to sacrifice the tion incurred by one generation produces welfare of poor individuals today for the benefits for many generations to come) sake of future, possibly richer, generations. and space (some areas are more vulnerable There is validity to these concerns. But the than others, hence more likely to support point remains that a strong economic argu- aggressive global mitigation efforts). And ment can be made for ambitious action on it is further complicated by the question of climate change. how to value the loss of life, livelihoods, and nonmarket services such as biodiversity and The economics of climate change: ecosystem services. Reducing climate risk is affordable Economists have typically tried to iden- Climate change is costly, whatever the tify the optimal climate policy using cost- policy chosen. Spending less on mitiga- benefit analysis. But as box 3 illustrates, tion will mean spending more on adapta- the results are sensitive to the particular tion and accepting greater damages: the assumptions about the remaining uncer- cost of action must be compared with the tainties, and to the normative choices made cost of inaction. But, as discussed in chap- regarding distributional and measurement ter 1, the comparison is complex because issues. (A technology optimist, who expects of the considerable uncertainty about the the impact of climate change to be relatively technologies that will be available in the modest and occurring gradually over time, future (and their cost), the ability of soci- and who heavily discounts what happens eties and ecosystems to adapt (and at what in the future, will favor modest action now. price), the extent of damages that higher And vice versa for a technology pessimist.) greenhouse gas concentrations will cause, So economists continue to disagree on the and the temperatures that might constitute economically or socially optimal carbon 8 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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 BOX 3 The cost of "climate insurance" Hof, den Elzen, and van Vuuren examine value of consumption and the present A strong motivation for choosing a the sensitivity of the optimal climate value of consumption that the world lower peak concentration target is to target to assumptions about the time would enjoy with no climate change). reduce the risk of catastrophic outcomes horizon, climate sensitivity (the amount A key point evident in the figure is the linked to global warming. From this per- of warming associated with a doubling relative flatness of the consumption loss spective, the cost of moving from a high of carbon dioxide concentrations from curves over wide ranges of peak CO2e target for peak CO2e concentrations to a preindustrial levels), mitigation costs, concentrations. As a consequence, mov- lower target can be viewed as the cost of likely damages, and discount rates. To do ing from 750 ppm to 550 ppm results in climate insurance--the amount of wel- so, they run their integrated assessment a relatively small loss in consumption fare the world would sacrifice to reduce model (FAIR), varying the model's settings (0.3 percent) with the Nordhaus assump- the risk of catastrophe. The analysis of along the range of assumptions found in tions. The results therefore suggest that Hof, den Elzen, and van Vuuren suggests the literature, notably those associated the cost of precautionary mitigation to that the cost of climate insurance is mod- with two well-known economists: Nicho- 550 ppm is small. With the Stern assump- est under a very wide range of assump- las Stern, who advocates early and ambi- tions, a 550 ppm target results in a gain tions about the climate system and the tious action; and William Nordhaus, who in present value of consumption of about cost of mitigating climate change. supports a gradual approach to climate 0.5 percent relative to the 750 ppm mitigation. target. Source: Hof, den Elzen, and van Vuuren 2008. Not surprisingly, their model results in completely different optimal targets Looking at tradeoffs: The loss in consumption relative to a world without warming for different peak CO2e concentrations depending on which assumptions are used. (The optimal target is defined as Reduction in net present value of consumption (%) the concentration that would result in the 4 lowest reduction in the present value of Stern assumptions global consumption.) The "Stern assump- Nordhaus assumptions tions" (which include relatively high 3 Optimum for given assumptions climate sensitivity and climate damages, and a long time horizon combined with low discount rates and mitigation costs) 2 produce an optimum peak CO2e concen- tration of 540 parts per million (ppm). The "Nordhaus assumptions" (which assume 1 lower climate sensitivity and damages, a shorter time horizon, and a higher discount rate) produce an optimum of 0 750 ppm. In both cases, adaptation costs 500 550 600 650 700 750 800 are included implicitly in the climate dam- CO2e concentration peak level (ppm) age function. Source: Adapted from Hof, den Elzen, and van Vuuren 2008, figure 10. The figure plots the least cost of stabi- Note: The curves show the percentage loss in the present value of consumption, relative to what it would be lizing atmospheric concentrations in the with a constant climate, as a function of the target for peak CO2e concentrations. The "Stern assumptions" and range of 500 to 800 ppm for the Stern and "Nordhaus assumptions" refer to choices about the value of key parameters of the model as explained in the text. The dot shows the optimum for each set of assumptions, where the optimum is defined as the greenhouse Nordhaus assumptions (reported as the gas concentration that would minimize the global consumption loss resulting from the sum of mitigation costs difference between the modeled present and impact damages. Overview: Changing the Climate for Development 9 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 40­50 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 40­50 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 A climate-smart world is within hypothesis of this Report is that they can be reach if we act now, act together, tackled through climate-smart policies that and act differently entail acting now, acting together (or glob- Even if the incremental cost of reducing ally), and acting differently. Acting now, climate risk is modest and the investment because of the tremendous inertia in both needs far from prohibitive, stabilizing climate and socioeconomic systems. Acting warming around 2°C above preindustrial together, to keep costs down and protect temperatures is extremely ambitious. By the most vulnerable. And acting differently, 2050 emissions would need to be 50 percent because a climate-smart world requires a below 1990 levels and be zero or negative by transformation of our energy, food produc- 2100 (figure 5). This would require imme- tion, and risk management systems. diate and Herculean efforts: within the next Act now: Inertia means that 20 years global emissions would have to today's actions will determine fall, compared to a business-as-usual path, tomorrow's options by an amount equivalent to total emissions from high-income countries today. In addi- The climate system exhibits substantial iner- tion, even 2°C warming would also require tia (figure 6). Concentrations lag emission costly adaptation--changing the kinds of reductions: CO2 remains in the atmosphere risks people prepare for; where they live; for decades to centuries, so a decline in emis- what they eat; and the way they design, sions takes time to affect concentrations. develop, and manage agroecological and Temperatures lag concentrations: tempera- urban systems.36 tures will continue increasing for a few cen- So both the mitigation and the adap- turies after concentrations have stabilized. tation challenges are substantial. But the And sea levels lag temperature reductions: the thermal expansion of the ocean from an increase in temperature will last 1,000 years or more while the sea-level rise from melting Figure 5 What does the way forward look like? Two options among many: Business as usual or aggressive mitigation ice could last several millennia.37 The dynamics of the climate system Projected annual total global emissions (GtCO2e) therefore limit how much future mitiga- 160 tion can be substituted for efforts today. For 140 Business as example, stabilizing the climate near 2°C usual (~5°C) (around 450 ppm of CO2e) would require 120 2°C trajectory global emissions to begin declining immedi- 100 ately by about 1.5 percent a year. A five-year 80 delay would have to be offset by faster emis- 60 sion declines. And even longer delays simply could not be offset: a ten-year delay in miti- 40 gation would most likely make it impossible 20 to keep warming from exceeding 2°C.38 0 Inertia is also present in the built envi- ronment, limiting flexibility in reducing ­20 greenhouse gases or designing adaptation ­40 responses. Infrastructure investments are 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 lumpy, concentrated in time rather than Year evenly distributed.39 They are also long- Source: Clarke and others, forthcoming. lived: 15­40 years for factories and power Note: The top band shows the range of estimates across models (GTEM, IMAGE, MESSAGE, MiniCAM) for emis- plants, 40­75 years for road, rail, and power sions under a business-as-usual scenario. The lower band shows a trajectory that could yield a concentration of 450 ppm of CO2e (with a 50 percent chance of limiting warming to less than 2°C). Greenhouse gas emissions distribution networks. Decisions on land use include CO2, CH4, and N2O. Negative emissions (eventually required by the 2°C path) imply that the annual rate of and urban form--the structure and density emissions is lower than the rate of uptake and storage of carbon through natural processes (for example, plant growth) and engineered processes (for example, growing biofuels and when burning them, sequestering the CO2 of cities--have impacts lasting more than a underground). GTEM, IMAGE, MESSAGE, and MiniCAM are the integrated assessment models of the Australian century. And long-lived infrastructure trig- Bureau of Agricultural and Resource Economics, the Netherlands Environmental Assessment Agency, Interna- tional Institute of Applied Systems Analysis, and Pacific Northwest National Laboratory. gers investments in associated capital (cars Overview: Changing the Climate for Development 11 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 (65­70 percent of emission reductions, improve the production of climate infor- adding up to 45­70 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 catastrophic events (such as widespread flooding or severe droughts) cannot be B OX 4 Safety nets: From supporting incomes to reducing fully absorbed by individuals, communi- ties, and the private sector. In a more vola- vulnerability to climate change tile climate, governments will increasingly Bangladesh has had a long history of The new employment guarantee become insurers of last resort and have an cyclones and floods, and these could program provides those with no implicit responsibility to support disaster become more frequent or intense. The other means of income (including recovery and reconstruction. This requires government has safety nets that can access to other safety nets) with be tailored fairly easily to respond to employment for up to 100 days at that governments protect their own liquid- the effects of climate change. The best wages linked to the low-season ity in times of crisis, particularly poorer or examples are the vulnerable-group agricultural wage. The guarantee smaller countries that are fi nancially vul- feeding program, the food-for-work element ensures that those who nerable to the impacts of climate change: program, and the new employment need help get it. If work cannot be Hurricane Ivan caused damages equivalent guarantee program. provided, the individual is entitled to to 200 percent of Grenada's GDP.53 Having The vulnerable- group feeding 40 days of wages at the full rate and immediate funds available to jump-start program runs at all times and usually then 60 days at half the rate. covers more than 2 million house- Bangladesh's programs, and others the rehabilitation and recovery process holds. But it is designed to be ramped in India and elsewhere, suggest some reduces the derailing effect of disasters on up in response to a crisis: following lessons. Rapid response requires rapid development. the cyclone in 2008, the program access to funding, targeting rules to Multicountry facilities and reinsurance was expanded to close to 10 million identify people in need--chronic can help. The Caribbean Catastrophe Risk households. Targeting, done by the poor or those temporarily in need-- Insurance Facility spreads risk among 16 lowest level of local government and and procedures agreed on well before Caribbean countries, harnessing the rein- monitored by the lowest administra- a shock hits. A portfolio of "shovel- tive level, is considered fairly good. ready" projects can be preidentified surance market to provide liquidity to The food-for-work program, which as particularly relevant to increasing governments quickly following destructive normally operates during the low agri- resilience (water storage, irrigation hurricanes and earthquakes.54 Such facili- culture season, is ramped up during systems, reforestation, and embank- ties may need help from the international emergencies. It too is run in collabo- ments, which can double as roads in community. More generally, high-income ration with local governments, but low-lying areas). Experience from India countries have a critical role in ensur- program management has been sub- and Bangladesh also suggests the ing that developing countries have timely contracted to nongovernmental orga- need for professional guidance (engi- nizations in many parts of the country. neers) in the selection, design, and access to the needed resources when shocks Workers who show up at the work site implementation of the public works hit, whether by supporting such facilities or are generally given work, but there is and for equipment and supplies. through the direct provision of emergency usually not enough to go around, so funding. the work is rationed through rotation. Source: Contributed by Qaiser Khan. But insurance and emergency fund- ing are only one part of a broader risk- management framework. Social policies successful models of social safety nets and will become more important in helping tailor them to the needs created by the people cope with more frequent and per- changing climate. sistent threats to their livelihoods. Social policies reduce economic and social vul- To ensure adequate food and water for all nerability and increase resilience to climate countries. International action is critical change. A healthy, well-educated popula- to manage the water and food security chal- tion with access to social protection can lenges posed by the combination of climate better cope with climate shocks and climate change and population pressures--even change. Social protection policies will need with improved agricultural productivity to be strengthened where they exist, devel- and water-use efficiency. One fi fth of the oped where they are lacking, and designed world's freshwater renewable resources are so that they can be expanded quickly after shared between countries.56 That includes a shock. 55 Creating social safety nets in 261 transboundary river basins, home to countries that do not yet have them is criti- 40 percent of the world's people and gov- cal, and Bangladesh shows how it can be erned by over 150 international treaties that done even in very poor countries (box 4). do not always include all riparian states.57 Development agencies could help spread If countries are to manage these resources 14 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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 Other greenhouse gases (CH4, N2O, F-gases) 20 Fossil fuel switch (coal to gas) 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 land and forests, agricultural productivity of species. While benefiting biodiversity, will have to increase, perhaps by as much as ecoagriculture practices also increase agri- 1.8 percent a year compared to 1 percent a culture's resilience to climate change along year without climate change.73 Most of that with farm productivity and incomes. In increase will have to occur in developing Central America farms using these practices countries because agriculture in high-income suffered half or less of the damage inflicted countries is already close to maximum fea- on others by Hurricane Mitch.75 sible yields. Fortunately, new technologies Better management of water is essential and practices are emerging (box 5). Some for agriculture to adapt to climate change. improve productivity and resilience as they River basins will be losing natural water sequester carbon in the soil and reduce the storage in ice and snow and in reduced nutrient runoff that damages aquatic ecosys- aquifer recharge, just as warmer tempera- tems. But more research is needed to under- tures increase evaporation. Water can be stand how to scale them up. used more efficiently through a combina- Increased efforts to conserve species and tion of new and existing technologies, bet- ecosystems will need to be reconciled with ter information, and more sensible use. food production (whether agriculture or fish- And that can be done even in poor coun- eries). Protected areas--already 12 percent tries and among small farmers: in Andhra of the earth's land but only a tiny portion of Pradesh, India, a simple scheme, in which the ocean and fresh water system--cannot farmers monitor their rain and groundwa- be the only solution to maintaining biodi- ter and learn new farming and irrigation versity, because species ranges are likely to techniques, has caused 1 million farmers to shift outside the boundaries of such areas. voluntarily reduce groundwater consump- Instead ecoagricultural landscapes, where tion to sustainable levels.75 farmers create mosaics of cultivated and nat- Efforts to increase water resources ural habitats, could facilitate the migration include dams, but dams can be only a part 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 rice­wheat 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, 20­25 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 Climate-smart policies also have to government accountability for appropriate tackle the inertia in the behavior of individ- responses is played out. That is why many uals and organizations. Weaning modern local governments have preceded national economies from fossil fuels and increasing governments in climate action (box 7). resilience to climate change will require attitudinal shifts by consumers, business New instruments and new resources: leaders, and decision makers. The chal- The role of a global agreement lenges in changing ingrained behaviors call Immediate and comprehensive action is not for a special emphasis on nonmarket poli- feasible without global cooperation, which cies and interventions. requires a deal perceived as equitable by all Throughout the world disaster risk man- parties--high-income countries, which need agement programs are focused on changing to make the most immediate and stringent community perceptions of risk. The City of efforts; middle-income countries, where London has made targeted communica- substantial mitigation and adaptation need tion and education programs a centerpiece to happen; and low-income countries, where of its "London Warming" Action Plan. the priority is technical and financial assis- And utilities across the United States have tance to cope with vulnerability to today's begun using social norms and peer com- conditions, let alone unfolding changes in munity pressure to encourage lower energy the climate. The deal must also be effective demand: simply showing households how in achieving climate goals, incorporating they are faring relative to others, and sig- lessons from other international agreements naling approval of lower than average con- and from past successes and failures with sumption is enough to encourage lower large international transfers of resources. energy use (see chapter 8). Finally, it has to be efficient, which requires Addressing the climate challenge will adequate funding and financial instruments also require changes in the way govern- that can separate where mitigation happens ments operate. Climate policy touches on from who funds it--thereby achieving miti- the mandate of many government agencies, gation at least cost. yet belongs to none. For both mitigation and adaptation, many needed actions require a An equitable deal. Global cooperation long-term perspective that goes well beyond at the scale needed to deal with climate those of any elected administration. Many change can happen only if it is based on a countries, including Brazil, China, India, global agreement that addresses the needs Mexico, and the United Kingdom, have and constraints of developing countries, created lead agencies for climate change, only if it can separate where mitigation set up high-level coordination bodies, and happens from who bears the burden of improved the use of scientific information this effort, and only if it creates fi nancial in policy making (see chapter 8). instruments to encourage and facilitate Cities, provinces, and regions provide mitigation, even in countries that are rich political and administrative space closer to in coal and poor in income or that have the sources of emissions and the impacts of contributed little or nothing historically to climate change. In addition to implement- climate change. Whether these countries ing and articulating national policies and seize the opportunity to embark on a more regulations, they perform policy-making, sustainable development path will be heav- regulatory, and planning functions in sec- ily influenced by the fi nancial and techni- tors key to mitigation (transportation, con- cal support that higher-income countries struction, public services, local advocacy) can muster. Otherwise the transition costs and adaptation (social protection, disaster could be prohibitive. risk reduction, natural resource manage- Global cooperation will require more ment). Because they are closer to citizens, than financial contributions, however. these governments can raise public aware- Behavioral economics and social psychol- ness and mobilize private actors.81 And at ogy show that people tend to reject deals the intersection of the government and they perceive as unfair toward them, even the public, they become the space where if they stand to benefit.82 So the fact that Overview: Changing the Climate for Development 21 BOX 7 Cities reducing their carbon footprints The movement toward carbon-neutral by photovoltaic solar cells. In total the More than 700 cities and local govern- cities shows how local governments are city has over 500,000 square meters of ments around the world are participating taking action even in the absence of solar water heating panels, the equiva- in a "Cities for Climate Protection Cam- international commitments or stringent lent of about 0.5 megawatts of electric paign" to adopt policies and implement national policies. In the United States, water heaters. As a result of these efforts, quantifiable measures to reduce local which has not ratified the Kyoto Protocol, energy use has fallen by nearly a third and greenhouse gas emissions (http://www close to a thousand cities have agreed to CO2 emissions by half. .iclei.org). Together with other local gov- meet the Kyoto Protocol target under the Examples of movements to carbon- ernment associations, such as the C40 Mayors' Climate Protection agreement. In neutral cities are mushrooming well Cities Climate Leadership Group and the Rizhao, a city of 3 million people in north- beyond China. In 2008 Sydney became World Mayors Council on Climate Change, ern China, the municipal government the first city in Australia to become carbon they have embarked on a process that combined incentives and legislative tools neutral, through energy efficiency, renew- seeks empowerment and inclusion of cities to encourage the large-scale efficient able energy, and carbon offsets. Copenha- and local governments in the UN Frame- use of renewable energy. Skyscrapers are gen is planning to cut its carbon emissions work Convention on Climate Change. built to use solar power, and 99 percent to zero by 2025. The plan includes invest- of Rizhao's households use solar-power ments in wind energy and encouraging Sources: Bai 2006; World Bank 2009d; C40 heaters. Almost all traffic signals, street the use of electric and hydrogen-powered Cities Climate Leadership Group, http://www lights, and park illuminations are powered cars with free parking and recharging. .c40cities.org (accessed August 1, 2009). it is in everyone's interest to collaborate is circumstances. This is particularly prob- no guarantee of success. There are real con- lematic for adaptation, where technologies cerns among developing countries that a can be very location specific. drive to integrate climate and development International transfers of clean technol- could shift responsibility for mitigation ogies have so far been modest. They have onto the developing world. occurred in at best one-third of the projects Enshrining a principle of equity in a funded through the Clean Development global deal would do much to dispel such Mechanism (CDM), the main channel for concerns and generate trust (see chapter 5). financing investments in low-carbon tech- A long-term goal of per capita emissions nologies in developing countries. 86 The converging to a band could ensure that no Global Environment Facility, which has country is locked into an unequal share historically allocated about $160 million of the atmospheric commons. India has a year to climate mitigation programs,87 recently stated that it would never exceed is supporting technology needs assess- the average per capita emissions of high- ments in 130 countries. About $5 billion income countries.83 So drastic action by has recently been pledged under the new high-income countries to reduce their own Clean Technology Fund to assist develop- carbon footprint to sustainable levels is ing countries by supporting large, risky essential. This would show leadership, spur investments involving clean technologies, innovation, and make it feasible for all to but there are disputes over what constitutes switch to a low-carbon growth path. clean technology. Another major concern of developing Building technology agreements into a countries is technology access. Innovation global climate deal could boost technology in climate-related technologies remains innovation and ensure developing-country concentrated in high-income countries, access. International collaboration is criti- although developing countries are increas- cal for producing and sharing climate- ing their presence (China is seventh in smart technologies. On the production side, overall renewable energy patents, 84 and cost-sharing agreements are needed for an Indian fi rm is now the leader in on- large-scale and high-risk technologies such road electric cars 85). In addition, devel- as carbon capture and storage (see chapter oping countries--at least the smaller or 7). International agreements on standards poorer ones--may need assistance to pro- create markets for innovation. And inter- duce new technology or tailor it to their national support for technology transfer 22 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 2008­2012 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 $20 a ton of CO2e (figure). Forestry and agricultural mitigation 3 would produce many co-benefits. The 2 maintenance of forests keeps open a wider diversity of livelihood options, 1 protects biodiversity, and buffers against 0 extreme events such as floods and land- 0 0 00 0 0 00 0 0 00 0 0 00 0 0 00 0 0 00 0 0 00 <2 <5 <2 <5 <2 <5 <2 <5 <2 <5 <2 <5 <2 <5 <1 <1 <1 <1 <1 <1 <1 slides. Reduced tillage and better fertilizer Energy Transport Buildings Industry Agriculture Forestry Waste management can improve productivity. supply And the resources generated could be Carbon price ($/tCO2e) substantial--at least for countries with Source: Barker and others 2007b, figure TS.27. large forests: if the forest carbon markets Note: EIT = economies in transition. The ranges for global economic potentials as assessed in each sector are meet their full potential, Indonesia could shown by black vertical lines. 26 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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 4­6 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 Anoushka Bhari, Kenya, age 8 Overview: Changing the Climate for Development 27 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°C­2.6°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. 28 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 44. Repetto 2008. prices, the elasticity is estimated at ­0.5, meaning 45. Stern 2007, part VI. that a doubling of fuel prices would halve emis- 46. Based on the formula used in Nordhaus sions, holding income per capita constant. 2008. 62. Based on average electricity prices for 47. These are rounded values based on the fol- households in 2006­07 from the U.S. Energy Infor- lowing. The IPCC estimates that at carbon prices mation Agency, http://www.eia.doe.gov/emeu/ up to $50 a ton CO2e, about 65 percent of emis- international/elecprih.html (accessed August 1, 2009). sion reduction would take place in developing 63. Emission data is from WRI (2008). countries in 2030 (Barker and others 2007a, table 64. IEA 2008d; UNEP 2008. A 2004 report 11.3). McKinsey & Company (2009) estimates this by the European Environment Agency (EEA share at 68 percent for a 450 ppm scenario if done 2004) estimated European subsidies to energy at using a least-cost allocation. As to the least-cost 30 billion in 2001, two-thirds for fossil fuels, the share of global mitigation investments in 2030 tak- rest for nuclear and renewables. ing place in developing countries, it is estimated at 65. http://www.eia.doe.gov/emeu/international/ 44­67 percent for a 450 ppm CO2e concentration elecprih.html (accessed July 2009). (see table 4.2: 44 percent, MESSAGE; 56 percent, 66. Price and Worrell 2006. McKinsey; 67 percent, IEA ETP) although an out- 67. ESMAP 2006. lying estimate is offered by REMIND (91 percent). 68. http://co2captureandstorage.info/index.htm Over the course of the century (using present value (accessed August 1, 2009). of all investments to 2100), the estimated share of 69. Calvin and others, forthcoming; IEA developing countries is somewhat higher, with 2008a. ranges between 66 percent (Edmonds and others 70. Gurgel, Reilly, and Paltsev 2007; IEA 2006; 2008) and 71 percent (Hope 2009). Wise and others 2009. 48. Edmonds and others 2008. 71. NRC 2007; Tilman, Hill, and Lehman 49. For a 425­450 ppm CO2e, or 2°C, stabili- 2006; WBGU 2009. zation scenario, IIASA (2009) estimates the cost 72. OECD 2008. at $4 trillion; Knopf and others (forthcoming) at 73. Lotze-Campen and others 2009; Wise and $6 trillion; Edmonds and others (2008) at $9 tril- others 2009. See chapter 3 for a discussion. lion; Nordhaus (2008) at $11 trillion; and Hope 74. Scherr and McNeely 2008. (2009) at $25 trillion. These are present values, 75. World Bank 2007b. and the large differences among them are largely 76. Milly and others 2008. driven by the different discount rate used. All fol- 77. Fay, Block, and Ebinger 2010; Ligeti, Pen- low a first-best scenario where mitigation takes ney, and Wieditz 2007; Heinz Center 2007. place wherever and whenever most cost-effective. 78. Lempert and Schlesinger 2000. 50. Hamilton 2009. 79. Keller, Yohe, and Schlesinger 2008. 51. The Nameless Hurricane, http://science. 80. Cass 2005; Davenport 2008; Dolsak 2001; nasa.gov/headlines/y2004/02apr_hurricane.htm Kunkel, Jacob, and Busch 2006. (accessed March 12, 2009). 81. Alber and Kern 2008. 52. Rogers 2009; Westermeyer 2009. 82. Guth, Schmittberger, and Schwarze 1982; 53. OECS 2004. Camerer and Thaler 1995; Irwin 2009; Ruffle 1998. 54. World Bank 2008a. 83. Times of India, http://timesofindia.india 55. Kanbur 2009. times.com/NEWS/India/Even-in-2031-Indias- 56. FAO 2009a. per- capita- emission- will- be- 1/7th- of- US/ 57. Worldwatch Institute, "State of the World articleshow/4717472.cms (accessed August 2009). 2005 Trends and Facts: Water Conflict and Security 84. Dechezleprêtre and others 2008. Cooperation," http://www.worldwatch.org/node/69 85. Maini 2005; Nagrath 2007. (accessed July 1, 2009); Wolf and others 1999. 86. Haites and others 2006. 58. Easterling and others 2007; Fisher and 87. http://www.gefweb.org/uploadedFiles/ others 2007. Publications/ClimateChange-FS-June2009.pdf 59. FAO 2008. (accessed July 6, 2009). 60. von Braun and others 2008; World Bank 88. http://unfccc.int/meetings/cop_13/items/ 2009a. 4049.php (accessed August 1, 2009). 61. Sterner 2007. The average fuel price in the 89. The development and aid community Euro area in 2007 was more than twice what it was has been moving toward impact evaluation and in the United States ($1.54 a liter as opposed to 63 results-based aid, suggesting a degree of frus- cents a liter). Variations in emissions not driven tration with input-based programs (where the by income can be captured by the residuals of a quantity of funds disbursed and the number of regression of emissions per capita on income. schools built were monitored, as opposed to the When these residuals are regressed on gasoline number of children graduating from schools or Overview: Changing the Climate for Development 29 improvements in their performance). However, Ibitoye, C. J. Jepma, W. A. Pizer, and K. Yamaji. there is some difference in the way "input-based" 2007a. "Mitigation From a Cross-Sectoral Per- approaches are defined in this case, because the spective." In Climate Change 2007: Mitigation. "inputs" are policy changes rather than narrowly Contribution of Working Group III to the Fourth defined financial inputs--adoption and enforce- Assessment Report of the Intergovernmental ment of a fuel efficiency standard rather than Panel on Climate Change, ed. B. Metz, O. 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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 · ········· · ··· · · · · · ······ ·· ·· ·· ··· ·· · ···· ········ · ·· · ··· · ·· ·· ·· ····· ·· · · · · · · · · ·· ···· · ·· ····· · · · · · ·· ··· · · · · ·· ······ · · ······ ····· · ·· ·· ·· ··· ··· · · ·· · ·· · · ·· · ············ ····· ··· ···· ······ ·· ····· · ·· ·· · · ·· ··· · ·· · ·· ·········· ·· · ······ · ······ ·· ·· · ·· ········· · · ·· ··· ········ ·· ··· · ·· · ····· ··· · ··· ·· ·· ·· · · · ··· · · · ··· ·· ·· ··· ·· · HWANG HE ····· ·· ···· · · · ········· · ··············· · ·· · · · · ·· · · ·· 150 million ··· · · · ·· · · ····· ··· ·· · · · ·· ··· ··· · ·· · · ·· ··· · · ··· · · ·· ··· · ··· ·· ······ · ·· INDUS ·· · · ·· · · · ·· 200 million · · · · · · ·· · · · ·· · · ·· · · ·· ··· ·· · · ·· · · · · ··· · ······· ·· · · · · ·· · · · · · ·· ··· ········ · · ·· ········· · ····· · ·· · ··· · · ···· · ·· · ······················· · ··········· ········ ·· · ·· ··· · ·· · ··· · · ·· ·· · ·· ··· ·· ······· ··· · · · ··· ··· · · · · ·· · · · ····· · ··· · ·· ·· · ·· ··············· ··· ··· · ······· ··· ·· ·· ··· ······ · · · ·· · ·· YANGTZE ··· · ··· ·· · ··· ·· · · · · ·· ··· ·· · BRAHMAPUTRA · · ···· ·· · ······ · · ·········· ··· · · · ···· · · · ·· ···· ··· · 450 million GANGES · 60 million ·· · 400 million GANGES- BRAHMAPUTRA DELTA 120 million IRRAWADDY SALWEEN MEKONG 35 million 20 million 60 million Population density (persons/sq. km) 0­100 101­250 251­500 501­1000 Rivers 1001­2000 >2000 No data River basins ·· ··· ····· ·· ··· ···· ··· ···· · Glaciers 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 China Uganda Chad; 5 Kenya; Niger; Rwanda India 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. Unmitigated climate change is Climate change threatens to reverse incompatible with sustainable development gains development An estimated 400 million people escaped Development that is socially, economically, poverty between 1990 and 2005, the date of and environmentally sustainable is a chal- the latest estimate8--although the unfolding lenge, even without global warming. Eco- global financial crisis and the spike in food nomic growth is needed, but growth alone prices between 2005 and 2008 have reversed is not enough if it does not reduce poverty some of these gains.9 Since 1990 infant mor- and increase the equality of opportunity. tality rates dropped from 106 per 1,000 live And failing to safeguard the environment births to 83.10 Yet close to half the popula- eventually threatens economic and social tion of developing countries (48 percent) are achievements. These points are not new. still in poverty, living on less than $2 a day.11 They only echo what still is, after more than Nearly a quarter--1.6 billion--lack access 20 years, perhaps the most widely used defi- to electricity,12 and one in six lack access to nition of sustainable development: "devel- clean water.13 Around 10 million children opment that meets the needs of the present under five still die each year from prevent- without compromising the ability of future able and treatable diseases such as respira- generations to meet their own needs." 7 tory infections, measles, and diarrhea.14 40 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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- 2­2.5°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 Source: Robine and others 2008. Note: Deaths attributed to the heat wave are those estimated to be in excess of the deaths that would have occurred in the absence of the heat wave, based on average baseline mortality trends. 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 $6,000. Higher World Health Organization estimates that temperatures are likely to increase cardio- climate change caused a loss of 5.5 mil- vascular illness, especially in the tropics but lion disability-adjusted life years in 2000-- also in higher-latitude (and higher-income) 84 percent of them in Sub-Saharan Africa and countries--more than offsetting the relief East and South Asia.28 As temperatures rise, from fewer cold-related deaths.31 42 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 Map 1.3 Climate change is likely to increase poverty in most of Brazil, especially its poorest regions Median income ($PPP) Effects of climate change on poverty (percentage points) < 4000 4001­5000 5001­6000 6001­7000 -4­0 0­1 1­2 2­3 7001­8000 8001­10000 >10000 No data 3­4 4­5 >5 No data 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 BOX 1.1 Empowered women improve adaptation and mitigation outcomes Women and men experience climate postdisaster recovery indicate that put- Women represent at least half of the change differently. Climate-change ting women in charge of food distribution world's agricultural workers, and women impacts and policies are not gender systems results in less corruption and more and girls remain predominantly respon- neutral because of differences in respon- equitable food distribution. sible for water and firewood collection. sibility, vulnerability, and capacity for Adaptation and mitigation potential, mitigation and adaptation. Gender-based Women's participation boosts especially in the agriculture and forestry patterns of vulnerability are shaped by the biodiversity and improves water sectors, cannot be fully realized without value of and entitlement to assets, access management employing women's expertise in natural to financial services, education level, social Between 2001 and 2006 the Zammour resource management, including tradi- networks, and participation in local orga- locality in Tunis saw an increase in veg- tional knowledge and efficiency in using nizations. In some circumstances, women etal area, biodiversity preservation, and resources. are more vulnerable to climate shocks stabilization of eroding lands in the to livelihoods and physical safety--but mountainous ecosystem--the result of an Women's participation supports there is evidence that in contexts where antidesertification program that invited public health women and men have equal economic women to share their perspectives during In India indigenous peoples know medici- and social rights, disasters do not discrimi- consultations, incorporated local women's nal herbs and shrubs and apply these for nate. Empowerment and participation of knowledge of water management, and therapeutic uses. Indigenous women, as women in decision making can lead to was implemented by women. The proj- stewards of nature, are particularly knowl- improved environmental and livelihood ect assessed and applied innovative and edgeable and can identify almost 300 outcomes that benefit all. effective rainwater collection and preser- useful forest species. vation methods, such as planting in stone Women's participation in disaster pockets to reduce the evaporation of irri- Globally, whether in Central America, management saves lives gation water, and planting of local species North Africa, South Asia, or Southern Community welfare before, during, and of fruit trees to stabilize eroded lands. Africa, gender-sensitive climate change after extreme climatic events can be adaptation and mitigation programs improved by including women in disaster Women's participation enhances show measurable results: women's full preparedness and rehabilitation. Unlike food security and protects forests participation in decision making can other communities that witnessed numer- In Guatemala, Nicaragua, El Salvador, and and will save lives, protect fragile natural ous deaths, La Masica, Honduras, reported Honduras women have planted 400,000 resources, reduce greenhouse gases, and no deaths during and after Hurricane Mitch maya nut trees since 2001. Beyond build resilience for current and future in 1998. Gender-sensitive community enhanced food security, women and their generations. Mechanisms or financing for education on early warning systems and families can benefit from climate change disaster prevention, adaptation, and miti- hazard management provided by a disas- finance, as the sponsoring Equilibrium gation will remain insufficient unless they ter agency six months before the hurricane Fund pursues carbon-trading opportuni- integrate women's full participation-- contributed to this achievement. Although ties with the United States and Europe. voices and hands--in design, decision both men and women participated in In Zimbabwe, women lead over half of making, and implementation. hazard management activities, ultimately, the 800,000 farm households living in women took over the task of continuously communal areas, where women's groups Sources: Contributed by Nilufar Ahmad, monitoring the early warning system. Their manage forest resources and develop- based on Parikh 2008; Lambrou and Laub enhanced risk awareness and manage- ment projects through tree planting, 2004; Neumayer and Plumper 2007; Smyth ment capacity enabled the municipality to nursery development, and woodlot own- 2005; Aguilar 2006; UNISDR 2007; UNDP evacuate promptly. Additional lessons from ership and management. 2009; and Martin 1996. 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 not always produce good planning (and by Nanchang extension, good adaptation). Nor do high Changsha average incomes guarantee protection for Jingjiu Line Fuzhou the poorest communities. Mitigation policies--for better or worse. Mitigation policies can be exploited to pro- Guangzhou vide economic co-benefits in addition to Shenzhen emission reductions and can create local VIETNAM and regional opportunities. Biofuels could LAO make Brazil the world's next big energy P.D.R. supplier--its ethanol production has more than doubled since the turn of the century.51 A large share of unexploited hydropower Provinces affected high T Travel flow from coastal potential is in developing countries, par- Minimally/not affected medium regions to rural regions low ticularly in Sub-Saharan Africa (map 1.5). Moderately affected Railway network North Africa and the Middle East, with Severely affected year-round exposure to sunlight, could Major passenger rail line benefit from increased European demand for solar energy (see chapter 4, box 4.15).52 Sources: ACASIAN 2004; Chan 2008; Huang and Magnoli 2009; United States Department of Agriculture Foreign Yet comparative advantage in renewable Agricultural Service, Commodity Intelligence Report, February 1 2008, http://www.pecad.fas.usda.gov/high- energy production in many countries still lights/2008/02/MassiveSnowStorm.htm (accessed July 14, 2009); Ministry of Communications, Government of the People's Republic of China, "The Guarantee Measures and Countermeasures for Extreme Snow and Rainfall is not optimally exploited, evidenced by Weather," February 1 2008, http://www.china.org.cn/e-news/news080201-2.htm (accessed July 14, 2009). the proliferation of solar power produc- Note: Width of arrows reflects estimates of size of travel flows during the Chinese New Year holiday, based on reversal of estimated labor migration flows. Total internal migration is estimated between 130 million and 180 tion in Northern Europe rather than North million people. Assessment of severity of the storm's impact is based on cumulative precipitation in the month Africa. of January and Chinese news and government communications at the time of the storm. 46 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 Map 1.5 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 2.50 Current hydropower production Zambezi 2.00 1.50 Orange 1.00 0.50 0.00 United States Sub-Saharan Africa Economically feasible hydropower in Sub­Saharan Africa (GWh per year) < 2,000 2,001­5,000 5,001­10,000 10,001­50,000 Undetermined or not applicable 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 7­8 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 5­20 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 10­20 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 ability distribution of such catastrophic The economics of decision making risks is unknown and will likely remain so. under uncertainty makes a case that uncer- More aggressive mitigation almost surely tainty about the effects of climate change will reduce their likelihood, though it is calls for more rather than less mitigation.85 very difficult to assess by how much. The Uncertainty makes a strong argument for possibility of a global catastrophe, even one adopting an iterative approach to selecting with very low probability, should increase targets--starting with an aggressive stance. society's willingness to pay for faster and This is not lessened by the prospect of more aggressive mitigation to the extent learning (acquiring new information that that it helps to avoid calamity.83 changes our assessment of uncertainty). Even without considering these cata- strophic risks, substantial uncertainties Normative choices on aggregation and values. remain around climate change's ecologi- Climate change policies require tradeoffs cal and economic impacts. The likely pace between short-term actions and long-term and ultimate magnitude of warming are benefits, between individual choices and unknown. How changes in climate vari- global consequences. So climate change ability and extremes--not just changes in policy decisions are driven fundamentally mean temperature--will affect natural sys- by ethical choices. Indeed, such decisions are tems and human well-being is uncertain. about concern for the welfare of others. Knowledge is limited about people's ability Directly including the benefits from to adapt, the costs of adaptation, and the nonmarket environmental goods--and magnitude of unavoided residual damages. their existence for future generations-- Uncertainty about the speed of discovering, in economic models of well-being is one disseminating, and adopting new technolo- approach for capturing these tradeoffs.87 gies is also substantial. In practice the ability to quantify such These uncertainties only increase with tradeoffs has been limited, but this frame- the pace and amount of warming--a major work does provide a point of departure for argument for immediate and aggressive further assessment of the increased value action.84 Greater uncertainty requires adap- that societies assign to the environment tation strategies that can cope with many as income increases, of possible tradeoffs different climates and outcomes. Such between current consumption and costly strategies exist (and are discussed below), efforts to safeguard the welfare--and exis- but they are less efficient than strategies tence--of future generations.88 that could be designed with perfect knowl- Moreover, the way a model aggregates edge. So uncertainty is costly. And more impacts across individuals or countries of uncertainty increases costs. different income levels significantly affects Without inertia and irreversibility, the value of estimated losses.89 To capture a uncertainty would not matter so much, dimension of equity additional to the inter- because decisions could be reversed and generational concerns expressed in the dis- adjustments would be smooth and cost- count rate, equity weights can be applied to less. But tremendous inertia--in the cli- reflect that the loss of a dollar means more mate system, in the built environment, to a poor person than to a rich one. Such and in the behavior of individuals and an approach better captures human welfare institutions--makes it costly, if not impos- (rather than just income). And because poor sible, to adjust in the direction of more people and poor countries are more exposed stringent mitigation if new information is to climate change, this approach substan- revealed or new technologies are slow to tially increases estimated aggregate losses be discovered. So inertia greatly increases from climate change. By contrast, summing the potential negative implications of cli- up global damages in dollars and expressing mate policy decisions under uncertainty. them as a share of global GDP--implicitly And uncertainty combined with inertia weighting damages by contribution to total and irreversibility argue for greater pre- output--amounts to giving a much lower cautionary mitigation. weight to the losses of poor people. Understanding the Links between Climate Change and Development 53 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 BOX 1.4 Ethics and climate change The complexity of climate change high- direct and indirect effects on exercising allocated according to each country's or lights several ethical questions. Issues and realizing civil and political rights. But group's contribution to climate change. of fairness and justice are particularly establishing causation and attribution is a A particular version of this view is that important given the long temporal and serious problem and may limit the scope cumulative historical emissions need to geographical disconnect between green- for applying human rights law to interna- be taken into account when establish- house gas emissions and their impacts. tional or domestic disputes. ing responsibilities. A counterargument At least three major ethical dimensions Because the causes of climate change holds that "excusable ignorance" grants arise in the climate change problem: are diffuse, the direct link between the immunity to past emitters, because they evaluating impacts, considering intergen- emissions of a country and the impacts were not aware of the consequences of erational equity, and distributing respon- suffered in another are difficult to estab- their actions, but this argument has been sibilities and costs. lish in a litigation context. A further obsta- criticized on the grounds that the poten- cle to defining responsibility and harm in tial negative effects of greenhouse gases Evaluating impacts legal terms is the diffusion of emissions on the climate have been understood for Several disciplines, economics included, and impacts over time: in some cases, some time. argue that welfare should be the over- the source of the harm has occurred over A further dimension of responsibility arching criterion in policy evaluation. But multiple generations, and the damages concerns how people have benefited even within a "discounted utilitarianism" felt today may also by felt by many future from the past emissions of greenhouse framework, there are large disagree- generations. gases (see overview figure 3). While these ments, most notably about which dis- benefits clearly have been enjoyed by count rate to use and how to aggregate Considering intergenerational equity the developed countries, which have welfare across individuals in the present Intergenerational equity is an integral contributed the bulk of atmospheric CO2 and future. One common argument is part of the evaluation of impacts. How so far, developing countries also gained that there is no sound ethical reason to intergenerational equity is incorporated some benefits from the resulting prosper- discount economic and human impacts in an underlying economic model has sig- ity. One response is to ignore the past just because they are anticipated to hap- nificant implications. As noted in box 1.2, and allot equal per capita entitlements pen 40--or even 400--years hence. A standard present-value criteria discount to all future emissions. Yet another view counterargument is that it is not equita- future costs and benefits, collapsing the recognizes that what is ultimately impor- ble for the current generation to allocate distribution of welfare over time to the tant is not the distribution of emissions resources to mitigating future climate present moment. Alternative formula- but rather the distribution of economic change if other investments are seen to tions include maximizing the current gen- welfare, including climate change dam- have a higher return, thus coming back to eration's utility, incorporating its altruistic ages and mitigation costs. This suggests the problem of weighing costs and ben- concerns for future generations, and that in a world of unequal wealth, greater efits of alternative uncertain options. taking into account the uncertainty of the responsibility for bearing costs falls to Recent discussion has focused on existence of future generations. the better off--although this conclusion human rights as the relevant criterion does not preclude mitigation actions for evaluating impacts. Some human Distributing responsibilities being undertaken in poorer countries rights--particularly economic and social and costs with external finance provided by high- rights--will be jeopardized by climate- Probably the most contentious issue income countries (see chapter 6). change impacts and possibly some policy is who should bear the burden of solv- responses. These include the right to ing the climate change problem. One food, the right to water, and the right to ethical response is the "polluter pays" Sources: Singer 2006; Roemer 2009; Caney shelter. Climate impacts may also have principle: responsibilities should be 2009; World Bank 2009b. 54 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 Alternative frameworks for decision The guardrails approach does not making require a monetary estimate of the damages, Uncertainty, inertia, and ethics point to the because the constraints are determined by need for caution and thus to the need for what is judged to be tolerable in each system more immediate and aggressive mitigation, (for instance, it might be difficult to trans- but the analytical debate over how much late into GDP figures the number of people more continues among economists and displaced after a severe drought). Drivers policy makers. The conclusions of differ- of the value of emission guardrails include ent cost-benefit analyses are very sensitive scientific analysis of the potential for to initial assumptions such as the base- threshold effects, as well as nonmonetized line scenario, the abatement and damage judgments about residual risks and vulner- functions, and the discount rate, includ- abilities that would remain under differ- ing implicit assumptions embedded in ent mitigation and adaptation strategies. model formulations93 --which can lead to The costs of remaining within proposed decision-making gridlock. sets of guardrails need to be considered in Alternative decision-making frame- relation to the judgments surrounding the works that incorporate broader- based levels of climate safety provided by the dif- assessments of costs and benefits, allow- ferent guardrails. On this sort of multicri- ance for risk aversion, and the impli- teria basis, decision makers can make an cations of ethical judgments can more informed and more comprehensive assess- effectively support decision making in ment of where it is best to set the guardrails the face of numerous knowledge gaps and (and this assessment can be periodically obstacles. Including some of the valuation revisited over time). issues noted above (option values, ecosys- This approach can be complemented by tem services, risks of discontinuities) into decision support techniques, such as robust a broader cost-benefit analysis is desirable decision making, to address difficult-to- (albeit difficult). More, however, is needed evaluate uncertainties.96 In the context of to make the normative consequences of unknown probabilities and a highly uncer- policy choices as transparent as possible to tain future, a robust strategy answers the inform decision makers aiming to estab- question, "What actions should we take, given lish concrete environmental and develop- that we cannot predict the future, to reduce ment targets and policies. That can help the possibility of an undesirable outcome to them win the support of the myriad stake- an acceptable level?"97 In the context of cli- holders who will experience the real-world mate change, policy becomes a contingency costs and benefits. problem--what is the best strategy given a One alternative is a tolerable windows, variety of possible outcomes?--rather than a or "guardrail," approach. A window of traditional optimization problem. The intel- mitigation goals, or a range bounded by lectual underpinnings of this approach are guardrails, is chosen to limit tempera- not new; they can be traced back to the work ture change and the rate of change to by Savage in the early 1950s on "minimizing what are considered--heuristically or on the maximum regret."98 the basis of expert judgment--to be tol- Looking for robust rather than just opti- erable levels.94 The window is defi ned by mal strategies is done through what essen- constraints derived from several climate- tially amounts to scenario-based planning. sensitive systems. One constraint could be Different scenarios are created, and alter- determined by society's aversion to a given native policy options are compared based GDP loss, associated with a given amount on their robustness--the ability to avoid a and rate of temperature change. A second given outcome--across the different sce- could be defi ned by society's aversion to narios. Such analysis includes "shaping social strife and inequitable impacts. A actions" that influence the future, "hedg- third could be concern about warming ing actions" that reduce future vulnerabil- thresholds, beyond which certain ecosys- ity, and "signposts" that indicate the need tems collapse.95 for a reassessment or change of strategies. Understanding the Links between Climate Change and Development 55 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 $6.2 mies toward long-lived, low-carbon infra- billion for weatherizing homes--will create structure, reduced emissions, and increased an estimated 325,000 jobs a year.132 resilience.127 Investments in energy effi- In most developing countries the projects ciency in public buildings, for instance, are in stimulus packages do not have a strong appealing because they are usually "shovel emission-reduction component, but they ready," are very labor intensive, and generate could improve resilience to climate change Figure 1.4 Global green stimulus spending is rising Size of green share of total stimulus package ($, billions) 94.1 Size of total stimulus package ($, billions) 221.3 787.0 12.4 586.1 485.9 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 Source: Robins, Clover, and Singh 2009. 60 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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 Progresa­Oportunidades in Mexico powerful element of success (see chapter 8). and Bolsa Escola­Bolsa Familia in Brazil, Understanding the Links between Climate Change and Development 61 among the best innovations in social policy 22. IPCC 2007b. in decades.138 23. Cruz and others 2007. The current crisis has eroded faith in 24. Easterling and others 2007. unregulated markets. As a consequence, 25. Auffhammer, Ramanathan, and Vincent 2006. better regulation, more intervention, and 26. Guiteras 2007. greater government accountability are 27. Ligon and Sadoulet 2007. expected. For dealing with climate change, 28. Campbell-Lendrum, Corvalan, and Pruss- additional climate-smart regulation is Ustun 2003. needed to induce innovative approaches to 29. Among the many diverse regions and coun- mitigation and adaptation. Such policies tries affected are Colombia (Vergara 2009), the create an opening for the scale and scope of Caucasus (Rabie and others 2008), Ethiopia (Con- government interventions needed to correct falonieri and others 2007), and the islands of the climate change--the biggest market failure South Pacific (Potter 2008). in human history. 30. Molesworth and others 2003. 31. Confalonieri and others 2007. 32. Confalonieri and others 2007; Morris and Notes others 2002. 1. Weiss and Bradley 2001. 33. Carter and others 2007. 2. Ristvet and Weiss 2000. 34. World Bank 2001. 3. Weiss 2000. 35. Azariadis and Stachurski 2005. 4. Harrington and Walton 2008; IWM and 36. Lokshin and Ravallion 2000; Jalan and CEGIS 2007. Ravallion 2004; Dercon 2004. 5. Schmidhuber and Tubiello 2007. 37. Dercon 2004. 6. Bates and others 2008. 38. Mueller and Osgood 2007. 7. WCED 1987. 39. Azariadis and Stachurski 2005. 8. Chen and Ravaillon 2008. 40. Rosenzweig and Binswanger 1993. 9. World Bank 2009a. 41. Jensen 2000. 10. United Nations 2008. 42. Alderman, Hoddinott, and Kinsey 2006. 11. Chen and Ravaillon 2008. 43. Figures include all greenhouse gases but 12. IEA 2007. do not include emissions from land-use change. 13. United Nations 2008. If estimates of land-use change emissions are 14. United Nations 2008. added, the share of developing countries in 15. UNDP 2008. global emissions is closer to 60 percent. 16. IARU 2009. 44. WRI 2008. 17. Smith and others 2009. 45. Chomitz and Meisner 2008. 18. Patriquin and others 2005; Patriquin, 46. Authors' calculations, based on data from Wellstead, and White 2007; Pacific Institute for CAIT (WRI 2008). Greenhouse gas emissions Climate Solutions 2008. (excluding land-use change) per capita range 19. Note that this relationship holds even when from 4.5 to 55.5 metric tons CO2e (7 to 27, if controlling for the fact that poorer countries tend to small-island states and oil producers are excluded) be warmer on average. Dell, Jones, and Olken 2008. among high-income countries. Emissions per 20. Dell, Jones, and Olken 2008. $1,000 of output at market exchange rates range 21. Brown and others 2009. from 0.15 to 1.72 metric tons in high-income "Take care of your earth, Look after its creatures. Don't leave your children, A planet that's dead." --Lakshmi Shree, India, age 12 62 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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 65­70 percent of the emission reduction, or trends if significant damages occur with warming 45­70 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. 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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 2.5­7°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 0.2­0.3°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- BOX FA.1 The carbon cycle The amount of carbon dioxide (CO2) in the atmosphere is controlled by biogeo- ATMOSPHERE (824) chemical cycles that redistribute carbon among the ocean, land, living material, Land sinks and atmosphere. The atmosphere cur- Gross and land-use rently contains about 824 gigatons (Gt) of primary change Ocean-to-atmosphere Fossil fuel combustion carbon. Human- caused emissions of car- Respiration production emissions flux and industrial processes bon in 2007 totaled about 9 Gt of carbon, of which about 7.7 Gt (or 28.5 Gt of CO2) were from the combustion of fossil fuel 119.6 120.2 2.7 1.5 92.2 90.6 7.7 and the rest were from changes in land cover. (One Gt equals a billion metric tons. To convert carbon emissions and fluxes to CO2 amounts, multiply the amount of carbon by 3.67.) The atmospheric concentration of CO2 is currently increasing at a rate of OCEAN (38,000) Carbon (Gt) about 2 parts per million (ppm) a year, Natural flux which is equivalent to an increase in the VEGETATION AND SOILS (2,300) Anthropogenic flux atmospheric loading of carbon by about SINK (carbon stored) 4 Gt of carbon a year (in other words, Source: Adapted from IPCC 2007b. about half of the fossil-fuel emissions of CO2 lead to a long-term increase in the termed, is assumed to result mainly from and the frequency of fire, pest infesta- atmospheric concentration). The rest of changes in land cover (net increases tions, drought, and heat stress increases. the CO2 emissions are being taken up by in forest cover from reforestation and If fossil-fuel emissions continue on a "carbon sinks"--the ocean and terrestrial afforestation in excess of deforestation) business-as-usual path, uptake of emis- ecosystems. The oceans take up about and increased carbon uptake because of sions by forests and other terrestrial eco- 2 Gt of carbon a year (the difference enhanced growth of the world's forests systems may slow and even reverse, with between the 90.6 and the 92.2 indicated in response to higher CO2 concentrations these ecosystems becoming a net source in the figure, plus a small land-to-ocean (known as the CO2 fertilization effect). of emissions by the end of the century, flux). The net uptake of carbon by oceans Terrestrial ecosystems hold about according to some models. And warmer and by terrestrial systems (photosynthe- 2,300 Gt of carbon--roughly 500 Gt in oceans will absorb CO2 more slowly, so a sis minus respiration) and the estimates above-ground biomass and about three greater fraction of fossil-fuel emissions of emissions from land-use change and times that amount in the soils. Reducing will remain in the atmosphere. fossil-fuel combustion would result in deforestation needs to be an important atmospheric concentrations higher than component of slowing emissions growth. Sources: Fischlin and others 2007; IPCC are recorded. It appears that terrestrial While every effort should be made to 2000; IPCC 2001; Canadell and others 2007; ecosystems are currently taking up the increase land storage of carbon, there Houghton 2003; Prentice and others 2001; excess. A 2.7 Gt "residual sink," as it is will be challenges as the climate changes Sabine and others 2004. 72 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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- Figure FA.1 Global emissions of greenhouse gases have been increasing a. Increases over time b. Composition of global emissions in 2004 Gt CO2e/year 5 N2O other 0 N2O agriculture F-gasses N 2O 1.1% 7.9% 10 CH4 other CH4 waste 5 CH4 agriculture CH4 CH4 energy 14.3% 0 10 5 CO2 decay and peat CO2 deforestation CO2 (fossil 0 fuel use) CO2 56.6% 30 (deforestation, decay of biomass) 25 17.3% 20 CO2 other CO2 (other) 15 CO2 fossil fuel use 2.8% 10 5 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 Direct Changes observed to date and Reflective particles 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, 1880­2007 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 1901­2000 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 Temperature change (°C) <­1 ­1­ ­0.6 ­0.6­ ­0.2 ­0.2­0.2 No data 0.2­0.6 0.6­1 1­ 1.4 >1.4 Source: Goddard Institute for Space Studies, http://data.giss.nasa.gov/cgi-bin/gistemp/do_nmap.py?year_last=2009&month_last=07&sat=4&sst=1&type=anoms&mean_gen=07&y ear1=1990&year2=2008&base1=1951&base2=1980&radius=1200&pol=reg (accessed July 2009). Note: Yellow, orange, and red colors denote average increases in temperatures (°C) from 1980 to the present compared with the previous three decades. Warming has been greatest at high latitudes, especially in the Northern Hemisphere. b. Precipitation Precipitation change (millimeters per day) <­1 ­1­ ­0.5 ­0.5­ ­0.3 ­0.3­ ­0.1 ­0.1­0.1 0.1­ 0.3 0.3­0.5 0.5­1 >1 No data Source: Goddard Institute for Space Studies, http://data.giss.nasa.gov/cgi-bin/precipcru/do_PRCmap.py?type=1&mean_gen=0112&year1=1980&year2=2000&base1=1951&bas e2=1980 (accessed May 2009). Note: Yellow denotes increased precipitation in millimeters a day; blue denotes decreases from 1980 to present compared with the previous three decades. Drying has been greatest in continental interiors, while rainfall has become more intense in many coastal areas. The changing geographic distribution of rainfall has serious implications for agriculture. 76 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.5 Embers burning hotter: Assessment of risks and damages has increased from 2001 to 2007 2001 assessment 2007 assessment 5 5 Risks to Large Negative Net Higher Risks to Large Negative Net High Increase in global mean temperature above circa 1990 (°C) many increase for most negative many increase for most negative regions in all regions in all metrics metrics 4 4 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 Source: Reproduced from Smith and others 2009. Notes: The figure shows risks from climate change, as described in 2001 (left) compared with updated data (right). Climate-change consequences are shown as bars and the increases in global mean temperature (°C) above today's levels (0 degrees to 5 degrees). Each column corresponds to a specific kind of impact. For example, "unique and threat- ened systems," such as alpine meadows or arctic ecosystems, are the most vulnerable (illustrated by the shading in column A) and only a small change in temperature may lead to great loss. The color scheme represents progressively increasing levels of risk from yellow to red. Between 1900 and 2000 global average temperature increased by ~0.6°C (and by nearly 0.2°C in the decade since) and has already led to some impacts. Since 2001 the assessed risk of damages has increased even for temperatures of an additional 1°C above today's levels, or about 2°C total above preindustrial levels. 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 0.4­1.7 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 Figure FA.6 Projected impacts of climate change by region Global mean annual temperature change relative to preindustrial era (°C) 0.8 1.8 2.8 3.8 4.8 5.8 10 to 15% 25 to 40% Sub-Saharan species at risk of extinction AFRICA Semi-arid/ arid areas increase by 5 to 8% 75 to 250 350 to 600 Additional people with increased water stress million million 2 to 5% decrease wheat and 5 to 12% decrease rice Crop yield maize in India potential in China Additional people at ASIA Up to 2 million Up to 7 million risk of coastal flooding each year 0.1 to 1.2 0.2 to 1.0 Additional people with increased water stress billion billion Annual bleaching of Great Barrier Reef AUSTRALIA/ 3,000 to 5,000 more heat related deaths per year NEW ZEALAND ­10% Murray-Darling River flow ­50% Decreasing water security in south and east Australia and parts of east New Zealand +5 to +15% in North +10 to +20% Water availability 0 to ­25% in South ­5 to ­35% EUROPE +2 to +10% in North +10 to +25% +10 to +30% Wheat yield potential +3 to +4% in South ­10 to +20% ­15 to +30% Potential extinction of about 25% Potential extinction of about Central Brazilian savanna tree species 45% Amazonian tree species LATIN Many tropical glaciers disappear Many mid-latitude glaciers disappear AMERICA 10 to 80 80 to 180 Additional people with increased water stress million million 5 to 20% increase crop 70 to 120% increase forest yield potential area burned in Canada NORTH Decreased space heating and increased space cooling AMERICA 3 to 8 times increase About 70% increase in hazardous in heat wave days in ozone days some cities Increase in depth of 10 to 50% Arctic tundra seasonal thaw of 10 to 15% 15 to 25% 30 to 50% replaced by forest POLAR Arctic permafrost 15 to 25% polar desert 20 to 35% reduction of REGIONS replaced by tundra Arctic permafrost area 20 to 35% decrease annual average Arctic sea ice area Increasing coastal inundation and damage to infrastructure due to sea-level rise Alien species colonize mid- SMALL and high latitude islands ISLANDS Agricultural losses up to 5% GDP in high terrain islands, up to 20% GDP in low terrain islands 0 1 2 3 4 5 Global mean annual temperature change relative to 1980­99 (°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 BOX FA.2 Ocean health: Coral reefs and ocean acidification The oceans will become more acidic affected are plankton, which form the base Coral reefs are already being pushed to over the coming decades and centuries of the marine food chain and are a major their thermal limits by recent temperature as a direct chemical consequence of the food source for fish and marine mammals. increases. Higher sea surface temperatures increasing atmospheric concentration of From the evidence available, there is sig- stress corals and cause coral bleaching CO2. Absorption of approximately one- nificant uncertainty about whether marine (the loss or death of symbiotic algae), fre- third of manmade emissions of CO2 over species and ecosystems will be able to quently resulting in large-scale mortality. the past 200 years has decreased the pH acclimate or evolve in response to such An ecological "tipping point" is likely to of surface seawater by 0.1 units (pH, the rapid changes in ocean chemistry. At this be crossed in many areas if ocean tem- degree of acidity or alkalinity, is measured stage, research into the impacts of high peratures increase to more than 2°C above on a logarithmic scale, and a 0.1 decrease concentrations of CO2 in the oceans is still their preindustrial levels, especially as in pH represents a 30 percent increase in in its infancy. ocean acidification reduces carbonate con- ocean acidity). Projected pH decreases in But for coral reefs, the adverse conse- centrations, inhibiting reef accretion. Once ocean surface waters over the next 100 quences are already becoming evident. the corals die, macroalgae colonize the years range from 0.3 to 0.5 units, which Coral reefs are among the marine ecosys- dead reefs and prevent regrowth of cor- would make the ocean more acidic than it tems most vulnerable to the changing als. Poor management can amplify these has been in many tens of millions of years.a climate and atmospheric composition dynamics, because overfishing of herbi- One of the most important implications of and are threatened by a combination of vore reef fish leads to greater macroalgae the changing acidity of the oceans is the direct human impacts and global climate abundance, and sediment and nutrient problem that it may cause for the many change. Their loss would directly affect runoff from deforestation and poor agri- marine photosynthetic organisms and millions of people. Coral reefs, both tropi- cultural practices promote macroalgae animals, such as corals, bivalves, and some cal and deep cold water, are global centers growth, exacerbating damage to corals. plankton species that make their shells and of biodiversity. They provide goods and Sources: Barange and Perry 2008; Doney plates out of calcium carbonate. The pro- services of roughly $375 billion a year to 2006; Fabry and others 2008; Wilkinson 2008. cess of "calcification" will be inhibited as nearly 500 million people. About 30 mil- a. Monaco Declaration, http://ioc3.unesco the water becomes more acidic. Some of lion of the world's poorest people directly .org/oanet/Symposium2008/Monaco the most abundant life forms that will be rely on coral reef ecosystems for food. Declaration.pdf (accessed May 2009). 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 20­40 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 2008­12 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 4­8 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 40­50 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 Melt of Arctic Sea Ice Loss Greenland Permafrost and Ice Sheet Climatic Tundra Loss Boreal Forest Change­Induced Boreal Forest Dieback Ozone Hole Dieback Sahara Indian Greening Monsoon Instability Dieback West African Change in ENSO Monsoon Shift of Amazon Amplitude or Frequency Rainforest Instability of West Antarctic Ice Sheet Source: Adapted from Lenton and others 2008. Note: Several regional-scale features of the climate system have tipping points, meaning that a small climate perturbation at a critical point could trigger an abrupt or irreversible shift in the system. These could be triggered this century depending on the pace and magnitude of climate change. Table FA.1 Potential tipping elements in the climate system: Triggers, time-scale, and impacts Tipping element Triggering level of warming Transition timescale Key impacts Disappearance of Arctic summer sea-ice +0.5­2°C ~10 years (rapid) Amplified warming, ecosystem change Melting of Greenland ice sheet +1­2°C >300 years (slow) Sea-level rise of 2­7 meters Melting of West Antarctic ice sheet +3­5°C >300 years (slow) Sea-level rise of 5 meters Collapse of Atlantic thermohaline circulation +3­5°C ~100 years (gradual) Regional cooling in Europe Persistence of El Niño-Southern Oscillation +3­6°C ~100 years (gradual) Drought in Southeast Asia and elsewhere (ENSO) Indian summer monsoon N/A ~1 year (rapid) Drought Sahara/Sahel and West African Monsoon +3­5°C ~10 years (rapid) Increased carrying capacity Drying and dieback of Amazon rainforest +3­4°C ~50 years (gradual) Biodiversity loss, decreased rainfall Northward shift of boreal forest +3­5°C ~50 years (gradual) Biome switch Warming of Antarctic bottom water Unclear ~100 years (gradual) Changed ocean circulation, reduced carbon storage Melting of tundra Ongoing ~100 years (gradual) Amplified warming, biome switch Melting of permafrost Ongoing <100 years (gradual) Amplified warming from release of methane and carbon dioxide Release of marine methane hydrates Unclear 1,000 to 100,000 years Amplified warming from release of methane Source: Adapted from Lenton and others 2008. Note: An expert elicitation of opinions about the probability of passing a tipping point in a subset of these systems--the melting of the West Antarctic ice sheet, melting of Greenland ice sheet, Amazon drying, and ocean circulation (Kriegler and others 2009)--estimated at least a 16 percent probability of one of these events for a warming of 2­4°C. The probability would rise to greater than 50 percent for a global mean temperature change above 4°C relative to year 2000 levels. In many cases, these numbers are considerably higher than the probability allocated to catastrophic events in current climate-damage assessments; for example, Stern (2007) assumed a 5­20 percent loss of the ice sheets with a 10 percent probability for a warming of 5°C. The science of climate change 81 Figure FA.7 Ways to limit warming to 2°C above preindustrial levels a. Idealized CO2 emission profiles b. Cumulative carbon emissions c. Temperature response Carbon/year (billion tons) Carbon (trillion tons) CO2 induced warming (°C) 1.2 4 14 1.0 12 Likelihood 3 10 0.8 8 0.6 2 2008 total 6 0.4 4 1 2 0.2 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 1900­1920 Source: Allen and others 2009a. Note: Three idealized CO2 emission paths (FA.7a) each consistent with total cumulative emissions (b) of 1 trillion tonnes of carbon. Each of the paths yields the same range of projected temperature increase (c) relative to uncertainty in the climate system's response (grey shading and red error bar), provided the cumulative total is unaffected. The blue, green, and red curves in FA.7a are all consistent with the 1 trillion tonne budget, but the higher and later the emissions peak, the faster the emissions have to decline to stay within the same cumulative emissions budget. Diamonds in FA.7c indicate observed temperatures relative to 1900­1920. While 2°C is the most likely outcome, temperature increases as high as 4°degrees above preindustrial levels cannot be ruled out. 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 0.1­0.6°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 convective rains become more intense, more "Are There Social Limits to Adaptation Brewer, P. G., and E. T. Peltzer. 2009. often leading to floods. At the same time, to Climate Change?" Climatic Change 93 "Oceans: Limits to Marine Life." 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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 temperature increases to 2­2.5°C above convincingly that ethics, culture, knowl- preindustrial levels. In the second the emis- edge, and attitudes toward risk limit human sions are much higher, leading eventually adaptation more than physical, biological, to temperatures about 5°C or more above or economic thresholds.9 The adaptation preindustrial levels.4 effort that will be required by future gener- Even on the lower temperature trajectory ations is thus determined by how effectively many ecosystems will come under increas- climate change is mitigated. ing stress, patterns of pests and disease will Incremental environmental impacts continue to change, and agriculture will imply stronger physical constraints on require significant changes in practice or future development. Climate-smart poli- displacement in location. On the higher cies will have to address the challenges of temperature trajectory most of the negative a riskier and more complex environment. trends will be even worse, and the few posi- Development practice has to be more adap- tive trends, such as increases in agricultural tive to shifting baselines, grounded in productivity in cooler cropping regions, strategies robust to imperfect knowledge.10 will be reversed. Agriculture will undergo Cropping strategies need to be robust under transformational change in practices and more volatile weather conditions by seeking locations. Storm intensity will be higher. to maintain long-term consistency in out- And sea levels are likely to rise by about one put rather than to maximize production. meter.5 Floods, droughts, and extreme tem- Urban planners in coastal cities need to peratures will be much more common.6 The anticipate demographic developments and past decade has been the hottest on record, new risks from rising seas or flooding. Pub- but by 2070 even the coolest years are likely lic health workers need to prepare for sur- to be hotter than now. As the physical and prising changes in climate-linked disease biological stresses arising from climate patterns.11 Information is crucial to sup- change increase, so will social tension. port risk-based planning and strategies--it On the higher trajectory, warming is the basis of good policy and better risk could trigger feedbacks in Earth systems management. that would make it difficult to further con- Managing ecosystems and their ser- strain temperature increases, regardless of vices will be more important and more mitigation. These feedbacks could rapidly difficult. Well-managed landscapes can collapse ecosystems, as some are predicting modulate flood waters. Intact coastal wet- for the Amazon and the boreal peat lands lands can buffer against storm damage. (see focus A). People in that higher-track But management of natural resources will world would see rapidly accelerating losses face a rapidly changing climate with more and costs reverberate through their societ- extreme events and with ecosystems under ies and economies--requiring adaptation increasing threats from stresses other than at a scale unprecedented in human history. climate (such as land-use and demographic International tensions could be expected change).12 Managing such physical risks is to rise over resources, and migration an integral part of climate-smart develop- away from the areas most affected would ment--an essential step to avoid avoidable increase.7 impacts on people. On the lower track, adaptation will However, not all physical impacts are be challenging and costly, and business- avoidable, particularly those linked to as-usual development will be far from extreme and catastrophic events whose sufficient. Broader and accelerated imple- probability is difficult to assess under cli- mentation of policies that have proved suc- mate change. Eliminating the risk of the cessful is paramount as is adaptation that most extreme events is not possible, and harnesses the ingenuity of people, institu- attempting to do so would be extremely tions, and markets. On the higher track costly given the uncertainty about the the question is whether warming may be location and timing of impacts. Being approaching, or already exceeding, lev- fi nancially prepared to cope with climate els to which we can adapt.8 Some argue impacts is critical for both households and Reducing Human Vulnerability: Helping People Help Themselves 89 government. This requires flexible risk- uncertainties because projections tend to spreading mechanisms. lose precision at finer scales--an inherent As chapter 1 discusses, the poor have the problem of downscaling from coarse, aggre- least capacity to manage physical and finan- gate models. If decision parameters cannot cial risk and to make longer-term adapta- be observed and measured,15 robust strate- tion decisions. Their lives are affected more gies (see chapter 1) that directly address the by climate, whether they practice subsis- reality of a world of shifting baselines and tence farming or are landless squatters in a intermittent disturbances16 are the appro- floodplain at the urban fringe. Other social priate framework in a context of unknown groups share many of the vulnerabilities of probabilities. the poor stemming from their lack of entitle- Accepting uncertainty as inherent to the ments, productive assets, and voice.13 Social climate change problem and robustness as policy, a critical complement to physical and a decision criterion implies changing deci- financial risk management, provides many sion-making strategies for long-lived invest- tools to help manage the risk affecting the ment and long-term planning. It demands most vulnerable and to empower commu- rethinking traditional approaches that nities to become agents in climate-change assume a deterministic model of the world management. in which the future is predictable. This chapter focuses on measures that First, priority should be given to no- will assist people in handling today's vari- regrets options: investment and policy able climate and the climate changes that options that provide benefits even with- occur over the next few decades. It fi rst out climate change. Such options exist in describes a policy framework based on almost every domain--in water and land strategies that are robust to climate uncer- management (see chapter 3), in sanitation tainty and management practices that are to reduce water-borne diseases (controlling adaptive in the face of dynamic conditions. sewer leakage), in disaster risk reduction It then looks at managing physical risks, (avoiding high-risk zones), in social protec- financial risks, and social risks. tion (providing assistance to the poor). But such options often are not implemented, Adaptive management: partly because of a lack of information and Living with change transaction costs but also because of cogni- Climate change adds an additional source of tive and political failures (see chapter 8).17 unknowns for decision makers to manage. Second, buying "safety margins" in new Real-world decision makers make decisions investments can increase climate resil- under uncertainty every day, even in the ience, often at low cost. For instance, the absence of climate change. Manufacturers marginal cost of building a higher dam or invest in flexible production facilities that including additional groups in a social pro- can be profitable across a range of produc- tection scheme can be small.18 Safety mar- tion volumes to compensate for unpredict- gins account not only for possible impacts able demand. Military commanders insist of climate change (more severe events) but on overwhelming numerical superiority. also for the uncertainty in socioeconomic Financial investors protect themselves development (changes in demand). against fluctuations in markets by diversi- Third, reversible and flexible options fying. All these forms of hedging are likely need to be favored, accepting that decisions to lead to suboptimal results for any fi xed can be wrong and thus keeping the cost of expectation about the future, but they are reversing them as low as possible. Restric- robust in the face of uncertainty.14 tive urban planning because of uncertain A compounding set of uncertainties-- flooding outcomes can be reversed more about demographics, technology, markets, easily and cheaply than future retreat or and climate--requires policies and invest- protection options. Insurance provides flex- ment decisions to be based on imperfect ible ways of managing risk and protecting and incomplete knowledge. Local and necessary investment when the direction national decision makers face even greater and magnitude of change are uncertain.19 90 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 Farmers transitioning to drought-tolerant Implementing such strategies through varieties (rather than investing in irriga- adaptive management entails continuous tion) can use insurance to protect their information development, f lexible and seasonal investment in new seeds from an robust planning and design, participa- exceptionally severe drought. For storm- tory implementation, and monitoring and prone areas a combination of early warning evaluation of feedback. It realigns decisions systems, evacuation plans, and (possibly and management with the scale of ecologi- expensive) property insurance can provide cal and social contexts and processes, such more flexibility to save lives and replace as watersheds and ecoregions, and can be homes than can protecting entire coastal driven by local or community management areas with infrastructure or depopulating systems.22 It stresses management informed them unnecessarily.20 by scientific and local knowledge, as well as Fourth, institutionalizing long-term policy experiments that develop under- planning requires forward-looking sce- standing, set learning as an objective, and nario analysis and an assessment of improve the ability to make decisions under strategies under a wide range of possible uncertainty (box 2.1).23 futures. This leads to periodic reviews of Involving stakeholders in planning investment (and, if necessary, revisions), increases ownership and the likelihood that and it improves policies and practices by actions will be sustained.24 Boston and Lon- iterative learning from outcomes. Widen- don both have climate-change strategies. In ing the spatial scope of planning is equally Boston the process was research-led, with critical to be prepared for changes that inconsistent stakeholder engagement. The may propagate over longer distances, such completed study, seen as overly technical, as the melting of glaciers that change the has had little impact. London used a bottom- water supply of urban zones hundreds up approach, engaging many stakeholders. of kilometers downstream, widespread And after the London Warming Report was droughts that affect regional grain mar- released, the Climate Change Partnership kets, or accelerated rural-urban migration evolved from the stakeholder organization caused by environmental degradation. But to continue adaptation planning.25 the required structural changes can be dif- A risk-based decision-making model ficult because of the inertia in prevailing favoring robustness and longer-term plan- management practices.21 ning, and appropriate local, community, and national governance structures is essential for adaptation to climate change.26 Increasing pressure on scarce resources BOX 2.1 Characteristics of adaptive management (land, water), combined with major socio- demographic transformations (population Adaptive management is an planning and capacity building, and growth, urbanization, globalization) and a approach to guide intervention in is aligned with ecological processes the face of uncertainty. The principal at appropriate spatial scale. It cre- shifting climate, provide much less room to idea is that management actions are ates an enabling framework for leave risks unmanaged. A storm hitting a informed by explicit learning from cooperation between administrative modern, rapidly growing coastal city has the policy experiments and the use of levels, sectors, and line departments; potential to cause a lot more damage than in new scientific information and tech- broad stakeholder participation the past when the coast was less populated nical knowledge to improve under- (including research centers and and built up. In the face of the uncertainty standing, inform future decisions, non- government organizations) in arising from climate change, robust strate- monitor the outcome of interven- problem solving and decisionmak- tions, and develop new practices. ing; and adaptable legislation to gies and adaptive management provide the This framework establishes mecha- support local action and respond to appropriate framework to better manage nisms to evaluate alternative scenar- new information. physical, financial, and social risks. ios and structural and nonstructural measures, understand and challenge Managing physical risks: assumptions, and explicitly consider Sources: Adapted from Raadgever and uncertainties. Adaptive manage- Avoiding the avoidable others 2008; Olsson, Folke, and Berkes ment has a long time horizon for 2004. Natural systems, when well managed, can reduce human vulnerability to climate risks Reducing Human Vulnerability: Helping People Help Themselves 91 and deliver developmental co-benefits, infrastructure and planning urban expan- reduce poverty, conserve biodiversity, and sion appropriately. Similarly, coastal man- sequester carbon. Ecosystem-based adap- grove forests protect against storm surges tation--maintaining or restoring natural partly by absorbing the flows and partly ecosystems to reduce human vulnerabil- by keeping human settlements behind the ity--is a cost-effective approach to reducing mangroves farther from the sea. climate risks and one that offers multiple benefits (see focus B). For example, forested Build climate-smart cities catchments buffer water flows from moder- Half the world's people now live in cities, a ate rains far better than nonforested catch- share that will rise to 70 percent by 2050.28 ments, but heavier rains quickly saturate Of urban population growth (5 million the sponge, so most water moves quickly new residents a month), 95 percent will be over the land.27 Well-vegetated wetlands in the developing world, with small cities downstream may be needed to further growing fastest. 29 Urban areas concen- buffer water flows while natural drainage trate people and economic assets, often in systems carry it away. But wetlands con- hazard-prone areas as cities have histori- verted to agriculture or urban settlements cally prospered in coastal areas and at the and simplified drainage systems inevitably confluence of rivers. In fact, low-elevation fail, leading to flooding. A comprehensive coastal zones at risk from rising sea lev- response to flood management includes els and coastal surges are home to about maintaining catchment cover, managing 600 million people globally and 15 of the wetlands and river channels, and siting world's 20 megacities (map 2.1).30 Map 2.1 At risk: Population and megacities concentrate in low-elevation coastal zones threatened by sea level rise and storm surges Population in low elevation coastal zones (LECZ) (%) Mega cities <2 2­5 5­10 10­20 Outside LECZ 20­50 >50 Landlocked countries/No data Inside LECZ Source: United Nations 2008a. Note: Megacities in 2007 included Beijing, Bombay, Buenos Aires, Cairo, Calcutta, Dhaka, Istanbul, Karachi, Los Angeles, Manila, Mexico City, Moscow, New Delhi, New York, Osaka, Rio de Janeiro, São Paulo, Seoul, Shanghai, and Tokyo. Megacities are defined as urban areas with more than 10 million inhabitants. 92 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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 BOX 2.3 Adapting to climate change: Alexandria, Casablanca, and Tunis Alexandria, Casablanca, and Tunis, each works to improve upstream watershed urban redevelopment projects, if carried with 3 million to 5 million people, are management and to broaden the main out, also risk increasing the city's vulner- assessing the extent of the projected drainage canals. Leaks in the household ability to rising seas. impacts of climate change and devising water distribution network have been Adaptation to climate change in Alex- adaptation scenarios for 2030 through an repaired, with the water saving equal andria, Casablanca, and Tunis should ongoing regional study. The cities' early to the consumption of about 800,000 occur primarily through improving responses to their increasing vulnerability people. But coastal zone management urban planning; identifying land-use and show uneven paths toward adaptation. remains a concern, given the limited tools expansion scenarios that would minimize In Alexandria the recent construction of to control construction and reduce sand vulnerability; addressing the vulnerability the corniche, a major six-lane highway built extraction from beaches. of key infrastructure assets, such as ports, right on the coast, has worsened coastal Tunis is also addressing its urban flood- roads, bridges, and water-treatment erosion and steepened the profile of the ing risks by improving drainage canals plants; and improving the capacity of seabed, causing storm surges to reach and controlling informal construction responsible institutions to coordinate farther into the city. Sea defenses are being around some natural reservoirs. Sea- responses and manage emergencies. In built without sufficient engineering stud- walls are being built to defend the most addition, energy efficiency in buildings ies or coordination among the responsible threatened coastal neighborhoods, and and municipal systems can be consistent institutions. A lake near the city, a natural the new master plan directs urban devel- with increasing resilience to climate receptacle for drainage waters, is suffering opment away from the sea. But the city change while reducing greenhouse gas acute pollution and real-estate pressures to center, already below sea level, is subsid- emissions. reclaim it for construction purposes. ing, and harbor and logistic facilities, as Casablanca responded to recent dev- well as power-generation and water- astating urban flooding episodes with treatment plants, are under threat. Major Source: Bigio 2008. 94 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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 Previous floods Population density (persons/sq. km) 2005 0­100 1001­2000 2004 101­250 >2000 2003 251­500 No data 2002 501­1000 Rivers Mek ong 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 3.5­4.5°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 BOX 2.4 Fostering synergies between mitigation and adaptation The spatial organization of cities, or their developments. Similarly, increased den- adaptation and mitigation are often urban form, determines energy use and sity combined with the paving of infiltra- related to building height, layout, spac- efficiency. The concentration of popula- tion areas hampers urban drainage that ing, materials, shading, ventilation, and tion and consumption tends to increase mitigates flooding. air-conditioning. rapidly during the early stage of urban- Climate-smart urban design can fos- Many climate-smart designs, combin- ization and development. Denser urban ter synergies between mitigation and ing ecological principles, social sensibili- areas have higher energy efficiency and adaptation. Promoting renewable energy ties, and energy efficiency, are planned shorter travel distances (see chapter 4, sources tends to favor the decentraliza- for urban areas in China, such as Dongtan, box 4.7). But increasing the density of tion of energy supply. Green spaces pro- close to Shanghai, but so far the plans people, economic activity, and infrastruc- vide shading and cooling, reducing the have largely remained blueprints. ture tends to amplify the effects of cli- need to air-condition buildings or to leave Sources: Girardet 2008; Laukkonen and mate on cities. For instance, green space the city during heat waves. Green-roofing others 2009; McEvoy, Lindley, and Handley can reduce the urban heat-island effects, can save energy, attenuate storm water, 2006; Wang and Yaping 2004; World Bank but it can also fall victim to building and provide cooling. Synergies between 2008g; Yip 2008. 96 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 Map 2.3 Northern cities need to prepare for Mediterranean climate--now Helsinki St. Petersburg Oslo Stockholm 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. BOX 2.5 Preparing for heat waves After heat waves in 2003 the Spanish Min- actions, and protection of at-risk Similar actions are under way else- istry of Health and CatSalut (the regional populations. where. Wales has a framework for heat- Catalan health service) implemented a · Level 2 is activated only if the tempera- wave preparedness and response. It comprehensive interministerial and inter- ture rises above the warning threshold establishes guidelines for preventing and agency action plan to blunt the effects (35°C in coastal areas and 40°C in inland treating heat-related illnesses, operates of future heat waves on health.a The plan areas), at which point health and social an early warning system during the sum- incorporates health responses and com- care and emergency service responses mer months, and has communication munications (at all levels of health care) are initiated. mechanisms with the meteorological triggered by a heat-health warning system. office.b Metropolitan Shanghai has a heat- The plan has three levels of action dur- The action plan and its health system health warning system as part of its multi- ing the summer season: response hinge on using primary health hazard management plan.c care centers (including social services) in · Level 0 starts on June 1 and focuses on the region. The centers identify and local- Sources: preparedness. ize vulnerable populations to strengthen a. CatSalut 2008. · Level 1 is triggered during July and outreach to them and disseminate public b. Welsh Assembly Government 2008. August and focuses on meteorological health information during the summer. c. Shanghai Multi-Hazard Early Warning Sys- assessments (including daily recordings They also collect health data to monitor and tem Demonstration Project, http://smb.gov. of temperature and humidity), disease evaluate the health impacts of heat waves cn/SBQXWebInEnglish/TemplateA/Default/ surveillance, assessment of preventive and the effectiveness of interventions. index.aspx (accessed March 13, 2009). Reducing Human Vulnerability: Helping People Help Themselves 97 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 UNITED STATES ociR otreuP HAITI )SU( 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 ).rF( anaiuG hcnerF PANAMA COLOMBIA ECUADOR PERU BRAZIL BOLIVIA PARAGUAY CHILE Change in incidence rates of dengue fever ARGENTINA in the Americas URUGUAY (% change between 1995­1997 and 2005­2007) Greatly increased rate (>100%) Increase from 0 cases to positive rate Increased rate (10% to 100%) Decreased rate (-100% to -10%) Source: PAHO 2009. Note: Infectious and vector-borne diseases have been expanding into new geographic areas all over the world. In the Americas the incidence of dengue fever has been rising because of increasing population density and widespread international travel and trade. Changes in humidity and temperature brought about by climate change amplify this threat and allows disease vectors (mosquitoes) to thrive in locations previously unsuitable for the disease; see Knowlton, Solomon, and Rotkin-Ellman 2009. 98 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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 1971­75 1976­80 1981­85 1986­90 1991­95 1996­2000 2001­05 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 1971­75 1976­80 1981­85 1986­90 1991­95 1996­2000 2001­05 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 1971­75 1976­80 1981­85 1986­90 1991­95 1996­2000 2001­05 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 1971­75 1976­80 1981­85 1986­90 1991­95 1996­2000 2001­05 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 2.8). At the national level, being finan- cially prepared to provide immediate assis- B OX 2 . 8 Creating jobs to reduce flood risk tance after disasters is critical for avoiding long-term losses for communities. Heavy rains are common in Liberia, for-work options, government officials yet drainage systems have not been embraced it. In September 2006 a one- maintained for decades because of year project to clear and rehabilitate Managing financial risks: Flexible years of neglect and civil war. As a drainage systems was launched in five instruments for contingencies result, flooding has triggered recur- counties. This significantly increased Public policy creates a framework that rent disasters in both rural and urban the flow of rainwater and reduced delineates clear roles and responsibilities for settings. Cleaning the drains was not flooding and related health risks. The the public sector, private sector, households, a priority for government officials or project also rehabilitated wells and citizens, because nobody had the improved market access by clearing and individuals. Core to such a framework resources. But after Mercy Corps, an roads and building small bridges. is a spectrum of risk management prac- international nongovernmental orga- tices with layered responsibilities. A minor nization, raised the possibility of cash- Source: Mercy Corps 2008. drought that causes small losses in crop production can be managed by households through informal and community-based risk sharing unless several small droughts homeowners receive a premium reduction if occur in short sequence (see chapter 1). A they install fire alarms). If climate is trend- more severe drought, one that occurs, say, ing in a predictable fashion (toward hotter every 10 years, can be managed through or drier weather conditions, for instance), risk transfer instruments in the private insurance is not viable. Insurance is appro- sector. But for the most severe and wide- priate when impacts are random and rare, spread events the government has to act as helping households, businesses, and govern- the insurer of last resort. It has to develop a ments spread risk over time (by paying regu- framework that allows communities to help lar premiums rather than covering the full themselves and the private sector to play an costs at once) and geographically (by sharing active and commercially viable role, while risk with others). So, it does not eliminate making provisions to cover its liabilities risk, but it does reduce the variance of losses arising from catastrophic events. borne by individuals in the insurance pool. Insurance against storms, floods, and Provide layers of protection droughts, whether provided to govern- The use and support of insurance mecha- ments or individuals, is difficult to manage. nisms has gained much attention in the con- Climate risk tends to affect entire regions text of adaptation.83 Insurance can protect or large groups of people simultaneously; against losses associated with extreme climate for example, thousands of breeders in events and manage costs that cannot be cov- Mongolia saw their livestock decimated in ered by international aid, by governments, or 2002, when a dry summer was followed by by citizens.84 Some novel approaches have an extremely cold winter (box 2.9). Such been developed and tested, such as weather- covariant events characterize many climate based derivatives and microinsurance prod- risks and make insurance very difficult to ucts on the private market. Consider the provide because claims tend to cluster and weather-index insurance for smallholder require large backup capital and adminis- farmers in India that provides compensa- trative efforts.86 That is one reason major tion to hundreds of thousands of farmers in climate risks are not widely covered by case of severe precipitation shortfall--and insurance, particularly in the developing the Caribbean common insurance pool that world. Indeed, microfi nance institutions quickly provides governments with liquidity often limit the share of agricultural loans in after disasters.85 their portfolio in case widespread weather But insurance is not a silver bullet--it is impacts cause their clients to default.87 only one element in a broader risk manage- The provision of financial services has been ment framework that promotes risk reduc- a long-standing challenge in development for tion (avoiding avoidable losses) and rewards reasons unrelated to climate change. Access sound risk management practices (just as to insurance products is generally much 102 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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 10­30 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 Figure 2.3 Insurance is limited in the developing world Non­life insurance premium volume in 2006 (total volume = $1.5 trillion) Non­life insurance penetration in 2006 Latin America Premium/GDP (%) & Caribbean 5.0 3% Africa 1% 4.5 Asia 13% 4.0 3.5 3.0 2.5 North America 2.0 46% 1.5 1.0 0.5 Europe 0.0 35% North Oceania Europe Asia Latin America Africa World Oceania 1% America and the Caribbean Source: Swiss Re 2007. Note: Insurance is primarily a developed-country market as indicated by the regional share of premiums (left), and penetration (premium as percent of GDP) of non­life insurance (right). Non­life insurance includes property, casualty, and liability insurance (also referred to as general insurance), health insurance, and insurance products not defined as life insurance. 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 11­50 Critical event Financial Medium 51­250 return period vulnerability (years) Low > 250 Not applicable Source: Mechler and others 2009. Note: The map shows degree to which countries are financially vulnerable to floods and storms. For example, in countries shaded dark red a severe weather event that would exceed the public sector's financial ability to restore damaged infrastructure and continue with development as planned is expected about once every 11 to 50 years (an annual probability of 2­10 percent). The high financial vulnerability of small economies underscores the need for financial contingency planning to increase governments' resilience against future disasters. Only the 74 most disaster-prone countries that experienced direct losses of at least 1 percent of GDP due to floods, storms, and droughts during the past 30 years were included in the analysis. the Malawian weather service. The World to be systematically promoted to mini- Bank Treasury acted as a trusted intermedi- mize government reliance on such fi nan- ary to the market, increasing confidence in cial arrangements for more routine losses. the transaction on both sides. Because pay- Contingent financing has opportunity costs ment and drought parameters were defined and should cover only the most urgent gov- beforehand, disbursement from such a ernment financial needs and most extreme fi nancial product could be rapid, and the losses. Agricultural extension services, government could forward-purchase maize building code enforcement, and strategic on regional commodity markets to secure urban planning are a few examples show- food as soon as possible before drought ing where government action can reduce would affect the most vulnerable, which avoidable consequences and the likelihood reduces response costs significantly, and of the most extreme outcomes. Equally decreases dependence on international important are early warning systems that appeals for assistance.98 provide advance warning and prevent the For these initiatives to be affordable and loss of human life and economic damages. sustainable, disaster risk reduction needs Such systems, supported by governments, Reducing Human Vulnerability: Helping People Help Themselves 105 can have dramatic effects, as in Bangladesh, where they have reduced human deaths from B OX 2 . 1 0The Caribbean Catastrophe Risk Insurance floods and storms and therefore the need for the government to finance the losses.99 Facility: Insurance against service interruption after disasters Among the many challenges facing insurance. It disburses funds based the governments of small island states on the occurrence of a predefined Managing social risks: Empower in the aftermath of natural disasters, event of a particular intensity, with- communities to protect themselves the most urgent is obtaining access out having to wait for onsite loss Climate change does not affect everyone to cash to implement urgent recovery assessments and formal confirma- equally.100 For poor households even mod- efforts and maintain essential govern- tions. This type of insurance is gener- erate climate stress can result in irreversible ment services. This challenge is partic- ally less expensive and settles claims ularly acute for Caribbean countries, quickly, because measuring the losses of human and physical capital.101 The whose economic resilience is limited strength of an event is almost instan- impacts on children can be long term and by mounting vulnerability and high taneous. The facility allows participat- affect lifetime earnings through education indebtedness. ing countries to pool their individual (withdrawal from school after a shock), The new Caribbean Catastrophe risks into one better-diversified health (compounding effect of poor sanita- Risk Insurance Facility provides portfolio and facilitates access to the tion and water- or vector-borne diseases), Caribbean Community governments reinsurance market, further spread- and stunting.102 Women in the develop- with an insurance instrument akin ing risks outside the region. to business interruption insurance. It Such insurance mechanisms should ing world experience the effects of climate furnishes short-term liquidity if they be part of a comprehensive financial disproportionately because many of their suffer catastrophic losses from a hur- strategy using an array of instruments household responsibilities (gathering and ricane or earthquake. to cover different types of events and selling wild products) are affected by the A wide range of instruments exists probabilities. vagaries of the weather.103 Households and to finance long-term recovery, but communities adapt through their livelihood this facility fills a gap in financing Sources: Ghesquiere, Jamin, and Mahul choices, asset allocations, and locational short-term needs through parametric 2006; World Bank 2008e. preferences, often relying on traditional knowledge to inform these decisions.104 People will be both more willing and more able to change if they have social support climates but less able to adapt to climate systems that combine community sharing, change.108 Second, the local nature of adap- publicly provided social insurance (such as tation means that sweeping policies with pensions), privately supplied fi nance and one-size-fits-all prescriptions are not suited insurance, and publicly provided safety to serving the needs of different urban and nets. rural locations.109 Building blocks of community resil- Build resilient communities ience--the capacity to retain critical Building on local and traditional knowledge functions, self-organize, and learn when about managing climate risk is important exposed to change--are evident through- for two reasons.105 First, many communities, out the world.110 In coastal Vietnam storm notably indigenous peoples, already have surges and rising sea levels are already put- context-relevant knowledge and strategies ting stress on coping mechanisms. After for addressing climate risks. Efforts to marry cutbacks of many state services in the late development and climate adaptation for vul- 1990s, local collective decision making and nerable communities will benefit from the credit and exchange networks substituted ways people have always responded to envi- social capital and learning for government ronmental risks, as in Africa where com- planning and infrastructure. (In recent munities have adapted to extended periods years, however, the government has recog- of drought.106 But those traditional coping nized its role to support community resil- and adaptation strategies can prepare com- ience and infrastructure development and munities only for some perceived risks, not now promotes a broad agenda of disaster for the uncertain and possibly different risks risk management).111 brought by climate change.107 In this way In the western Arctic the Inuit, expe- communities might be well adapted to their riencing diminished sea ice and shifting 106 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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 Change in vegetation greenness, 1982­2006 (%) 11­25 >25 -10­10 (no significant trend) 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 of forests and biodiversity resources, as in by 2012 and to directly support governments Mexico and Brazil.118 at all levels, NGOs, and other intermediary Effective community-based adaptation agencies.124 builds on social learning, the process of exchanging knowledge about existing expe- Provide safety nets for the most riences, and incorporating it with techni- vulnerable cal scientific information.119 When people Climate change will amplify vulnerabilities migrate between urban and rural areas and expose more people to climate threats for seasonal employment or in the wake of more frequently and for longer periods. natural disasters, their movements follow This requires social policies to assist groups flows of earlier movements of relatives and whose livelihoods may gradually erode friends.120 When people adopt new tech- with climate change. Extreme events may nologies or change cropping patterns, their also directly affect households and require decisions depend on information flows in safety nets (social assistance) to prevent the social networks.121 When people choose dif- most vulnerable from falling economically. ferent areas to strengthen their skills and Protracted episodes of climate stress (as is education, their decisions are tied to those common with drought) can contribute to of their peers.122 commodity price increases and volatility, Community and experience-based social disproportionally affecting the poor and learning has been a principal means to cope vulnerable, as was the case in the 2008 food with climate risks in the past, but it may crises.125 High food prices increase poverty prove insufficient for climate change. Con- for those who need to purchase food to sup- sequently, effective community-oriented port their families, and worsen nutrition, climate adaptation strategies must balance reduce use of health and education ser- the assets of communities (greater local vices, and deplete the productive assets of capacity and knowledge, potential reserves the poor.126 In parts of the developing world of social capital, lower costs) against the food insecurity and associated food price deficits (limited scientific knowledge, nar- fluctuations already represent a systemic row scope for action). source of risk that is expected to increase While numerous community-based with climate change.127 adaptation activities are supported by a Climate shocks have two important wide range of NGOs and other intermedi- characteristics. First, there is uncertainty aries, they reach only a minuscule fraction about who exactly will be affected and of those at risk. A pressing challenge is to where. The affected population is often not replicate their successes far more widely. identified until a crisis is well advanced, Scaling up has often been limited by poor when it is difficult to respond swiftly and links, and sometimes tensions, between effectively. Second, the timing of possible local stakeholders and government institu- shocks is not known ahead of time. Both tions. Issues of authority, responsibility, and aspects have implications for conceptualiz- funding often impede cooperation. Success- ing and designing social policies in response fully scaling up community-driven devel- to future climate threats. Social protection opment will require that its supporters and should be thought of as a system, rather governments think of the process beyond than isolated interventions, and should be the project and of transformation or transi- put in place during good times. Safety nets tion to avoid projects coming to a brutal end need to have flexible financing and contin- when funding stops. Capacity, pivotal to suc- gent targeting so they can be ramped up cess, includes motivation and commitment, to provide effective responses for episodic which in turn require appropriate incentives shocks.128 at all levels.123 The new Adaptation Fund can To address chronic vulnerabilities, a greatly increase the support for scaling up wide set of safety net instruments provides because it is expected to manage resources cash or in-kind transfers to poor house- on the order of $0.5 billion to $1.2 billion holds.129 Used effectively, they have an 108 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 immediate impact on reducing inequality areas and insurance-based mechanisms to and are the first-best approach to address- access contingent financing.133 ing the poverty implications of commod- Workfare programs can be part of a ity price increases; they allow households safety net's response.134 They are labor- to invest in their future livelihoods and intensive public works programs that pro- manage risk by reducing the incidence of vide income to a target population while negative coping strategies (such as selling building or maintaining public infrastruc- of livestock during droughts). Safety nets ture. These programs focus on assets and can be designed to encourage households to high-return activities that can increase the invest in human capital (education, train- resilience of communities, such as water ing, nutrition) that increases resilience in storage, irrigation systems, and embank- the long term. ments. To be fully effective, however, they In response to shocks, safety nets can need clear objectives, suitable and well- have an insurance function if they are conceived projects, predictable funding, designed to be scalable and flexible. They professional guidance in selection and are often phased, with the priorities shift- implementation, and credible monitoring ing from immediate provision of food, san- and evaluation (box 2.11). itation, and cleanup to eventual recovery, Safety nets can also facilitate the reform rebuilding, and, possibly, disaster preven- of energy policy. Raising fuel prices brings tion and mitigation. To fulfi ll an insurance energy efficiency, economic gains, and fis- function, safety nets need countercycli- cal savings, but also brings significant polit- cal and scalable budgets, targeting rules ical and social risks. Safety nets can protect to identify people with transitory needs, the poor from high energy prices and help flexible implementation that allows rapid eliminate large, burdensome, regressive, response following a shock, and basic orga- and climate-damaging energy subsidies nizational procedures and responsibilities (see chapter 1).135 Energy subsidies, a com- agreed on well before a disaster.130 Early mon response to high fuel prices, are often warnings provided through seasonal fore- inefficient and not well targeted, but elimi- casts and bulletins can mobilize safety nets nating them is often problematic. Several ahead of time and prepare logistics and middle-income countries (Brazil, China, food deliveries.131 Colombia, India, Indonesia, Malaysia, and Safety nets will need to be strengthened Turkey) have recently used safety nets to substantially where they exist and devel- facilitate the removal of fossil-fuel subsi- oped where they are lacking. Many low- dies.136 Cash transfer payments following income countries cannot afford permanent the removal of subsidies must be carefully transfers to their poor, but scalable safety targeted to ensure that the poor are reason- nets that provide a basic form of noncon- ably compensated--the reform in Indo- tributory insurance can represent a core nesia showed that, even with substantial social protection that prevents mortality mistargeting, the bottom four deciles of the and excessive depletion of assets, even in population still gained during the transfer poor countries where they have not com- period.137 monly been used.132 For instance, the Productive Safety Net Facilitate migration in response in Ethiopia combines permanent social to climate change assistance (a longer-term workfare program Migration will often be an effective targeted at 6 million food-insecure house- response to climate change--and unfor- holds) and scalable safety nets that can tunately the only response in some cases. be rapidly expanded to serve millions of Estimates of the number of people at risk transitory poor households during a major of migration, displacement, and reloca- drought. An important innovation is the tion by 2050 vary from to 200 million to use of indexes based on observed weather as high as 1 billion.138 (But these estimates impacts to quickly provide more scalable are based on broad assessments of people and targeted assistance to food-insecure exposed to increasing risks rather than Reducing Human Vulnerability: Helping People Help Themselves 109 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 BOX 2.12 Migration today The estimates of climate-change-induced and about half of all international migrants migrants to overcome the barriers to migration are highly uncertain and are women. Half of the world's interna- movement. These patterns are largely ambiguous. In the short term climate tional migrants originate from 20 coun- explained by barriers to movement and stress is likely to add incrementally to tries. Less than 10 percent of the world's the requirements to overcome them. Bar- existing migration patterns (map at left) international migrants are people forced riers include financial ones as the costs of rather than generating entirely new flows to cross an international border for fear of transport, housing on arrival, and living of people. The majority of the world's persecution (the definition of refugees). expenses while developing new income migrants move within their own coun- Many forced migrants, however, fall under streams. Observations suggest that there tries. For example, there are nearly as the definition of internally displaced per- is a "migration hump," where the rate of many internal migrants in China alone sons (map at right), estimated to number migration from a community increases (about 130 million) as there are interna- 26 million people globally. The routes and as incomes rise beyond a level necessary tional migrants in all countries (estimated intermediaries used by migrants fleeing to meet subsistence needs, and then to be 175 million in 2000). Most internal conflicts, ethnic strife, and human rights decreases again as the gap between migrants are economic migrants, moving violations are increasingly the same as incomes at the place of origin and the from rural to urban areas. There is also those used by economic migrants. The main destination closes. The migration significant, if poorly estimated, rural- available international statistics do not hump explains why the poorest of the rural migration, which tends to smooth allow a specific attribution of internal dis- poor do not migrate or migrate only very demand and supply in rural labor mar- placement due to environmental degrada- short distances. kets, and which serves as a step in the tion or natural disasters, but most of the migration path of rural migrants. forced migration linked to climate change International migration is largely a is likely to remain internal and regional. Sources: Tuñón 2006; World Bank 2008f; United Nations 2005; United Nations 2006; phenomenon in the developed world. Of Migration flows are not random, but Migration DRC 2007; de Haas 2008; Lucas international migrants, about two-thirds patterned, with flows of migrants con- 2006; Sorensen, van Hear, and Engberg- move between developed countries. The centrating around places where existing Pedersen 2003; Amin 1995; Lucas 2006; growth in new arrivals is higher in the migrants have demonstrated that a life Lucas 2005; Massey and Espana 1987; de developed than the developing countries, can be established and can help future Haan 2002; Kolmannskog 2008. International labor migration Internal displacement 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 Share of international migration by region (%) Internally displaced persons (millions) Total number of migrants in 2000 = 175 million (100%) 0­0.1 0.1­0.2 0.2­0.5 Inflows Outflows 0.5­1 >1 None / No data Sources: Parsons and others 2007; IDMC 2008 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 Population change between 1999 and 2008 Flood risk (number of inhabitants/pixel) Very high flood risk Low Medium High <0 0­50 51­100 101­250 251­500 >500 Source: Geoville Group 2009. Note: Slow economic growth in the agricultural sector has made Dakar the destination of an exodus from the rest of the country. Forty percent of Dakar's new inhabitants between 1988 and 2008 have moved into zones of high flood potential, twice as high as that of Dakar's urban (19 percent) and rural communes (23 percent). Because urban expansion is geo- graphically limited, the influx of migrants has resulted in a very high concentration of people in urban and peri-urban zones (in the map, 16 pixels constitute one square kilometer). decision-making structures in the commu- leadership positions in 2050. On a path to nity being resettled should be respected to a 2°C warmer world, they will face dra- the fullest extent. matic changes. However, managing these changes will be but one of their many Looking ahead to 2050: challenges. Heading toward a 5°C warmer Which world? world, the outlook will be far more dis- mal. It will be clear that mitigation efforts A recurring theme of this Report is that over more than half a century have been the inertia in social, climate, and biologi- inadequate. Climate change will not be cal systems supports the case for action simply one of many challenges--it will be now. Some children alive today will be in the dominant challenge. "I would like to reach out to our world leaders to help initiate educational awareness and local government efforts to empower children to protect and restore the environment. Social and Political Institutions must respond and adapt strategies to protect public health, particularly for children. As a fifth grader, I think these are possible ways in order to ensure the survival of our Mother Earth." Raisa Kabir, Bangladesh, age 10 --Dave Laurence A. Juntilla, Philippines, age 11 112 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 Notes 33. Nicholls and others 2008. 1. WRI and others 2008; Heltberg, Siegel, and 34. Simms and Reid 2006. Jorgensen 2009. 35. World Bank 2008a. 2. Tompkins and Adger 2004. 36. Seo 2009. 3. Enfors and Gordon 2008. 37. World Bank 2008g. 4. The first is approximately the B1 SRES sce- 38. World Bank 2008g. nario where the world is on track to stabilization 39. Using a $2.15 a day poverty line; see Raval- of greenhouse gases at 450­550 ppm CO2e and lion, Chen, and Sangraula 2007. eventually a temperature of about 2.5°C above 40. United Nations 2008a. preindustrial levels, and the second where emis- 41. Satterthwaite 2008. sions are significantly higher is approximately 42. Díaz Palacios and Miranda 2005. the A1B SRES scenario, which would lead to 43. Pelling 1997. stabilization at about 1,000 ppm and eventually 44. World Bank 2008c. temperatures about 5°C above preindustrial lev- 45. Hara, Takeuchi, and Okubo 2005. els; see Solomon and others 2007. 46. Bates and others 2008. 5. Horton and others 2008; Parry and others 47. World Bank 2008a. 2007; Rahmstorf and others 2007. 48. Satterthwaite and others 2007. 6. Allan and Soden 2008. 49. McEvoy, Lindley, and Handley 2006. 7. WBGU 2008. 50. Laryea-Adjei 2000. 8. Adger and others 2008. 51. Confalonieri and others 2007. 9. Repetto 2008. 52. Only includes major cause-specific mor- 10. Lempert and Schlesinger 2000. tality and excludes indirect effects and morbidity; 11. Keim 2008. see McMichael and others 2004; Global Humani- 12. Millennium Ecosystem Assessment 2005. tarian Forum 2009. 13. Ribot, forthcoming. 53. World Bank 2008b. 14. Lempert and Schlesinger 2000; Lempert 54. Robine and others 2008. 2007. 55. Solomon and others 2007; Luber and 15. Lewis 2007. McGeehin 2008. 16. Lempert and Schlesinger 2000; Lempert 56. Corburn 2009. and Collins 2007. 57. Fay, Block, and Ebinger 2010. 17. Bazerman 2006. 58. Gallup and Sachs 2001. 18. Groves and Lempert 2007. 59. Hay and others 2006; this estimation only 19. Ward and others 2008. accounts for the expansion of the disease vector; 20. Hallegatte 2009. population growth will compound this effect and 21. Pahl-Wostl 2007; Brunner and others increase the population at risk by 390 million 2005; Tompkins and Adger 2004; Folke and oth- people (or 60 percent) relative to the 2005 popu- ers 2002. lation baseline. 22. Cumming, Cumming, and Redman 2006. 60. Hales and others 2002; without climate 23. Olsson, Folke, and Berkes 2004; Folke and change only 35 percent of the projected global others 2005; Dietz, Ostrom, and Stern 2003. population in 2085 would be at risk. 24. Dietz and Stern 2008. 61. WHO 2008; de la Torre, Fajnzylber, and 25. Ligeti, Penney, and Wieditz 2007. Nash 2008. 26. Pahl-Wostl 2007. 62. Keiser and others 2004. 27. FAO and CIFOR 2005. 63. Rogers and others 2002. 28. United Nations 2008b. 64. World Climate Programme 2007. 29. United Nations 2008a. 65. WHO 2005; Frumkin and McMichael 30. Balk, McGranahan, and Anderson 2008. 2008. Low-elevation coastal zones are defined 66. Better sanitation and hygiene are good for as coastal land below 10 meters elevation; see health, as evidenced by the impact of sanitation Socioeconomic Data and Application Center, improvements on urban child health in Salva- http://sedac.ciesin.columbia.edu/gpw/lecz.jsp dor, Brazil, a city with 2.4 million people. The (accessed January 8, 2009). program reduced the prevalence of diarrheal 31. McGranahan, Balk, and Anderson 2007. diseases by 22 percent across the city in 2003­04 32. The net migration rate in Shanghai has been and by 43 percent in high-risk communities. The 4­8 percent, compared with approximately minus improvements were mostly attributable to new 2 percent attributable to natural growth between infrastructure (Barreto and others 2007). 1995 and 2006; see United Nations 2008a. 67. AMWA 2007. Reducing Human Vulnerability: Helping People Help Themselves 113 68. Galiani, Gertler, and Schargrodsky 2005. 98. World Bank to Offer Index-based Weather 69. Richmond 2008. Derivative Contracts, http://go.worldbank.org/ 70. A growing body of evidence suggests 9GXG8E4GP1 (accessed May 15, 2009). 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. (accessed March 12, 2009). 110. Gibbs 2009. 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; 87. Christen and Pearce 2005. Portes and Sensenbrenner 1993. 88. Llanto, Geron, and Almario 2007. 121. Buskens and Yamaguchi 1999; Rogers 89. Kunreuther and Michel-Kerjan 2007; Tol 1995. 1998. 122. Foskett and Helmsley-Brown 2001. 90. World Bank 2005. 123. Gillespie 2004. 91. Mills 2005; Dlugolecki 2008; ABI 2004. 124. World Bank 2009. 92. Skees 2001. 125. Ivanic and Martin 2008. 93. This raises important issues: land-use 126. Grosh and others 2008. regulation and codes are required and need to be 127. 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Cardiff, UK: Welsh Assembly den. 2008. "Building Adaptive Capac- Government Department for Public Health ity to Cope with Increasing Vulnerability and Health Professions. Due to Climatic Change in Africa: A New White, A., and A. Martin. 2002. Who Owns the Approach." Physics and Chemistry of the World's Forests? Forest Tenure and Public For- Earth 33 (8­13): 780­87. ests in Transition. Washington, DC: Forest UNICEF (United Nations Children's Fund). Trends and Center for International Environ- 2008. Climate Change and Children: A Human mental Law. Security Challenge. Florence: UNICEF. WHO (World Health Organization). 2005. United Nations. 2005. Trends in Total Migrant Health and Climate Change: The Now and Stock: The 2005 Revision. New York: United How. A Policy Action Guide. Geneva: WHO. Nations Population Division, Department of ------. 2008. Protecting Health from Climate Economic and Social Affairs. Change: World Health Day 2008. Geneva: ------. 2006. 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"A Hand- ------. 2008e. The Caribbean Catastrophe Risk ful of Heuristics and Some Propositions for Insurance Facility: Providing Immediate Fund- Understanding Resilience in Social-Ecological ing after Natural Disasters. Washington, DC: Systems." Ecology and Society 11 (1):13. World Bank. Wang, R., and Y. E. Yaping. 2004. "Eco-city ------. 2008f. World Development Indicators Development in China." Ambio: A Journal of 2008. Washington, DC: World Bank. the Human Environment 33 (6): 341­42. ------. 2008g. World Development Report 2009. Ward, R. E. T, C. Herweijer, N. Patmore, and Reshaping Economic Geography. Washington, R. Muir-Wood. 2008. "The Role of Insurers DC: World Bank. Reducing Human Vulnerability: Helping People Help Themselves 123 ------. 2009. Development and Climate WRI (World Resources Institute), United Change: A Strategic Framework for the World Nations Development Programme, United Bank Group: Technical Report. Washington, Nations Environment Programme, and World DC: World Bank. Bank. 2008. World Resources 2008: Roots of World Climate Programme. 2007. Climate Ser- Resilience: Growing the Wealth of the Poor. vices Crucial for Early Warning of Malaria Epi- Washington, DC: WRI. demics. Geneva: World Climate Programme. Yip, S. C. T. 2008. "Planning for Eco-Cities in World Economic Forum. 2008. Building Resil- China: Visions, Approaches and Challenges." ience to Natural Disasters: A Framework for Paper presented at the 44th ISOCARP Con- Private Sector Engagement. Geneva: World gress. The Netherlands. Economic Forum, World Bank, and United Nations International Strategy for Disaster Reduction. 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 0.3­0.5 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 Service Subcategory Status Notes Provisioning services Food Crops Substantial production increase Livestock Substantial production increase Capture fisheries Declining production due to overharvest Aquaculture Substantial production increase Wild foods Declining production Fiber Timber +/­ Forest loss in some regions, growth in others Cotton, hemp, silk +/­ Declining production of some fibers, growth in others Wood fuel Declining production Genetic resources Lost through extinction and crop genetic resource loss Biochemicals, natural medicines, Lost through extinction, overharvest pharmaceuticals Fresh water Unsustainable use for drinking, industry, and irrigation; amount of hydro energy unchanged, but dams increase ability to use that energy Regulating services Air quality regulation Decline in ability of atmosphere to cleanse itself Climate regulation Global Globally, ecosystems have been a net sink for carbon since mid-century Regional and local Preponderance of negative impacts (for example, changes in land cover can affect local temperature and precipitation) Water regulation +/­ Varies depending on ecosystem change and location Erosion regulation Increased soil degradation Water purification and waste treatment Declining water quality Disease regulation +/­ Varies depending on ecosystem change Pest regulation Natural control degraded through pesticide use Pollination Apparent global decline in abundance of pollinators Natural hazard regulation Loss of natural buffers (wetlands, mangroves) Cultural services Spiritual and religious values Rapid decline in sacred groves and species Aesthetic values Decline in quantity and quality of natural lands Recreation and ecotourism +/­ More areas accessible but many degraded Source: Millennium Ecosystem Assessment 2005. 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 Projected ecosystem shift Biodiversity hotspot Significant overlap between biodiversity hotspot and ecosystem shift region 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 ments, and dams to control river flows BOX F B.2 Payment for ecosystem and mitigation services all present threats to biodiversity.32 Adaptation goals can often be achieved Two successful payment programs are The project is expected to sequester through better management of ecosys- the Moldova Soil Conservation project about 2.5 million tons of carbon dioxide tems rather than through physical and and the bird conservation and water- equivalent by 2017. In Bolivia, farmers engineering interventions; for example, shed protection program in Bolivia's bordering Amboró National Park are Los Negros Valley, both funded through paid to protect a watershed containing coastal ecosystems can be more effec- the World Bank BioCarbon Fund. In Mol- the threatened cloud forest habitat of tive as buffer zones against storm surges dova, 20,000 hectares of degraded and 11 species of migratory birds, with ben- than sea walls. Other options include eroded state-owned and communal efits both for local biodiversity and for catchment and flood plain management agricultural lands are being reforested, dry-season water supplies. to adjust downstream water flows and reducing erosion and providing for- the introduction of climate-resilient est products to local communities. Source: World Bank Carbon Finance Unit. agroecosystems and dry-land pastoral- ism to support robust livelihoods. Ecosystem-based adaptation aims tion. These payments could be part of not recognized and if they do not have to increase the resilience and reduce a market-based mechanism within an secure rights to their lands, territories, the vulnerability of people to climate enhanced Clean Development Mecha- and resources (box FB.3). Experience change through the conservation, res- nism process, or they could be non- from community-based natural resource toration, and management of ecosys- market payments from a new financial management initiatives has shown that tems. When integrated into an overall mechanism that does not impinge on the involvement of local people, includ- adaptation strategy, it can deliver a the emissions compliance mechanisms. ing indigenous peoples, in participatory cost-effective contribution to adapta- The challenge of REDD is in its imple- monitoring of natural resources can pro- tion and generate societal benefits. mentation, which is discussed in more vide accurate, cost-effective, and locally In addition to the direct benefits detail in chapter 6. anchored information on forest biomass for adaptation, ecosystem-based adap- REDD could make a significant con- and natural resource trends. tation activities can also have indirect tribution to both the conservation of benefits for people, biodiversity, and biodiversity and mitigation of climate Ecosystem-based adaptation mitigation. For example, the restora- change if it protects biologically diverse "Hard" adaptation measures such as tion of mangrove systems to provide areas that have high carbon stocks and coastal defense walls, river embank- shoreline protection from storm surges are at high risk of deforestation. Tech- niques for identifying such areas are available and could be used to guide B OX FB.3 Excerpts from the Declaration of Indigenous the allocation of financial resources (map FB.2).31 Peoples on Climate Change To deal effectively with the chang- "All initiatives under Reducing Emissions education. We strongly urge relevant ing impacts and competing uses of from Deforestation and Degradation United Nations bodies to facilitate and ecosystems under a changing climate, (REDD) must secure the recognition and fund the participation, education, and governments will need to introduce implementation of the rights of Indig- capacity building of Indigenous youth enous Peoples, including security of land and women to ensure engagement in strong, locally appropriate policies, tenure, recognition of land title according all international and national processes measures, and incentives to change to traditional ways, uses and customary related to climate change." (Article 7) long-established behaviors, some of laws and the multiple benefits of forests "We offer to share with humanity our which are already illegal. These actions for climate, ecosystems, and peoples Traditional Knowledge, innovations, and will run counter to some community before taking any action." (Article 5) practices relevant to climate change, preferences, so the balance between "We call for adequate and direct fund- provided our fundamental rights as appropriate regulation and incentives is ing in developed and developing States intergenerational guardians of this and for a fund to be created to enable knowledge are fully recognized and critical. REDD holds potential benefits Indigenous Peoples' full and effective respected. We reiterate the urgent need for forest-dwelling indigenous and local participation in all climate processes, for collective action." (Concluding Para). communities, but a number of condi- including adaptation, mitigation, The declaration was issued during the tions will need to be met for these ben- monitoring, and transfer of appropri- Indigenous Peoples Global Summit on efits to be achieved. Indigenous peoples, ate technologies, in order to foster our Climate Change held in Anchorage on for example, are unlikely to benefit from empowerment, capacity building, and April 24, 2009. REDD if their identities and rights are Biodiversity and ecosystem services in a changing climate 129 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): 122­31. 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): 25­33. 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): 143­46. 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): S117­37. 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): 39­61. F. I. Woodward. 2002. "Conservation References FAO (Food and Agriculture Organization). of Biodiversity in a Changing Climate." Bandyopadhyay, S., and G. Tembo. 2009. 2003. "The Ecosystem Approach to Fish- Conservation Biology 16 (1): 264­68. "Household Welfare and Natural eries: Issues, Terminology, Principles, Hannah, L., G. Midgley, and D. Miller. Resource Management around National Institutional Foundations, Implementa- 2002. "Climate Change-Integrated Con- Parks in Zambia." Policy Research Work- tion and Outlook." Fisheries Technical servation Strategies." Global Ecology and ing Paper Series 4932, World Bank, Paper 443, FAO, Rome. Biogeography 11 (6): 485­95. Washington, DC. ------. 2005. Putting Into Practice the Eco- Harmelin-Vivien, M., L. Le Direach, J. Beddington, J. R., D. J. Agnew, and C. W. system Approach to Fisheries. Rome: FAO. Bayle-Sempere, E. Charbonnel, J. A. Clark. 2007. "Current Problems in the Management of Marine Fisheries." Sci- Fischlin, A., G. F. Midgley, J. T. Price, R. Garcia-Charton, D. Ody, A. Perez-Ruzafa, ence 316 (5832): 1713­16. Leemans, B. Gopal, C. Turley, M. D. A. O. Renones, P. Sanchez-Jerez, and C. Valle. Rounsevell, O. P. Dube, J. Tarazona, and 2008. "Gradients of Abundance and Bio- Bode, M., K. A. Wilson, T. M. Brooks, W. R. A. A. Velichko. 2007. "Ecosystems, Their mass across Reserve Boundaries in Six Turner, R. A. Mittermeier, M. F. McBride, Properties, Goods and Services." In Cli- Mediterranean Marine Protected Areas: E. C. Underwood, and H. P. Possingham. mate Change 2007: Impacts, Adaptation Evidence of Fish Spillover?" Biological 2008. "Cost-Effective Global Conserva- and Vulnerability. Contribution of Work- Conservation 141 (7): 1829­39. tion Spending Is Robust to Taxonomic ing Group II to the Fourth Assessment Harris, N. L., S. Petrova, F. Stolle, and S. Group." Proceedings of the National Report of the Intergovernmental Panel Brown. 2009. "Identifying Optimal Areas Academy of Sciences 105 (17): 6498­501. on Climate Change, ed. M. Parry, O. F. for REDD Intervention: East Kaliman- Brown, S., L. R. Iverson, A. Prasad, and L. Canziani, J. P. Palutikof, P. J. van der Lin- tan, Indonesia, as a Case Study." Environ- Dawning. 1993. "Geographical Distribu- den, and C. E. Hanson. Cambridge, UK: mental Research Letters 3:035006, doi:10. tion of Carbon in Biomass and Soils of Cambridge University Press. 1088/1748-9326/3/3/035006. Tropical Asian Forests." Geocarto Inter- Fitzgerald, M. A., S. R. McCouch, and Heller, N. E., and E. S. Zavaleta. 2009. "Bio- national 4: 45­59. R. D. Hall. 2009. "Not Just a Grain of diversity Management in the Face of Brown, T. A. 2002. Genomes. Oxford: John Rice: The Quest for Quality." Trends in Climate Change: A Review of 22 Years of Wiley & Sons. Plant Science 14 (3): 133­39. Recommendations." Biological Conserva- Campbell, L. M., B. J. Haalboom, and J. Foden, W., G. Mace, J.-C. Vie, A. Angulo, tion 142 (1): 14­32. Trow. 2007. "Sustainability of Commu- S. Butchart, L. DeVantier, H. Dublin, ICES (International Council for the Explo- nity-Based Conservation: Sea Turtle Egg A. Gutsche, S. Stuart, and E. Turak. ration of the Sea). 2008a. ICES Advice Harvesting in Ostional (Costa Rica) Ten Biodiversity and ecosystem services in a changing climate 131 Book 9: Widely Distributed and Migra- Environmental Information Coalition, UNEP-WCMC ((United Nations Environ- tory Stocks. Copenhagen: ICES Advisory National Council for Science and Envi- ment Program­World Conservation Committee. ronment. Monitoring Center). 2008. State of the ------. 2008b. ICES Insight Issue No. 45. Millennium Ecosystem Assessment. 2005. World's Protected Areas 2007: An Annual Copenhagen: ICES. Ecosystems and Human Well-Being: Syn- Review of Global Conservation Progress. Joseph, L. N., R. F. Maloney, and H. P. Pos- thesis Report. Washington, DC: World Cambridge, UK: UNEP-WCMC. singham. 2008. "Optimal Allocation of Resources Institute. Vitousek, P. M., H. A. Mooney, J. Lub- Resources among Threatened Species: A Myers, N., R. A. Mittermeier, C. G. Mitter- chenco, and J. M. Melillo. 1999. "Human Project Prioritization Protocol." Conser- meier, G. A. B. da Fonseca, and J. Kent. Domination of Earth's Ecosystems." Sci- vation Biology 23 (2): 328­38. 2000. "Biodiversity Hotspots for Conser- ence 277 (5325): 494­99. Kraft, N. J. B., R. Valencia, and D. D. Ack- vation Priorities." Nature 403: 853­58. Welch, D. 2005. "What Should Protected erly. 2008. "Functional Traits and Niche- OECD (Organisation for Economic Co- Area Managers Do in the Face of Cli- Based Tree Community Assembly in an operation and Development). 2008. mate Change?" The George Wright Amazonian Forest." Science 322 (5901): Recommendation of the Council on the Forum 22 (1): 75­93. 580­82. Design and Implementation of Decom- WHO and FAO (World Health Organization Lawton, J. H., and R. M. May. 1995. Extinction missioning Schemes in the Fishing Sector. and Food and Agriculture Organization). Rates. Oxford, UK: Oxford University Press. Paris: OECD. 2009. "Global and Regional Food Con- Lodge, M. W., D. Anderson, T. Lobach, G. Smith, L. D., J. P. Gilmour, and A. J. Hey- sumption Patterns and Trends." In Diet, Munro, K. Sainsbury, and A. Willock. ward. 2008. "Resilience of Coral Com- Nutrition and the Prevention of Chronic Dis- 2007. Recommended Best Practices for munities on an Isolated System of Reefs eases. Geneva and Rome: WHO and FAO. Regional Fisheries Management Orga- following Catastrophic Mass-Bleaching." World Bank. 2008. The Sunken Billions: nizations. London: Chatham House Coral Reefs 27 (1): 197­205. The Economic Justification for Fisheries for the Royal Institute of International Stiansen, J. E., B. Bogstad, P. Budgell, P. Reform. Washington, DC: World Bank Affairs. Dalpadado, H. Gjosaeter, K. Hiis Hauge, and FAO. McCarthy, M. A., and H. P. Possingham. R. Ingvaldsen, H. Loeng, M. Mauritzen, Wunder, S., S. Engel, and S. Pagiola. 2008. 2007. "Active Adaptive Management for S. Mehl, G. Ottersen, M. Skogen, and "Taking Stock: A Comparative Analysis Conservation." Conservation Biology 21 E. K. Stenevik. 2005. Status Report on of Payments for Environmental Services (4): 956­63. the Barents Sea Ecosystem 2004­2005. Programs in Developed and Developing McGinley, M. 2007. Species Richness. Wash- Bergen, Norway: Institute of Marine Countries." Ecological Economics 65 (4): ington, DC: Encyclopedia of Earth-- Research (IMR). 834­52. 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 Applying climate-smart practices will incentives to conserve forests and adopt hinge on managing biodiversity better-- more sustainable farming techniques. The integrating natural habitats into rural techniques are not yet proven at the needed landscapes, protecting wetlands, and scale, but the potential is great, and the maintaining the water storage provided by additional benefits for agricultural produc- aquifers. Increasingly, countries are mak- tivity and poverty reduction are substan- ing use of techniques that improve soil and tial. At a high enough carbon price, global water productivity. But these innovations emission reductions from agriculture could will bear fruit only if decisions are based equal reductions from the energy sector (see on solid intersectoral analysis and only if overview, box 8).2 Third, countries could users have the right incentives--stemming change the way they support agriculture. from policies, institutions, and market Rich countries provide $258 billion annu- conditions. ally in agriculture support, 3 more than Many natural resources cross borders. As half of which depends only on the amount climate change makes resources harder to of crop produced or input used. Though manage, and growing populations increase politically difficult, countries are begin- demand, countries will need to cooperate ning to change the terms of these subsidies more intensively to manage international to encourage implementation of climate- waters, forests, and fisheries. All countries smart practices on a large scale. will turn more frequently to the inter- This chapter fi rst discusses what can national agricultural market and so will be done at the national level to increase benefit from a number of measures--from productivity of agriculture and fi sheries stock management to more competitive while more effectively protecting natural procurement techniques to customs and resources. It next discusses what can be port logistics--that make food trade more done to support national efforts, focus- reliable and efficient. ing on international cooperation and the Climate change also puts a premium essential role of information both at the on information about natural resources. global and the local level. Then it focuses Information--traditional and new, inter- on how incentives might change to acceler- national and local--will have a high payoff ate implementation of beneficial practices under a more variable and more uncertain and to help societies balance the need for climate, where the stakes are higher and increased production with better protec- making decisions is more complicated. tion of natural resources. Information supports resource manage- ment, food production, and better trade. Put in place the fundamentals for If societies generate information they can natural resource management trust about their resources and can get it An extensive literature recommends to the people who can use it, from inter- strengthening the policy and institutional national river basin authorities to farmers conditions that influence how people man- in their fields, those people can make more age agriculture, aquaculture, and healthy informed choices. ecosystems. Several measures can increase Many of these solutions, long advocated productivity in all sectors, while protecting in the natural resource literature, have long-term ecological health. None of these been frustratingly slow in coming to frui- approaches functions alone. All require the tion. But three new factors, all related to cli- support of the others to work effectively, mate change, could provide new incentives. and any change in one can alter the whole First, food prices are expected to increase system. as a result of more climate shocks as well Several themes recur across sectors, cli- as from growing demand. Increasing food mates, and income groups. prices should spur innovation to increase productivity. Second, it may be possible to · Innovative decision-making tools allow extend carbon markets to pay farmers to users to determine the impacts of differ- store carbon in soil. This step would create ent actions on natural resources. Managing Land and Water to Feed Nine Billion People and Protect Natural Systems 135 · 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 Heavier rain increases erosion, siltation, and landslides. Forest hydrology changed, Increased temperatures leading to loss of forest biodiversity. cause glacial melt. Basin receives more rain and less snow. Greater extremes in water availability Increased demand Higher temperatures increase (lower low flows and more frequent for hydropower. evaporation from water bodies floods) affect supply of cooling water Affects timing of water and from soil. for power stations. available downstream. Greater production of biofuels increases Coastal cities vulnerable to floods, agricultural water demand. storms, and sea-level rise. Increase in paved surfaces accelerates runoff and reduces aquifer recharge. Growing demand for resources. 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 Change in average annual runoff (percent) < ­30 ­30­ ­15 ­15­ ­5 ­5 ­ 5 No data 5­15 15­30 > 30 < 2/3 models agree 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 2041­2060 com- pared with 1900­1970. 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 consecutive dry days (number of days) < ­20 ­20 ­ ­10 ­10­ ­5 ­5­0 < 2/3 models agree 0­5 5 ­10 10­20 > 20 b. More intense rainfall Change in rainfall intensity (percent change in simple daily intensity index, SDII) < ­15 ­15 ­ ­10 ­10­ ­5 ­5­0 < 2/3 models agree 0­5 5 ­ 10 10­15 > 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 2030­2049, compared with 1980­1999. 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 Increasing knowledge about the world's kilometers, whereas Earthtrends reports it water will improve management. To at 58 cubic kilometers. Both reports cite the manage water well, it is critical to know how same source of information. The confusion much water is available in any basin and stems from different interpretations of the what it is used for. This may sound straight- term use (the higher figure includes water forward, but it is not. The UN's World reuse within Egypt, while the lower figure Water Development Report states: "Few does not).8 countries know how much water is being The planet contains a fi xed amount of used and for what purposes, the quantity water, with the form and location vary- and quality of water that is available and ing over space and time.9 Humans have can be withdrawn without serious envi- little control over most of it--saltwater in ronmental consequences, and how much oceans, freshwater in glaciers, water in the is being invested in water infrastructure."7 atmosphere. Most investment concentrates Water accounting is complex. Defi nitions on water in rivers and lakes, but soil mois- and methods vary, and confusion is com- ture and groundwater together account for mon. For example, the Pacific Institute puts 98 percent of the world's available freshwa- the Arab Republic of Egypt's annual renew- ter (figure 3.2).10 Many people worry about able water resources in 2007 at 86.8 cubic how much drinking water is available, Figure 3.2 Freshwater in rivers makes up a very small share of the water available on the planet--and agriculture dominates water use Freshwater resources in the world Oceans Vegetation Wetlands Permafrost 1% 97.5% 0.8% 8.5% Groundwater 30.1% Atmosphere 9.5% Surface Soil moisture Freshwater and 12.2% 2.5% atmosphere 0.4% Rivers 1.6% 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% Domestic and Agriculture other industrial 93% 19 ­ 20% Rivers, lakes and groundwater 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 2­4 liters of water but eats food that The effects of climate change on hydro- requires 2,000­5,000 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 Percentage change in yields between present and 2050 No data ­50 ­20 0 20 50 100 Source: Müller and others 2009. Note: The figure shows the projected percentage change in yields of 11 major crops (wheat, rice, maize, millet, field pea, sugar beet, sweet potato, soybean, groundnut, sunflower, and rapeseed) from 2046 to 2055, compared with 1996­2005. The values are the mean of three emission scenarios across five global climate models, assuming no CO2 fertilization (see note 54). Large negative yield impacts are projected in many areas that are highly dependent on agriculture. 146 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 In mid to high latitudes, local increases impact: models that project the effect of cli- in temperature of only 1­3°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 9­20 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 1­2°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 The cultivation of biofuels to mitigate is important to establish guidelines for climate change will create even more com- expansion of biofuels so that other envi- petition for land. Current estimates indi- ronmental goals are not squeezed out (box cate that dedicated energy crop production 3.4). Comprehensive life-cycle accounting takes place on only 1 percent of global ara- for biofuels--which includes their contri- ble land, but biofuel legislation in devel- bution to emission reductions as well as oped and developing countries supports their water and fertilizer use--may slow expanding production. Global ethanol the pace of conversion. production increased from 18 billion liters Second-generation biofuels now under a year in 2000 to 46 billion in 2007, while development, such as algae, jatropha, sweet biodiesel production increased nearly sorghum, and willows, could reduce com- eightfold to 8 billion liters. Land allocated petition with agricultural land for food to biofuels is projected to increase four- crops by using less land or marginal land, fold by 2030, with most of the growth in although some of these developments North America (accounting for 10 per- could still lead to the loss of pasture land cent of arable land in 2030) and Europe and grassland ecosystems. Perennial crops (15 percent).69 Projections indicate that with deeper root systems, such as switch- only 0.4 percent of arable land in Africa grass, can better combat soil and nutrient and about 3 percent in Asia and Latin erosion, require fewer nutrient inputs, and America will be dedicated to biofuel pro- sequester higher rates of carbon than cur- duction by 2030.70 Under some scenarios rent biofuel feedstocks.72 But their water for mitigating climate change, projections needs may prohibit their sustainable pro- beyond 2030 suggest that land allocated duction in arid regions. More research is to producing biofuels by 2100 will grow needed to improve the productivity and to more than 2 billion hectares--a huge emission reduction potential of future figure given that current cropland covers generations of biofuels. "only" 1.6 billion hectares. These scenar- ios project that most of the land for such Growing populations, more carnivorous large-scale biofuel production will origi- palates, and climate change will require nate from conversion of natural forests large increases in agricultural productiv- and pastureland.71 ity. The amount of land needed to feed If demand increases rapidly, biofuels the world in 2050 will depend significantly will be a significant factor in agricultural on how much meat people eat. Meat is a markets, increasing commodity prices. resource-intensive way for humans to con- Much of the current demand for biofuel sume protein, because it requires land for crops is spurred by government targets and pasture and grain feed. The resource impli- subsidies and by high oil prices. Without cations vary with the type of meat and how artificial support the competitiveness of it is produced. Producing 1 kg of beef can biofuels is still poor, with the exception of take as much as 15,000 liters of water if it Brazil's sugarcane ethanol. Nor is it clear is produced in industrial feedlots in the how much biofuels reduce greenhouse gas United States (figure 3.3).73,74 But exten- emissions because of the fossil fuels used sive beef production in Africa requires only during production and the emissions from 146­300 liters per kilogram depending on land clearing. Despite the potential that the weather.75 Per kilogram, beef produc- biofuels have to decrease greenhouse gas tion is also greenhouse-gas intensive, even emissions, the actual net carbon savings compared with other meat production, of current-generation biofuels is under emitting 16 kilograms of CO2 equivalent debate, when production processes and (CO2e) for every kilogram of meat pro- associated land-use changes are factored duced (figure 3.4).76 in to the calculations. In addition, demand Despite the resource implications, for land for biofuels already competes with demand for meat is expected to increase as biodiversity conservation. As a result, it population and incomes grow. Eating more 148 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 BOX 3.4 Palm oil, emission reductions, and avoided deforestation Palm oil plantations represent the conver- cultivation in Indonesia and Malaysia, pro- questionable. Detailed life- cycle analysis gence of many current land-use issues. viding a profitable diversification in liveli- shows that the net reduction in carbon Palm oil is a high-yielding crop with food hoods. However, harvested palm nuts must emissions depends on the land cover and biofuel uses, and its cultivation cre- be delivered to mills for processing within existing before the palm oil plantation ates opportunities for smallholders. But 24 hours of harvesting, so holdings tend to (figure). Significant emission reductions it infringes on tropical forests and their cluster around mills. Thus a high propor- derive from plantations developed many benefits, including greenhouse tion of the area around mills is converted on previous grasslands and cropland, gas mitigation. Cultivation of palm oil to palm oil, either as large tract commercial whereas net emissions will increase has tripled since 1961 to cover 13 million plantations or densely clustered smallhold- greatly if peatland forests are cleared for hectares, with most of the expansion in ings. Certain landscape design practices, producing palm oil. Indonesia and Malaysia and more than such as the creation of agroforestry belts The expansion of the carbon market to half on recently deforested lands. Recent to smooth the transition between palm oil include REDD (Reduced Emissions from announcements for new palm oil conces- plantations and forest patches, can help Deforestation and forest Degradation) is sions in the Brazilian Amazon, Papua New make the plantation landscape less inimi- an important tool to balance the relative Guinea, and Madagascar raise concerns cal to biodiversity while providing further values of palm oil production and defor- that the trend is likely to continue. diversification for smallholders. estation on one hand, and forest protec- Smallholders currently manage 35 to The mitigation value of biodie- tion on the other. This balance will be 40 percent of the land under palm oil sel derived from palm oil is also critical to ensure biodiversity protection and emission reduction. Recent studies show that convert- Emission reductions from biodiesel derived from palm oil differ greatly according to the ing land to palm oil production may be previous land use on the palm oil plantation site. between six to ten times more profitable Emission reduction per ton of biofuel (tCO2) than maintaining the land and receiving 5.0 payments for carbon credits through REDD, should this mechanism be limited 2.5 to the voluntary market. If REDD credits are given the same price as carbon cred- 0.0 its traded in compliance markets, the profitability of land conservation would ­2.5 increase dramatically, perhaps even exceeding profits from palm oil, making ­5.0 agricultural conversion less attractive. ­7.5 Therefore, done right, REDD could realisti- cally reduce deforestation and thereby ­10.0 contribute to a global mitigation effort. ­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 4,800 3,900 3,300 2,800 1,800 1,300 1,000 900 900 Beef Pork Chicken Rice Sorghum Soybean Wheat Milk Maize Potato Source: Waterfootprint (https://www.waterfootprint.org), accessed May 15, 2009; Gleick 2008. Note: Figure shows liters of water needed to produce one kilogram of product (or one liter for milk). Water use for beef production only characterizes intensive production systems. 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 Food item Emissions Productivity gains must not come at the (1 kg) (kg CO2e) Driving distance equivalent (km) expense of soil, water, and biodiversity. Intensive agriculture often damages natu- Potato 0.24 1.2 ral systems. Highly productive agriculture, such as is practiced in much of the devel- Wheat 0.80 4.0 oped world, is usually based on farms that Chicken 4.60 22.7 specialize in a particular crop or animal and on the intensive use of agrochemicals. This Pork 6.40 31.6 kind of farming can damage water quality and quantity. Fertilizer runoff has increased Beef 16.00 79.1 the number of low-oxygen "dead zones" in coastal oceans exponentially since the Source: Williams, Audsley, and Sandars 2006. 1960s: they now cover about 245,000 square Note: The figure shows CO2 equivalent emissions in kilograms resulting from the production (in an industrial coun- try) of 1 kilogram of a specific product. The driving distance equivalent conveys the number of kilometers one must kilometers, mostly in coastal waters of the drive in a gasoline-powered car averaging 11.5 kilometers a liter to produce the given amount of CO2e emissions. developed world (map 3.4).83 Intensive irri- For example, producing 1 kilogram of beef and driving 79.1 kilometers both result in 16 kilograms of emissions. 150 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 Figure 3.5 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 Source: Diaz and Rosenberg 2008. Note: In the developed world intensive agriculture has often come at high environmental cost, including runoff of excess fertilizers leading to dead zones in coastal areas. Dead zones are defined as extreme hypoxic zones, that is, areas where oxygen concentrations are lower than 0.5 milliliters of oxygen per liter of water. These conditions normally lead to mass mortality of sea organisms, although in some of these zones organisms have been found that can survive at oxygen levels of 0.1 milliliter per liter of water. Managing Land and Water to Feed Nine Billion People and Protect Natural Systems 151 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 Tropical and subtropical Climate-resilient farming requires diverse dry broadleaf forests income sources, production choices, and Flooded grasslands genetic material. Climate change will and savannas create a less predictable world. Crops will Tropical and subtropical fail more often. One way to buffer the grasslands, savannas, uncertainty is to diversify on all levels (box and shrublands 3.5). The first type of diversification relates Tropical and subtropical coniferous forests to sources of income, including some out- side of agriculture.89 As farms get smaller Deserts and input prices increase, farmers will do this anyway. Indeed, in much of Asia small- Montane grasslands holders and landless workers typically earn and shrublands more than half their total household income Tropical and subtropical from nonagricultural sources.90 moist broadleaf forests Conversion of A second type of diversification involves Temperate original biomes increasing the types of production on the Loss by 1950 coniferous forests Loss between farm. The market opportunities for crop 1950 and 1990 Boreal diversification are expanding in many forests Projected loss by 2050 intensively farmed areas as a result of more open export markets and buoyant national Tundra demand in rapidly growing economies, ­10 0 10 20 30 40 50 60 70 80 90 100 especially in Asia and Latin America.91 In Potential area converted (%) these regions farmers may be able to diver- sify into livestock, horticulture, and spe- Source: Millennium Ecosystem Assessment 2005. cialized agricultural production.92 These Note: The projections are based on four scenarios of how the world will approach ecosystem services and include assumptions about ecosystem management, trade liberalization, technology, and the treatment of activities typically give high returns per public goods. unit of land and are labor intensive, which makes them suitable to small farms. yields will be higher from diverse seeds than The third type of diversification involves from uniform seeds, even though yields in a increasing the genetic variability within "normal" year may be lower. individual crop varieties. Most high- Experiments using standard cultiva- yielding varieties in use on highly produc- tion practices indicate that under increased tive farms were bred on the assumption that CO2 concentrations and higher tempera- the climate varied within a stable envelope; tures (reflecting projections of the Inter- the breeders aimed for seed to be increas- governmental Panel on Climate Change ingly homogenous. In a changing climate, for 2050) older varieties of wheat or barley however, farmers can no longer rely on a may grow faster and have an advantage over handful of varieties that work under a nar- more modern varieties introduced in the row set of environmental conditions. Farm- late 20th century.93 Furthermore, the wild ers will need each batch of seeds to contain relatives of today's crops contain genetic genetic material able to deal with a variety material that may be useful to make com- of climatic conditions. Each year, some mercial crops more adaptable to changing plants flourish whatever the climate that conditions. Increased temperatures and year. Over a number of years the average CO2 levels have a greater positive effect on 152 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 BOX 3.5 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 25­100 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 donors were involved in 94 percent of farms using ecoagricultural practices suf- them.100 fered 58 percent, 70 percent, and 99 per- A landscape-scale approach to land use cent less damage in Honduras, Nicaragua, can encourage greater biodiversity outside and Guatemala, respectively, than farms protected areas, which is essential to allow using conventional techniques.103 In Costa for ecosystem shifts, species dispersal and Rica, vegetative windbreaks and fence rows the promotion of ecosystem services. The boosted farmers' income from pasture and field of ecoagriculture holds promise.101 The coffee while also increasing bird diversity.104 idea is to improve the farmland's productiv- In Zambia the use of leguminous trees105 ity and simultaneously conserve biodiversity and herbaceous cover crops in improved and improve environmental conditions on fallow practices increased soil fertility, surrounding lands. Through the methods suppressed weeds, and controlled erosion, of ecoagriculture, farmers can increase their thereby almost trebling annual net farm agricultural output and reduce their costs, incomes.106 Bee pollination is more effec- reduce agricultural pollution, and create tive when agricultural fields are closer to habitat for biodiversity (figure 3.7). natural or seminatural habitat,107 a finding Effective policies to conserve biodiversity that matters because 87 of the world's 107 give farmers strong incentives to minimize leading food crops depend on animal pol- conversion of natural areas to farmland linators.108 Shade-grown coffee systems can and to protect or even expand high quality protect crops from extreme temperature habitat on their land. Other options include and drought.109 incentives to develop ecological networks In Costa Rica, Nicaragua, and Colombia and corridors between protected areas and silvopastoral systems that integrate trees other habitats. Studies in North America and with pastureland are improving the sus- Europe show that lands withdrawn from con- tainability of cattle production and diver- ventional agricultural production (set-asides) sifying and increasing farmers' incomes.110 unequivocally increase biodiversity.102 Such systems will be particularly useful as Agriculture practices that enhance bio- a climate-change adaptation, because trees diversity often have many co-benefits, such retain their foliage in most droughts, pro- as reducing vulnerability to natural disas- viding fodder and shade and thus stabilizing ters, enhancing farm income and produc- milk and meat production. They also can tivity, and providing resilience to climate improve water quality. Agricultural pro- change. During Hurricane Mitch in 1998 duction and revenues can go together with Figure 3.7 Computer simulation of integrated land use in Colombia. 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 biodiversity conservation. Indeed, in many (IAASTD) showed that successful agricul- cases intact ecosystems generate more rev- tural development under climate change will enues than converted ones. In Madagascar involve a combination of existing and new managing a 2.2 million hectare forest over approaches.117 First, countries can build on 15 years cost $97 million, when account- the traditional knowledge of farmers. Such ing for the forgone economic benefits that knowledge embodies a wealth of location- would have occurred if the land had been specific adaptation and risk management converted to agriculture. But the benefits of options that can be applied more widely. the well-managed forest (half of which come Second, policies that change the relative from watershed protection and reduced soil prices that farmers face have great poten- erosion) were valued between $150 million tial to encourage practices that will help and $180 million over the same period.111 the world adapt to climate change (by Decades of development experience increasing productivity) and mitigate it show how difficult it is in practice to pro- (by reducing agricultural emissions). tect habitats for biodiversity. New schemes Third, new or unconventional farming are however emerging to give landowners practices can increase productivity and reduce strong fi nancial incentives to stop land carbon emissions. Farmers are beginning conversion. These include ways to generate to adopt "conservation agriculture," which revenues from the services that ecosystems includes minimum tillage (where seeds are provide to society (see focus B), conserva- sowed with minimum soil disturbance and tion easements (which pay farmers to take residue coverage on the soil surface is at least sensitive land out of production),112 and 30 percent), crop residue retention, and crop tradable development rights.113 rotations. These tillage methods can increase yields,118 control soil erosion and runoff,119 Climate change will require faster increase water and nutrient-use efficiency,120 adoption of technologies and approaches reduce production costs, and in many cases that increase productivity, cope with sequester carbon.121 climate change, and reduce emissions In 2008, 100 million hectares, or about 6.3 percent of global arable land, were Several options will need to be pursued farmed with minimum tillage--about dou- simultaneously to increase productivity. ble the amount in 2001.122 Most takeup has Agricultural research and extension has been in developed countries, because the been underfunded in the past decade. The technique has heavy equipment require- share of official development assistance ments and has not been modified for con- for agriculture dropped from 17 percent ditions in Asia and Africa.123 Minimum in 1980 to 4 percent in 2007,114 despite tillage also makes the control of weeds, estimates that rates of return to invest- pests, and diseases more complex, requir- ment in agricultural research and exten- ing better management.124 sion are high (30­50 percent).115 Public Nevertheless, in the rice-wheat farm- expenditures on agricultural research ing system of the Indo- Gangetic plain of and development (R&D) in low- and India, farmers adopted zero-tillage on middle-income countries have increased 1.6 million hectares in 2005.125 In 2007­08 slowly since 1980, from $6 billion in an estimated 20­25 percent of the wheat 1981 to $10 billion in 2000 (measured in two Indian states alone (Haryana and in 2005 purchasing power dollars), and Punjab) was cultivated under minimum private investments remain a small share tillage, corresponding to 1.26 million hect- (6 percent) of agricultural R&D in those ares.126 Yields increased by 5­7 percent, countries.116 Those trends will have to be and costs came down by $52 a hectare.127 reversed if societies are to meet their food About 45 percent of Brazilian cropland is needs. farmed using these practices.128 The use The recently concluded Integrated of minimum tillage will probably con- Assessment of Agricultural Knowledge, tinue to grow, particularly if the tech- Science, and Technology for Development nique becomes eligible for payments for Managing Land and Water to Feed Nine Billion People and Protect Natural Systems 155 soil carbon sequestration in a compliance of fallow land, conservation tillage, cover carbon market. crops, and biochar can all increase carbon Biotechnology could provide a transfor- storage (box 3.7). Draining rice paddies at mational approach to addressing the tradeoffs least once during the growing season and between land and water stress and agricul- applying rice straw waste to the soil in the tural productivity, because it could improve off-season could reduce methane emissions crop productivity, increase crop adaptation by 30 percent.130 Methane emissions from to climatic stresses such as drought and heat, livestock can also be cut by using higher- mitigate greenhouse gas emissions, reduce quality feeds, more precise feeding strate- pesticide and herbicide applications, and gies, and improved grazing practices.131 modify plants for better biofuel feedstocks Better pasture management alone could (box 3.6). There is, however, little likelihood achieve about 30 percent of the greenhouse of genetic modification affecting water pro- gas abatement potential from agriculture ductivity in the short term.129 (1.3 gigatons of CO2e a year by 2030 over Climate- smart farming practices 3 billion hectares globally).132 improve rural livelihoods while mitigat- As countries intensify agricultural pro- ing and adapting to climate change. New duction, the environmental impacts of soil crop varieties, extended crop rotations fertility practices will come to the fore.133 (notably for perennial crops), reduced use The developed world and many places in Asia 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 2.5­5 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 Uses of International Watercourses, which new agreements on resource sharing will was adopted by the UN General Assembly need to be negotiated. in 1997, has yet to command sufficient rati- To facilitate adaptation and regulate fications to enter into force.175 fi shery rights, it is important to develop Cooperation among riparian countries is international resource management essential to address water challenges caused regimes, both legal and institutional, and by climate change. Such cooperation can be associated monitoring systems. Such agree- achieved only through inclusive agreements ments might be facilitated by strengthening that make all the riparian countries respon- regional fi sheries management organiza- sible for the joint management and sharing tions.181 The Benguela Current's Large of the watercourse and that are designed Marine Ecosystem Programme is a prom- to address increased variability from both ising development. Running along the west droughts and floods. Typically water agree- coast of Angola, Namibia, and South Africa, ments are based on allocating fixed quanti- the Benguela ecosystem is one of the most ties of water to each party; climate change highly productive in the world, support- makes this concept problematic. Allocations ing a reservoir of biodiversity including based on percentages of flow volume would fi sh, seabirds, and sea mammals. Within better address variability. Even better would the ecosystem there is already evidence be a "benefit- sharing" approach, where the that climate change is shifting the ranges focus is not on water volumes but on the eco- of some key commercial species poleward nomic, social, political, and environmental from the tropics.182 This shift compounds values derived from water use.176 existing stresses from overfi shing, dia- mond mining, and oil and gas extraction. Countries will need to work together to Angola, Namibia, and South Africa estab- better manage fisheries lished the Benguela Current Commission Fish is the most international of food com- in 2006, the first such institute created for modities. One-third of global fish produc- a large marine ecosystem. The three coun- tion is traded internationally, the highest tries committed to integrated management ratio for any primary commodity.177 As of the fishery in order to adapt to climate their fish stocks have declined, European, change.183 North American, and many Asian nations have begun importing more fish from More reliable trade in agricultural developing countries.178 This increased commodities will help countries demand, combined with the overcapital- experiencing unexpected weather ization of some fishing fleets (the European extremes fleet is 40 percent larger than the fish stocks Even if farmers, businesses, governments, can accommodate), is spreading the deple- and water managers dramatically increase tion of marine resources to the southern the productivity of land and water, some Mediterranean, West Africa, and South parts of the world will not have enough America. And despite the multibillion water to always grow all of their food. dollar-a-year international trade in fisher- Deciding how much food to import and ies, developing countries receive relatively how much to grow domestically has impli- little in fees from foreign fishing fleets oper- cations for agricultural productivity and ating in their waters. Even in the rich tuna water management (box 3.8). Seeking food fishery of the western Pacific, small island self-sufficiency when resource endowments developing states receive only about 4 per- and growth potential are inadequate will cent of the value of the tuna taken.179 By impose heavy economic and environmental modifying the distribution of fish stocks, costs. changing food webs, and disrupting the Many countries already import a large physiology of already stressed fi sh spe- share of their food--most Arab countries cies, climate change will only make things import at least half of the food calories they worse.180 Fleets facing further declines in consume--and increasingly harsh condi- stocks may venture even farther afield, and tions mean that all countries need to prepare 160 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 BOX 3.8 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 change­50% of 4.0 cereals produced domestically atures and reduced precipitation makes the task more challenging: technological 3.5 With climate change­50% of cereals produced domestically progress will need to be 22­33 percent 3.0 With climate change­60% 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 10­40 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 Amount of cereals 22.1 (million tons) 1.8 Exported Imported Source: FAO 2009c. Note: Annual exports and imports are based on the average over four years (2002­2006). rice in India affect Bangladeshi consumers multinational procurement so that small adversely and dampen the incentives for countries can group together for economies rice farmers in India to invest in agricul- of scale.190 ture, a long-term driver of growth. In addi- A third measure is active management tion, export bans stimulate the formation of stocks. Countries need robust national of cartels, undermine trust in trade, and stockpiling and the latest instruments in encourage protectionism. Domestic price risk hedging, combining small physical controls can also backfire by diverting stockpiles with virtual stockpiles purchased resources from those who need them most through futures and options. Models indi- and by reducing incentives for farmers to cate that futures and options could have produce more food. saved Egypt between 5 and 24 percent of the roughly $2.7 billion it spent purchasing Countries can take measures to improve wheat between November 2007 and October access to markets 2008, when prices were soaring.191 Global Countries can take unilateral action to collective action in managing stocks would improve their access to international food also help prevent extreme price spikes. A markets, a particularly important step for small physical food reserve could allow a small countries whose actions do not affect smooth response to food emergencies. An the market but that nonetheless import a international coordinated global food reserve large share of their food. One of the sim- could reduce pressures to achieve grain self- plest ways is to improve procurement meth- sufficiency. And an innovative virtual reserve ods. Sophisticated measures for issuing could prevent market price spikes and keep tenders to import food, such as electronic prices closer to levels suggested by long-run tendering and bidding and advanced credit market fundamentals without putting the and hedging products, could all help gov- coordinated global reserves at risk.192 ernments get a better deal. Another option Weatherproofi ng transport services is would be to relax national laws that prohibit also critical to ensure year-round access to 162 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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 5­10 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) 0­25 26­50 51­75 76­100 >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 Research and development will be necessary to take full advantage of these new informa- 300 tion technologies. There is great scope for applying new technologies and information 450 systems to manage natural resource issues associated with climate change. Investments in satellite data for natural resource man- 600 agement can pay off in the long run. But the potential is far from being met, especially in the poorest countries. A study in the Nether- lands concluded that additional investments in satellite observations for water quality management (eutrophication, algal blooms, turbidity), including the capital costs of the Source: Water Watch, www.waterwatch.nl (accessed May 1, 2009). satellite, has a 75 percent probability of pro- Note: Farmers whose fields are red are using one-fourth as much water per liter of wine than those whose fields are shown in blue. In addition to gauging water productivity, governments can also use these techniques ducing fi nancial benefits.209 Research and to target the activities of advisory and enforcement services. development of these tools and their appli- cation in developing countries are thus ripe they are about to exceed their allocation for public and private investment.210 of groundwater, and alert inspectors to monitor those particular farms.206 More reliable information can empower communities and change the Digital maps created from remote-sensing governance of natural resources information will help resource managers Natural resource management often at many levels. Using information from requires governments to set and enforce remote sensing to create digital maps of laws, limits, or prices. Political and socio- all of Africa's soils will be very useful for economic pressures make this very diffi- sustainable land management. Current cult, especially where formal institutions soil maps are 10­30 years old and gener- are weak. But when resource users have the ally not digitized, making them inadequate right information about the impacts of their to inform policies to address soil fertility actions, they can bypass governments and and erosion. An international consortium work together to reduce overexploitation, is using the latest technologies to prepare often increasing their revenues. Making a a digitized global map, starting with the strong economic case for reform can help, African continent. 207 Satellite imagery as in a recent study that highlighted the and new applications now allow scientists global cost of poor governance in marine to measure streamflow, soil moisture and capture fisheries.211 water storage (lakes, reservoirs, aquifers, India offers several examples of bet- snow, and ice) and to forecast floods. They ter information resulting in more efficient also make it possible to show crop yields, agricultural production and welfare gains. crop stress, CO2 uptake, species composi- In the state of Madhya Pradesh a subsidiary tion and richness, land cover and land- of Indian Tobacco Company (ITC) devel- cover change (such as deforestation), and oped a system called eChoupals to lower its Managing Land and Water to Feed Nine Billion People and Protect Natural Systems 165 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 60­80 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 Source: WDR team. Managing Land and Water to Feed Nine Billion People and Protect Natural Systems 167 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 Fish farms Power station Bonded warehouse carbon captured and stored for grain stocks to buffer price underground shocks in international grain market Bio-engineered trees Wastewater treatment plant sequester carbon in former treated water wasteland · injected into aquifer to protect against saline intrusion Modern crop varieties · piped to coastal wetlands to adapted to climate change stress counteract excess abstraction · used for irrigation upstream Coastal agriculture with irrigation from coastal Flood protection barrier aquifers protected from saline Wetlands intrusion preserved to sequester carbon, provide habitat, and purify water Desalination plant · uses renewable energy Mangroves protected: · provides water to city and · in response to incentives coastal agriculture from carbon credits · to provide ecosystem services, including fish nursery and storm Regulated fishery protection Fish farms ensures catch is at sustainable levels Source: WDR team. 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 60­97 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 31­39 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 7­20 percent with CO2 long-needed reform of water management fertilization and by around 40­350 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 2007­08 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 infrastructure to intensify production. The development assistance to Africa.228 A study simultaneous rise in energy and food prices of African pastoralists shows that even will also make some big investments prof- modest improvements in natural resource itable again, including large multipurpose management could produce additional dams for power and irrigation. It will be carbon sequestration of 0.50 metric ton of important to channel the incentives from carbon a year per hectare. A price of $10 high food prices into innovative invest- per metric ton of CO2 would increase their ments and policy reforms to boost agricul- incomes by 14 percent.229 tural productivity while making land and Carbon sequestration in agriculture water use sustainable. would be a relatively inexpensive and effi- cient response to climate change. The An international price that paid for abatement cost in agriculture in 2030 is avoiding emissions and sequestering estimated to be almost an order of mag- carbon in agriculture could encourage nitude lower than that in the forestry sec- better protection of natural systems tor ($1.8 per metric ton of CO2 equivalent Under the Clean Development Mecha- compared with $13.5 per metric ton of CO2 nism of the Kyoto Protocol, agricultural equivalent).230 One reason for this is that soil carbon sequestration projects in the many agricultural techniques that improve developing world are not eligible for selling carbon sequestration also increase agricul- carbon credits to investors in the developed tural yields and revenues. world. If they were, incentives for farmers So, the techniques for storing more car- and other land users would change funda- bon in soil already exist, but they are not mentally. Carbon markets that cover green- being adopted. The list of causes is long-- house gases from agricultural and other inadequate knowledge of management land-management practices could be one techniques appropriate to tropical and sub- of the most important mechanisms to drive tropical soils, weak extension infrastructure sustainable development in a world affected to deliver the available innovations, lack of by climate change. The potential is huge: property rights to encourage investments one source estimates 4.6 gigatons of CO2 or with long-term payoffs but short-term more a year by 2030, which is more than costs, inappropriate fertilizer taxation poli- half of the potential from forestry (7.8 giga- cies, and poor transport infrastructure. tons of CO2 a year).225 At $100 a ton of CO2e, The world community could take four potential emission reductions from agricul- practical steps to expand the carbon mar- ture are on par with those from energy (see ket. First, rather than attempt to monitor overview, box 8). Models show that pricing detailed emissions and uptakes in each field, carbon in agriculture and land-use change the people involved in the carbon markets would help prevent the conversion of intact (local and international) need to agree on a ecosystems ("unmanaged land" in figure simplified actuarial-based accounting sys- 3.14) to meet rising demand for biofuel. tem that monitors the activities of farmers Although the mechanisms for conserv- and conservatively estimates the associated ing soil carbon through a carbon price are carbon sequestration.231 It would not be not yet developed, the potential to reduce cost-effective or feasible to measure carbon emissions from agriculture is large. Even sequestration across multiple, dispersed in Africa, where relatively carbon-poor smallholder parcels in the developing world. drylands make up 44 percent of the con- Moreover, the approach is transparent and tinent, the possibility for agricultural would allow the farmer to know up front carbon sequestration is great.226 The pro- what the payments and penalties would be jected mean agricultural mitigation poten- for various activities. tial across the continent is 100 million to The processes by which soils take up or 400 million metric tons of CO2e a year by emit carbon are complex. They vary from 2030.227 With a relatively low price of $10 place to place (even within a field) and a metric ton in 2030, this fi nancial flow depend on soil properties, climate, farm- would be comparable to the annual official ing system, and land-use history. Further, 170 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 Figure 3.14 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 Other unmanaged land Other unmanaged land 80 80 Unmanaged forests Unmanaged forests 60 60 Bioenergy crops Managed forests Managed forests 40 Grassland 40 Grassland Unmanaged pasture Unmanaged pasture 20 20 Crops Pasture Pasture Bioenergy crops Crops 0 0 1990 2005 2020 2035 2050 2065 2080 2095 1990 2005 2020 2035 2050 2065 2080 2095 Year Year Source: Wise and others 2009. Note: Projections based on the MiniCAM Global Integrated Assessment Model. Both scenarios represent a path to achieve a CO2 concentration of 450 ppm by 2095. In figure 3.14a, a price is put on carbon emissions from fossil fuels, industry, and land-use change. In figure 3.14b, the same price is applied but only to fossil-fuel and industry emissions. When a price is not applied to terrestrial emissions, growers are likely to encroach into natural habitats, mainly in response to the demand for biofuels. 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 15­30 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- 10­15 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 BOX 3.9 Pilot projects for agricultural carbon finance in Kenya Preliminary results from two pilot proj- The sequestration activities include receive, 80 percent will go to the com- ects in western Kenya indicate that reduced tillage, cover crops, residue munity and 20 percent to monitoring and smallholder agriculture can be inte- management, mulching, composting, project development. grated into carbon finance. One involves green manure, more targeted applica- Two lessons are emerging. First, a good mixed cropping systems across 86,000 tion of fertilizers, reduced biomass burn- aggregator is essential, especially one that hectares, using a registered association ing, and agroforestry. The projects use can also advise on agricultural practices. of 80,000 farmers as the aggregator. activity-based monitoring. The estimates Second, the method for monitoring must Another smaller coffee project encom- of carbon sequestration over 20 years are be simple and accessible and transparent passes 7,200 hectares thus far, and a derived from a model known as RothC. to the farmer. In these cases, the farmer 9,000-member farmer cooperative The World Bank BioCarbon Fund is pur- can easily consult a table to determine the serves as the aggregator. The average chasing the carbon credits based on a exact payment he or she will receive for size of landholdings for both projects is price per ton mutually agreed on by the each activity, a system that encourages small (about 0.3 hectare). fund and the project developers, VI Agro- participation. The amount of carbon sequestration is forestry and Swedish Cooperative Centre estimated to be 516,000 tons and 30,000 and ECOM Agroindustrial Group. Of the Sources: Kaonga and Coleman 2008; tons of CO2e a year, respectively, total revenues that the communities Woelcke and Tennigkeit 2009. Redirecting agricultural subsidies so that any income support to farmers is could be an important mechanism contingent on their meeting good environ- for achieving climate-smart land and mental and agricultural standards, and any water management rural development support goes to mea- The member countries of the Organisation sures that improve competitiveness, man- for Economic Co-operation and Develop- age the environment and the land, improve ment provide $258 billion every year in sup- the quality of life, and increase diversifica- port to their farmers, which amounts to 23 tion. Through the rural development sup- percent of farm earnings.245 Of this support port category, farmers can be compensated 60 percent is based on the quantity of a spe- if they provide environmental services that cific commodity produced and on variable go beyond the mandatory standards. 246 inputs with no constraints attached to their This reform is a promising initiative to use--only 2 percent is for noncommodity jump-start climate- and farmer-smart agri- services (such as creating buffer strips to cultural and natural resource policies, and protect waterways, preserving hedgerows, the European Union could serve as a test- or protecting endangered species). bed for mechanisms that could be applied The political imperatives of climate for sustainable land and water management change offer an opportunity to reform those in the developing world. subsidy schemes, to focus them more on climate change mitigation and adaptation measures that would also benefit domes- To cope with the effects of climate tic soil, water, and biodiversity resources change on natural resources and simulta- as well as increase farm productivity. In neously reduce emissions of greenhouse addition to these direct benefits, allocating gases, societies need to produce more from resources on that scale would also demon- land and water and protect their resources strate whether these climate-smart tech- better. To produce more, they need to niques can be applied on a large scale in the increase investment in agriculture and developing world and attract entrepreneur- water management, particularly in devel- ial ingenuity and energy to find new ways of oping countries. For agriculture that means solving the technical and monitoring prob- investing in roads and research and devel- lems that will arise. opment as well as adopting better policies The European Union has already and institutions. For water, it means using reformed its Common Agricultural Policy new decision-making tools and better data, Managing Land and Water to Feed Nine Billion People and Protect Natural Systems 173 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. "Our globe is facing environmental problems due to human behavior--cutting down trees, air pollution, use of plastics cannot be reused or recycled, chemical hazards in agriculture. . . . Tree planting would reduce CO2." --Netpakaikarn Netwong, Thailand, age 14 174 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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 1961­1990. 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 1980­99. 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 1961­1990 (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. for health, well-being, or performance beyond 114. World Bank 2008c. their regular nutritional value. Examples include 115. Alston and others 2000; World Bank 2007c. antioxidant foods, such as guarana and açaí berry, 116. Beintema and Stads 2008. vitamin A-rich golden rice and orange-fleshed 117. IAASTD 2009. sweet potato, margarine fortified with plant ste- 118. Blaise, Majumdar, and Tekale 2005; Gov- rols to improve cholesterol levels, and eggs with aerts, Sayre, and Deckers 2005; Kosgei and others increased omega-3 fatty acids for heart health. 2007; Su and others 2007. Kotilainen and others 2006. 119. Thierfelder, Amezquita, and Stahr 2005; 93. Ziska 2008. Zhang and others 2007. 94. T. Christopher, "Can Weeds Help Solve the 120. Franzluebbers 2002. Climate Crisis?" New York Times, June 29, 2008. 121. Govaerts and others 2009. 176 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 122. Derpsch and Friedrich 2009. 170. Naylor and others 2000. 123. Derpsch 2007; Hobbs, Sayre, and Gupta 171. FAO 2001; Lightfoot 1990. 2008. 172. Delgado and others 2003. 124. World Bank 2005. 173. FAO 2009b. 125. Derpsch and Friedrich 2009; Erenstein 174. For example, China and Nepal are not and Laxmi 2008. parties to an agreement between Bangladesh and 126. Erenstein 2009. India for the water of the Ganges basin and receive 127. Erenstein and others 2008. no allocation. 128. de la Torre, Fajnzylber, and Nash 2008. 175. Salman 2007. 129. Passioura 2006. 176. Qaddumi 2008. 130. Yan and others 2009. 177. Kurien 2005. 131. Thornton 2009. 178. FAO 2009e. 132. Smith and others 2009. 179. Duda and Sherman 2002. 133. Doraiswamy and others 2007; Perez and 180. FAO 2009d; Sundby and Nakken 2008. others 2007; Singh 2005. 181. Lodge 2007. 134. Such as the deep placement of urea bri- 182. BCLME Programme 2007. quettes or supergranules. 183. GEF 2009. 135. Singh 2005. 184. World Bank 2009. 136. Singh 2005. 185. Fischer and others 2005. 137. Poulton, Kydd, and Dorward 2006; Dor- 186. Rosegrant, Fernandez, and Sinha 2009. ward and others 2004; Pender and Mertz 2006. 187. Easterling and others 2007. 138. Hofmann and Schellnhuber 2009; Sabine 188. FAO 2008. and others 2004. 189. Mitchell 2008. Climate shocks have led 139. Hansen and others 2005. to restrictive domestic food trade policies and 140. FAO 2009e. exacerbated price increases in the past as well; 141. FAO 2009e. for examples, see Battisti and Naylor 2009. 142. Delgado and others 2003. 190. World Bank 2009. 143. FAO 2009e. 191. World Bank 2009. 144. Arkema, Abramson, and Dewsbury 2006. 192. von Braun and others 2008. 145. Smith, Gilmour, and Heyward 2008. 193. Bouet and Laborde 2008. 146. Gordon 2007. 194. Other issues need a case-by-case assess- 147. Armada, White, and Christie 2009. ment, such as exemptions from tariff cuts on spe- 148. Pitcher and others 2009. cial products, as sought by developing countries 149. OECD 2008; World Bank 2008d. for products specified as important for food secu- 150. FAO 2009e. rity, livelihood security, and rural development. 151. World Bank 2008d. World Bank 2007c. 152. Costello, Gaines, and Lynham 2008; 195. WMO 2000. Hardin 1968; Hilborn 2007a; Hilborn 2007b. 196. Xiaofeng 2007. 153. FAO 2009c. Fish and seafood include 197. 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CHAPTER 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 50­80 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 20­35 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 Country Climate change Renewable energy Energy efficiency Transport European Union 20 percent emission reduction from 1990 to 20 percent of primary 20 percent energy 10 percent transport 2020 (30 percent if other countries commit to energy mix by 2020 savings from the fuel from biofuel by 2020 substantial reductions); 80 percent reduction reference case by 2020 from 1990 to 2050 United States Emission reduction to 1990 levels by 2020; 80 25 percent of electricity Increase fuel economy percent reduction from 1990 to 2050 by 2025 standard to 35 miles a gallon by 2016 Canada 20 percent reduction from 2006 to 2020 Australia 15 percent reduction from 2000 to 2020 China National Climate Change Plan and White 15 percent of primary 20 percent reduction in 35 miles a gallon fuel Paper for Policies and Actions for Climate energy by 2020 energy intensity from economy standard Change, a leading group on energy 2005 to 2010 already achieved; plan conservation and emission reduction to be the world leader established, chaired by the prime minister in electric vehicles; and mass construction of subways under way India National Action Plan on Climate Change: per 23 gigawatts of 10 gigawatts of energy Urban transport policy: capita emissions not to exceed developed renewable capacity savings by 2012 increase investment in countries', an advisory council on climate by 2012 public transport change created, chaired by the prime minister South Africa Long-term mitigation scenario: emissions 4 percent of the power 12 percent energy- Plan to be the world peak in 2020 to 2025, plateau for a decade, mix by 2013 efficiency improvement leader in electric and then decline in absolute terms by 2015 vehicles; and expand bus rapid transit Mexico 50 percent emission reduction from 2002 to 8 percent of the power Efficiency standards, Increase investment in 2050; national strategy on climate change: mix by 2012 cogeneration public transport intersecretariat commission on climate change set up for coordination Brazil National plan on climate change: reducing 10 percent of the power 103 terawatt hours of World leader in ethanol deforestation 70 percent by 2018 mix by 2030 energy savings by 2030 production Sources: Government of China 2008; Government of India 2008; Government of Mexico 2008; Brazil Interministerial Committee on Climate Change 2008; Pew Center 2008a; Pew Center 2008b; Project Catalyst 2009. Note: Some of the above goals represent formal commitments, while others are still under discussion. Energizing Development without Compromising the Climate 193 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 1850­2006. 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 1850­2000) 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 30­60 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% Residential and Industry commercial buildings 19% 8% b. High-income countries c. Middle-income countries d. Low-income countries Others Land-use 14% change and Agriculture forestry Others 8% 23% Power 18% Others Industry 5% Power 14% 15% Transportation 26% 4% Land-use change Power Industry and forestry 36% 7% 50% Transportation Agriculture Agriculture 23% 14% 20% 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 a. Car ownership and income, 2000 Passenger cars/1,000 people 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 $) b. Car use and income, 1970­2005 Vehicle-km/capita (thousands) 16 14 12 10 8 6 United States (cars and household light trucks) 4 Germany France 2 Japan 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). achievable at acceptable costs. Limiting concentrations in the atmosphere to stabi- warming to not much more than 2°C above lize at no more than 450 parts per million preindustrial temperatures means that (ppm) CO2 equivalent (CO2e).22 Current global emissions must peak no later than greenhouse gas concentrations are already 2020, then decline by 50­80 percent from at 387 ppm CO2e and are rising at about current levels by 2050, with perhaps even 2 ppm a year.23 Thus, there is little room negative emissions required toward 2100.21 for emissions to grow if warming is to sta- This is an ambitious undertaking: only bilize around 2°C. Most models assume about half of the energy models reviewed that achieving 450 ppm CO2e will require fi nd it feasible (figure 4.7), and even then overshooting that concentration for a few most require all countries to start taking decades and then coming back to 450 ppm action immediately. CO2e toward the end of the century (table More specifically, staying close to a 4.1). Faster reductions of short-lived green- 2°C warming requires greenhouse gas house gas emissions, such as methane and Energizing Development without Compromising the Climate 197 Figure 4.6 Where the world needs to go: Energy-related CO2 emissions per capita CO2 emissions per capita (metric tons) 25 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) CO2 emissions change in 2050 relative to 2000 (%) 140 650 ppm CO2e (4­5°C) 550 ppm CO2e (3°C) 450 ppm CO2e (2°C) ETSAP-TIAM 120 FUND 100 GTEM 80 IMAGE 60 IMAGE-BECS 40 MERGE Optimistic 20 MERGE Pessimistic 0 Emissions in year 2000 MESSAGE ­20 MESSAGE-NOBECS ­40 MiniCAM-Base ­60 MiniCAM-Lo Tech POLES ­80 SGM ­100 Zero emissions WITCH ­120 Full Delay Full Delay Full Delay Not to exceed Not to exceed Overshoot Source: Clarke and others, forthcoming. Note: Each dot represents the emissions reduction that a particular model associates with a concentration target--450, 550, 650 parts per million (ppm) of CO2 equivalent (CO2e)-- in 2050. The number of dots in each column signals how many of the 14 models and model variants were able to find a pathway that would lead to a given concentration outcome. "Overshoot" describes a mitigation path that allows concentrations to exceed their goal before dropping back to their goal by 2100, while "not to exceed" implies the concentra- tion is not to be exceeded at any time. "Full" refers to full participation by all countries, so that emission reductions are achieved wherever and whenever they are most cost- effective. "Delay" means high-income countries start abating in 2012, Brazil, China, India, and the Russian Federation start abating in 2030, and the rest of the world in 2050. 198 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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 Not-to- exceed Overshoot Immediate participation 1) Immediate participation by all regions 1) Immediate participation by all regions 2) 70% dramatic emissions reductions by 2020 2) Construction of 126 new nuclear reactors and the capture of nearly a billion tons of CO2 in 2020 3) Substantial transformation of the energy system by 2020, including the construction of 500 new nuclear reactors, and the capture of 20 billion 3) Negative global emissions by the end of the century, and thus tons of CO2 requires broad deployment of biomass-based CCS 4) Carbon price of $100/tCO2 globally in 2020 4) Carbon prices escalate to $775/tCO2 in 2095 5) Tax on land-use emissions beginning in 2020 5) Possible without a tax on land-use emissions, but would result in a tripling of carbon taxes and a substantial increase in the cost of meeting the target. 1) Dramatic emissions reductions for non-Annex I (developing countries) Delayed participation at the time of their participation 2) Negative emissions in Annex I (high-income) countries by 2050 and negative global emissions by the end of the century, and thus requires broad deployment of biomass-based CCS 3) Carbon prices begin at $50/tCO2, and rise to $2,000/tCO2 4) Results in significant carbon leakage, because crop production is outsourced to nonparticipating regions resulting in a substantial increase in land-use change emissions in those regions Source: Clarke and others, forthcoming. Note: Maintaining emissions at 450 ppm CO2e or less at all times is almost impossible to attain. If concentrations are allowed to exceed 450 ppm CO2e before 2100, keeping warming close to 2°C still poses tremendous challenges, as the right-hand column outlines. Annex I countries are the OECD and transition economies committed to reducing emissions under the Kyoto Protocol. The non-Annex I countries did not take on any commitment to reduce emissions. 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 0.3­0.9 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 0.2­0.7 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 28­32 giga- 0.7 0.70 tons in 2020 from 26 gigatons in 2005, 0.6 0.58 0.56 and then fall to 12­15 gigatons by 2050.34 0.5 This trajectory requires a 2­3 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 4­5 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 Nakic ´ ´enovic 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 2005­2050 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 650­750 exajoules--a 17­28 percent cut. between emission reductions in the Most models project that fossil fuels renewables and nuclear energy. The short to medium term (2005­2050) and would need to drop from 80 percent of largest increase would be in renew- the long term (2050­2100). A modest energy supply today to 50­60 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 30­40 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 80­90 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 8­15 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 1­2 0­1 0­2 3­5 2­3 bonized, followed by the industrial and building sectors (table above). Coal with CCS 0 1­13 1­12 2­9 0­25 3­26 Oil 34 16­21 20­26 11­23 18­20 18­19 Sources: a. Knopf and others, forthcoming; Rao and Gas without CCS 21 19­21 20­21 20­22 9­13 5­9 others 2008. Gas with CCS 0 8­16 6­21 7­31 1­29 3­8 ´enovic 2007; b. Riahi, Grübler, and Nakic ´ IIASA 2009. Nuclear 6 8 8­10 10­11 8­12 9­11 c. IEA 2008b; Calvin and others, forthcom- Biomass without CCS 10 12­21 10­18 10­11 9­14 16­30 ´enovic 2007; ing; Riahi, Grübler, and Nakic ´ IIASA 2009; van Vuuren and others, forth- Biomass with CCS 0 2­8 1­7 3­9 1­12 2­12 coming; Weyant and others 2009. Non-biomass renewables 3 8-14 7­12 7­12 10­13 5­19 d. IEA 2008b; Calvin and others, forthcom- ´enovic 2007; ing; Riahi, Grübler, and Nakic ´ Total (exajoules a year) 493 665­775 87­121 70­80 130­139 66­68 IIASA 2009; van Vuuren and others, forth- Sources: WDR team, based on data from Riahi, Grübler, and Nakic ´enovic 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 (0.8­1 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 (0.6­0.9 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 85­95 percent of coal plants in China by policy. So, these countries' contributions energy demand would have to be 20­30 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 1.5­2 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 (0.5­2.6 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 15­20 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 80­90 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 (1.2­2.2 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 2­3 percent by 2050. Providing McKinsey & Company 2009a; Riahi, Grübler, and Nakic ´ ´enovic 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. 38­40 percent and 40­42 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 35­38 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 43­62 gigatons Non-OECD by 2050.41 But a 450 ppm CO2e trajectory 20 World requires that energy emissions be reduced 10 to 12­15 gigatons, a 28­48 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 150­200 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 45­50 gigawatts by 2020.f Similarly, solar between power plants and users, smart ranges from 80­170 exajoules a year by photovoltaics have a learning rate of 15­20 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 Nakic ´ ´enovic 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 Nakic ´ ´enovic 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%) We want to go to 2°C: 450 ppm emissions = 14 Gt Advanced technologies and 10 innovations with international climate policies and R&D 0 2000 2020 2035 2050 Year 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 Nakic ´ ´enovic 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 CO2 emission reduction potential (Gt/year) 8 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 Unproven Technically Commercially Financially Widespread scientific concept viable available viable deployment Stage of development Source: WDR team, based on data from World Bank 2008a and IEA 2008a (mitigation potential from IEA Blue Scenario in 2050). Note: See table 4.4 for detailed definitions of technology development stage. A given technology group can be progressing through different stages at the same time but in dif- ferent country settings and at different scales. Wind, for example, is already cost competitive with gas-fired power plants in most of the United States (Wiser and Bolinger 2008). But in China and India wind may be economically but not financially viable against coal-fired power plants. So for clean technologies to be adopted in more places and at larger scales, they must move from the top to bottom in table 4.4. Table 4.4 Policy instruments tailored to the maturity of technologies Issues to address to move Maturity level Status to next stage Policy support Technically The basic science is proven and tested in the Development and Technology development policies: viable lab or on a limited scale. Some technical and demonstration to prove Substantial public and private R&D, and cost barriers remain. operational viability at large-scale demonstration. scale and to minimize costs. Internalize global externalities. Internalize global externalities through carbon tax or cap-and-trade. Technology transfer. Commercially The technology is available from commercial Leveling the playing field Domestic policies to provide a level available and vendors. Projected costs are well understood. between clean energy and playing field: economically Technology is economically viable, justified fossil fuels. Remove fossil-fuel subsidies and viable by country's development benefits. But it internalize local externalities. cannot yet compete against fossil fuels without subsidy and/or internalization of local Provide financial incentives for clean externality. energy technologies. Financially viable Technology is financially viable for project Market failures and barriers Regulations, with financial incentives to investors--cost competitive with fossil hamper accelerating adoption remove market failures and barriers. fuels, or has high financial returns and short through the market. Support for delivery mechanisms and payback period for demand options. financing programs to expand adoption. Consumer education. Widespread Technology is being adopted widely through market operation. Source: WDR team. 208 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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 3.5­5.0 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 BOX 4.6 Advanced technologies Carbon capture and storage (CCS) could emission cuts. CCS also significantly entire chain of technical, legal, institu- reduce emissions from fossil fuels by reduces efficiency of power plants and tional, financial, and environmental issues 85­95 percent and is critical in sustain- has the potential for leakage. could require a decade or more before ing an important role for fossil fuels in The near-term priority should be spur- applications go to scale. a carbon- constrained world. It involves ring large-scale demonstration projects Plug-in hybrids offer a potential near- three main steps: to reduce costs and improve reliability. term option as a means of transition to · CO2 capture from large stationary Four large-scale commercial CCS dem- full electric vehicles.c They combine bat- sources, such as power plants or other onstration projects are in operation--in teries with smaller internal combustion industrial processes, before or after Sleipner (Norway); Weyburn (Canada- engines, which allow them to travel part- combustion. United States); Salah (Algeria); and Snoh- time on electricity provided by the grid vit (Norway)--mostly from gas or coal through recharging at night. When run- · Transport to storage sites by pipelines. gasification. Together these projects cap- ning on electricity generated from renew- · Storage through injection of CO2 into ture 4 million tons of CO2 per year. A 450 able energy, they emit 65 percent less CO2 geological sites, including: depleted oil ppm CO2e trajectory requires 30 large- than a gasoline-powered car.d However, and gas fields to enhance oil and gas scale demonstration plants by 2020.b they increase electricity consumption, recovery, coal beds to enhance coal Capturing CO2 from low- efficiency power and the net emission reductions depend bed methane recovery, deep saline for- plants is not economically viable, so new on the electricity source. Significant mations, and oceans. power plants should be built with highly improvements and cost reductions in Currently, CCS is competitive with con- efficient technologies for retrofitting with energy storage technology are required. ventional coal only at a price of $50 to $90 CCS later. Legal and regulatory frame- Electric vehicles are solely battery- a ton of CO2.a Still at the R&D stage, it is works must be established for CO2 injec- powered, but they require much greater technologically immature. The number tion and to address long-term liabilities. battery capacity than plug-in hybrids and of economically available geological The European Union has adopted a direc- are more expensive. sites close to carbon emission sources tive on the geological storage of CO2, and varies widely from country to country. the United States has proposed CCS rules. Sources: Early opportunities to lower costs are Detailed assessments of potential carbon a. IEA 2008b. at depleted oil fields and enhanced oil storage sites are also needed, particularly b. IEA 2008b. recovery sites, but storage in deep saline in developing countries. Without a mas- c. IEA 2008b. aquifers would also be required for deep sive international effort, resolving the d. NRDC 2007. 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. Emissions from transport are much lower in denser cities Individual emissions from transport (kg per capita) 700 600 Marseilles 500 Atlanta 400 Johannesburg 300 Kuala Lumpur Frankfurt Mexico City 200 Paris Harare Cape Town Cairo Los Curitiba São Paulo 100 Angeles Berlin Singapore Shanghai Delhi Bogotá Seoul Mumbai Tokyo Santiago 0 0 50 100 150 200 250 300 350 Density (people per hectare) Source: World Bank 2009b. Note: The figure does not correct for income because a regression of transport emissions on density and income reveals that density, not income, is a key factor. Data are for 1995. Energizing Development without Compromising the Climate 211 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 20­25 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 10­30 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 125,000­185,000 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 and deployment of energy efficiency and low-carbon technologies (box 4.9). Energy B OX 4 . 9 Carbon pricing alone is not enough efficiency faces distinct barriers in different sectors. For power, where a small number of Carbon pricing alone cannot guaran- term elasticity ranging between ­0.6 decision makers determine whether energy- tee large-scale deployment of efficient and ­1.1. efficiency measures are adopted, fi nancial and clean energy, because it cannot Third, the low price elasticity of fully overcome the market failures adoptiing many energy- efficiency incentives are likely to be effective. For and nonmarket barriers to the inno- measures may also be a result of high transport, buildings, and industry--where vation and diffusion of low-carbon opportunity costs in rapidly growing adoption is a function of the preferences technologies.a developing countries like China. A of, and requires action by, many decentral- First, price addresses only one of return of 20 percent for an efficiency ized individuals--energy demand is less many barriers. Others, such as a lack measure is attractive, but investors responsive to price signals, and regulations of institutional capacity and financ- may not invest in efficiency if other tend to be more effective. A suite of policy ing, block the provision of energy- investments with equivalent risks saving services. have higher returns. instruments can replicate proven successes Second, while the price elasticity of So, strong pricing policies are in removing barriers to energy efficiency. energy demand is high over the long important but not enough. They term, it is generally quite inelastic in need to be combined with regula- Regulations. Economywide energy- the short term, because people have tions to correct market failures, intensity targets, appliance standards, build- few short-run options for reducing remove market and nonmarket bar- ing codes, industry performance targets their transport needs and household riers, and foster clean technology (energy consumption per unit of output), energy use in response to fuel price development. changes. Automobile fuel prices have and fuel-efficiency standards are among the an historical short-term elasticity Sources: most cost-effective measures. More than 35 ranging from only ­0.2 to ­0.4,b with a. ETAAC 2008. countries have national energy-efficiency a much smaller response of ­0.03 to b. Chamon, Mauro, and Okawa 2008. targets. France and the United Kingdom ­0.08 in recent years,c but a long- c. Hughes, Knittel, and Sperling 2008. have gone a step further in energy-efficiency obligations by mandating that energy com- panies meet energy-saving quotas. In Japan than half since the 1970s, even as their effi- energy-efficiency performance standards ciency has increased by three-quarters.77 require utilities to achieve electricity sav- ings equal to a set percentage of their base- Financial incentives. In many develop- line sales or load.73 Brazil, China, and India ing countries weak enforcement of regula- have energy-efficiency laws, but as in all tions is a concern. Regulations need to be contexts, effectiveness depends on enforce- supplemented with financial incentives for ment. Other options include the mandatory consumers and producers. Low-income con- phasing out of incandescent lights. sumers are most sensitive to the higher up- Complying with efficiency standards front costs of efficient products. Financial can avoid or postpone adding new power incentives to offset these up-front costs, such plant capacity and reduce consumer prices. as consumer rebates and energy-efficient And industrial energy performance targets mortgages,78 can change consumer behavior, can spur innovation and increase competi- increase affordability, and overcome barriers tiveness. For new buildings in Europe the to market entry by new, efficient producers. cumulative energy savings from building In addition, regulations are also vulnerable codes is about 60 percent over those built to rebound effects, so pricing policies are before the fi rst oil shock in the 1970s.74 needed to discourage consumption. Fuel Refrigerator efficiency standards in the taxes have proved one of the most cost- United States have saved 150 gigawatts in effective ways to reduce transport energy peak power demand over the past 30 years, demand, along with congestion charges and more than the installed capacity of the entire insurance or tax levies on vehicles based on U.S. nuclear program.75 Efficiency standards kilometers traveled, and higher taxes on light and labeling programs cost about 1.5 cents a trucks and sports utility vehicles (table 4.5). kilowatt-hour, much cheaper than any elec- Utility demand-side management has tricity supply option.76 The average price of produced large energy savings. Key to success refrigerators in America has fallen by more is decoupling utility profits from electricity 214 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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 Energy efficiency and demand-side Policy area management interventions Renewable energy interventions Barriers addressed Economywide Removal of fossil-fuel subsidies Environmental externalities not included Tax (fuel or carbon tax) in the price Quantitative limits (cap-and-trade) Regressive or demand-augmenting distortions from subsidies for fossil fuels Regulations Economywide energy-efficiency targets Mandatory purchase, open and fair Lack of legal framework for renewable Energy-efficiency obligations grid access independent power producers Appliance standards Renewable portfolio standards Lack of transmission access by renewable Low-carbon fuel standards energy Building codes Technology standards Lack of incentives and misplaced incentives Industry energy-performance targets to save Fuel economy standards Interconnection regulations Supply-driven mentality Unclear interconnection requirements Financial incentives Tax credits Feed-in tariff, net metering High capital costs Capital subsidies Green certificates Unfavorable pricing rules Profits decoupled from sales Real-time pricing Lack of incentives for utilities and Consumer rebates Tax credits consumers to save Time-of-use tariffs Capital subsidies Fuel taxes Congestion tolls Taxes based on engine size Insurance or tax levies on vehicle miles traveled Taxes on light trucks, SUVs Institutional Utility Utility Too many decentralized players arrangements Dedicated energy-efficiency agencies Independent power producers Independent corporation or authority Energy service companies (ESCOs) Financing Loan financing and partial loan guarantees System benefit fund High capital cost, and mismatch with mechanisms ESCOs Risk management and long-term short-term loans Utility energy-efficiency, demand-side financing ESCOs' lack of collateral and small deal size management program, including system Concessional loans Perceived high risks benefit fund High transaction costs Lack of experience and knowledge Promotion and Labeling Education about renewable energy Lack of information and awareness education Installing meters benefits Loss of amenities Consumer education Source: WDR team. Energizing Development without Compromising the Climate 215 BOX 4.10 California's energy-efficiency and renewable energy programs A U.S. leader in energy efficiency, Califor- California's electricity consumption per capita has remained flat over the past 30 years, thanks nia has kept its electricity consumption largely to utility demand-side management and efficiency standards. The cost of energy per capita flat for the past 30 years, sub- efficiency is much lower than that of electricity supply stantially below the U.S. national average a. Electricity sales per capita (figure, panel a). Appliance standards kWh/person and building codes, along with finan- cial incentives for utility demand-side 14,000 management programs, are estimated 12,000 to be responsible for one- quarter of the United States 2005 differences difference (figure, panel b). California 10,000 = 5,300 kWh/yr = $165/capita decoupled utility profits from sales in 8,000 1982 and recently went a step further with "decoupling-plus"--utilities earn 6,000 California additional money if they meet or exceed 4,000 savings goals. The state's energy-efficiency program 2,000 has an annual budget of $800 million, collected from tariff surcharges on elec- 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 tricity and used for utility procurements, demand-side management, and research Year and development. The average cost of b. Annual energy savings from efficiency programs and standards the program is about 3 cents per kilowatt- hour, far lower than the cost of supply GWh (figure, panel c). To promote renewable 45,000 ~15% of annual electricity use in California in 2003 energy, the state is implementing renew- 40,000 able portfolio standards to increase renew- 35,000 able energy's share in power generation to 20 percent by 2010. 30,000 In June 2005 California became the first 25,000 Utility efficiency programs at a cost of U.S. state to issue an executive order on 20,000 ~1% of electric bill climate change, setting a target for reduc- ing greenhouse gas emissions to the 2000 15,000 Building standards level by 2010, to the 1990 level by 2020, 10,000 and to 80 percent below the 1990 level by 5,000 2050. Energy efficiency is projected to con- Appliance standards tribute about 50 percent of this reduction. 0 1975 1979 1983 1987 1991 1995 1999 2003 Year Sources: California Energy Commission 2007a; Rosenfeld 2007; Rogers, Messenger, c. Comparison of California energy efficiency (EE) program costs to supply generation costs and Bender 2005; Sudarshan and Sweeney, forthcoming. $/kWh Demand options Supply options 0.18 0.167 0.16 0.14 0.12 0.118 0.10 0.08 0.06 0.054 0.04 0.029 0.02 0 Average cost of EE Base load Shoulder Peak programs for 2000­04 generation generation generation 216 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 energy auditing, recommend energy sav- commercial banks, as specialized agencies, ing measures, and provide financing to cli- or as revolving funds.81 ents; they also serve as project aggregators. Lending through local commercial Most ESCOs have had difficulty in obtain- banks offers the best prospect for program ing adequate fi nancing from commercial sustainability and maximum impact. Inter- banks because of their weak balance sheets national fi nancial institutions have sup- and the perceived higher risks of loans ported partial-risk-guarantee programs to dependent on revenues from energy sav- mitigate the risks of energy-efficiency proj- ings. Policies, financing, and technical sup- ects for commercial banks, increasing the port from governments and international banks' confidence in jump-starting energy- development banks can strengthen ESCOs efficiency fi nancing (box 4.11). Dedicated and mainstream their business model. In revolving funds are another common China, for example, after a decade of capac- approach, particularly in countries where ity building supported by the World Bank, investing in energy efficiency is in the early the ESCO industry grew from three com- stages and banks are not ready to provide panies in 1997 to more than 400, with $1 fi nancing.82 This approach is transitional, billion in energy performance contracts in and sustainability is a major issue. 2007.80 Utility demand-side management is usually funded through a system benefit Financing mechanisms. Developing and fund (fi nanced by a tariff surcharge on operating energy-efficiency services for kilowatt-hours to all electricity customers), investment in energy efficiency are primarily which is more sustainable than government institutional issues. Lack of domestic capital budgets. Administered by either utilities or is rarely a problem, but inadequate organi- dedicated energy-efficiency agencies, the zational and institutional systems for devel- funds cover incremental costs of switching oping projects and accessing funds can be to renewable energy from fossil fuels, con- barriers to finance. The three main financing sumer rebates, concessional loans, research mechanisms for energy-efficiency projects and development, consumer education, and are ESCOs, utility demand-management low-income consumer assistance. programs, and loan financing and partial loan guarantee schemes operating within Public procurement. Mass procurement of energy-efficient products can substantially reduce costs, attract larger contracts and bank lending, and lower transaction costs. In BOX 4.11 World Bank Group experience with financing Uganda and Vietnam the bulk procurement energy efficiency of 1 million compact fluorescent lamps in The World Bank and the Interna- technical assistance, particularly at each country substantially reduced the cost tional Finance Corporation (IFC) have the beginning, to raise awareness of of the lamps and improved product quality financed a series of energy- efficiency energy efficiency, to provide training through technical specifications and war- financial intermediary projects, and advisory services to the banks ranty; once installed, they cut peak demand mostly in Eastern Europe and East in developing financial mechanisms, by 30 megawatts.83 Public procurement Asia. The IFC pioneered the use of and to build the capacity of project through government agencies, usually one of a guarantee mechanism through developers. While in Bulgaria the the biggest energy consumers in an economy, selected domestic banks with the transaction cost of institutional Hungary Energy Efficiency Guarantee capacity building for both financial can reduce costs and demonstrate govern- Fund. A Global Environment Facil- institutions and energy service ment's commitment and to leadership in ity grant of $17 million was used to companies--from project concept to energy efficiency. But mandates, incentives, guarantee $93 million worth of loans financial closure--has been around and procurement and budgeting rules have for energy- efficient investments. No 10 percent of total project costs at the to be in place.84 guarantee has been called, giving beginning, it is expected to decline to local banks confidence in and famil- around 5­6 percent later on. iarity with energy- efficiency lending. Consumer education. Consumer educa- One of the key lessons of the Sources: WDR team; Taylor and others tion can promote lifestyle changes and more experience is the importance of 2008. informed choices--examples include energy- efficiency labeling and increased use of elec- Energizing Development without Compromising the Climate 217 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 BOX 4.12 Difficulties in comparing energy technology costs: A matter of assumptions Comparing costs of different energy tech- technologies compares all the economic also be factored in. Dynamic analysis of nologies is a tricky business. A frequently attributes along the primary fuel cycle future costs of new technologies depends used approach for comparing electricity for a unit of energy benefits. Comparing on the assumptions made about the generation technologies is based on costs renewable energy costs with fossil fuel learning rate--the cost reductions associ- per kilowatt-hour (kWh). A levelized-cost and nuclear should take into account the ated with a doubling of capacity. The cost method is commonly used to compare different services they provide (base- of wind energy has dropped nearly 80 the life-cycle economic costs of energy load or intermittent energy). On the one percent over the past 20 years. Technol- alternatives that deliver the same energy hand, solar and wind energy produce ogy breakthroughs and economies of services. First, capital costs are calculated variable outputs, although outputs can scale can lead to more rapid cost reduc- using a simple capital recovery factor be enhanced in various ways, usually at tions, a phenomenon some experts now method.a This method divides the capital an additional cost. On the other hand, expect will lead to dramatic near-term cost into an equal payment series--an solar and wind energy technologies can reductions in solar cell prices.c annualized capital cost--over the lifetime typically be licensed and built in much In financial analysis, differences in insti- of the equipment. Then the annualized less time than large-scale fossil or nuclear tutional context (whether public or private capital costs are added to the annual oper- plants. financing) and government policies (taxes ation and maintenance (O&M) costs and Third, externalities such as environ- and regulations) are often the deciding the fuel costs to obtain the levelized costs. mental costs and portfolio diversification factors. Differences in financing costs are So capital costs, O&M costs, fuel costs, the values should be incorporated when particularly important for the most capital- discount rate, and a capacity factor are key comparing fossil-fuel costs and clean intensive technologies like wind, solar, and determinants of levelized costs. energy costs. A carbon price will make nuclear. A California study shows that the In reality, costs are time and site spe- a big difference in pushing up the costs cost of a wind power plant varies much cific. The costs of renewable energy of fossil fuels. Fossil-fuel price volatility more than the cost of a gas combined are closely linked to local resources creates additional negative externali- cycle plant, with different financing terms and sites. Wind costs, for example, vary ties. Increasing fuel prices by 20 percent for private ("merchant"), investor-owned, widely depending on site-specific wind increases the costs of generation by and publicly owned utilities.d resources. Labor costs and construction 16 percent for gas and 6 percent for coal, time are also key factors, particularly for while leaving renewable energy practi- fossil-fuel and nuclear plants. Chinese cally untouched. Adding renewable Sources: coal-fired power plants, for example, energy sources provides portfolio diver- a. The capital recovery factor = cost about one-third to one-half of the sification value because it hedges against [i(1+i)n]/[(1+i)n ­ 1] where i is the discount international prices for similar plants. The the volatility of fossil fuel prices and sup- rate and n is the lifetime or period of capital long lead time to construct nuclear power plies. Including this portfolio diversifica- recovery of the systems. plants contributes to the high costs in the tion value in the evaulation of renewables b. World Economic Forum 2009. United States. increases their attractiveness.b c. Deutsche Bank Advisors 2008 (projected Second, sensible integrated com- When dealing with new technologies, photovoltaic cost reductions). parative assessment of different energy the potential for cost reduction should d. California Energy Commission 2007b. 218 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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 4.13 Denmark sustains economic growth while cutting emissions Between 1990 and 2006 Denmark's GDP mainly wind and biomass, with a goal to energy intensity in Europe, a result of grew at roughly 2.3 percent a year, more raise the use of renewable energy to at stringent building and appliance codes than Europe's average of 2 percent. Den- least 30 percent by 2025. Membership in and voluntary agreements on energy mark also reduced carbon emissions by the Nordic power pool, with more than savings in industry. Combined heat- and 5 percent. 50 percent hydropower, provides the power-based district heating networks Sound policies decoupled emissions additional flexibility of exporting surplus provide 60 percent of the country's win- from growth. Denmark, along with other wind power and importing Norwegian ter heating, with over 80 percent of it Scandinavian countries, implemented hydropower during periods of low wind coming from heat previously wasted in the world's first carbon tax on fossil resources. Vestas, the major Danish wind electricity production. fuels in the early 1990s. At the same company, has 15,000 employees and time Denmark also adopted a range of accounts for a quarter of the global mar- policies to promote the use of sustain- ket for wind turbines. In 15 years Danish Sources: WDR team based on WRI 2008; able energy. Today around 25 percent renewable technology exports have Denmark Energy Mix Fact Sheet, http:// of Denmark's electricity generation and soared to $10.5 billion. ec.europa.eu/energy/energy_policy/doc/ 15 percent of its primary energy con- In addition to its low carbon-intensity factsheets/mix/mix_dk_en.pdf (accessed sumption come from renewable energy, of energy, Denmark has the lowest August 27, 2009). Energizing Development without Compromising the Climate 219 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. An alternative approach for achieving generate electricity or maintain the perfor- renewable energy targets is competitive ten- mance of plants. But output incentives per dering, where power producers bid on pro- kilowatt-hour of power produced promote viding a fi xed quantity of renewable power, the desired outcome--generating electric- with the lowest-price bidder winning the ity from renewable energy. Any incremental contract, as is done in China and Ireland. costs of renewable energy over fossil fuels Tendering is effective at reducing costs, can be passed on to consumers or financed but a main risk has been that some bidders through a system benefits charge, a carbon underbid and obligations have not always tax on fossil-fuel use, or a dedicated fund translated into projects on the ground. from government budgets or donors. Several financial incentives are available to encourage renewable energy investments: Nuclear power and natural gas reducing up-front capital costs through sub- Nuclear power is a significant option for sidies; reducing capital and operating costs mitigating climate change, but it suffers from through investment or production tax cred- four problems: higher costs than coal-fired its; improving revenue streams with carbon plants,92 risks of nuclear weapon prolifera- credits; and providing fi nancial support tion, uncertainties about waste management, through concessional loans and guarantees. and public concerns about reactor safety. Output-based incentives are generally prefer- Current international safeguards are inad- able to investment-based incentives for grid- equate to meet the security challenges of connected renewable energy.91 Investment expanded nuclear deployment.93 How- incentives per kilowatt of installed capac- ever, the next generation of nuclear reactor ity do not necessarily provide incentives to designs offer improved safety characteristics 220 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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 27­37 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. Global direct normal solar radiation (kilowatt-hours a square meter a day) Annual mean global direct solar irradiance (kilowatt­hours per square meter per day) Necessary for concentrated 1 2 3 4 5 6 7 8 9 solar technology 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 Policies have to be integrated shifts in transport. It is also important to Policy instruments need to be coordinated align policies and strategies in national, and integrated to complement each other provincial, and local governments (see and reduce confl icts. A reduction of emis- chapter 8). sions in transport, for example, requires In conclusion low-carbon technology integration of a three-legged approach. In and policy solutions can put the world the order of difficulty, they are transform- onto a 2°C trajectory, but a fundamental ing vehicles (fuel efficient, plug-in hybrid, transformation is needed to decarbonize and electric cars), transforming fuels (eth- the energy sector. This requires immediate anol from sugarcane, second generation action, and global cooperation and com- biofuels, and hydrogen), and transform- mitment from developed and developing ing mobility (urban planning and mass countries. There are win-win policies that transit).98 Biofuel policies need to coor- governments can adopt now, including reg- dinate energy and transport policies with ulatory and institutional reforms, financial agriculture, forestry, and land-use policies incentives, and fi nancing mechanisms to to manage the competing demands for scale up existing low-carbon technologies, water and land (see chapter 3). If energy particularly in the areas of energy efficiency crops take land away from agriculture in and renewable energy. poor nations, the "medicine" of the req- Adequate carbon pricing and increased uisite interventions might be worse than technology development are essential the "disease" in the sense that mitigation to accelerate development and deploy- might increase vulnerability to climate ment of advanced low- carbon technolo- impacts.99 Large- scale deployment of gies. Developed countries must take the plug-in hybrid and electric vehicles would lead in demonstrating their commitment substantially increase power demand, to significant change at home, while also threatening the anticipated lower emis- providing fi nancing and low-carbon tech- sions from the technology unless the grid nologies to developing countries. Devel- is supplied with an increased share of low- oping countries require paradigm shifts carbon energy sources. Policies to encour- in new climate-smart development mod- age renewable energy, if not designed els. The technical and economic means properly, can discourage efficient heat pro- exist for these transformative changes, duction for combined heat and power. but only strong political will and unprece- Policies, strategies, and institutional dented global cooperation will make them arrangements also have to be aligned happen. across sectors. Cross-sectoral initiatives are usually difficult to implement, because Notes of fragmented institutional arrangements 1. IPCC 2007. and weak incentives. Finding a champion 2. Authors' estimates; Socolow 2006. Estimates is critical for moving the agenda forward; are based on 100 kilowatt-hours a month elec- for example, local governments can be a tricity consumption for a poor household with good entry point for emission reductions in an average of seven people, equivalent to 170 cities, particularly for buildings and modal kilowatt-hours a person-year. Electricity is pro- "If nothing is done, we shall lose our beloved planet. It is our collective responsibility to find `unselfish' solutions and fast before it's too late to reverse the damage caused every day." --Maria Kassabian, Nigeria, age 10 Energizing Development without Compromising the Climate 223 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 40­50 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 Nakic ´ ´enovic 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 energy­economy­agricultural- 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 224 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 by the Netherlands Environmental Assessment 50. McKinsey & Company 2009a. Agency, is an integrated assessment model includ- 51. The Mexico Low Carbon Study identified ing the TIMER 2 energy model coupled with the nearly half of the total potential for emissions climate policy model FAIR-SiMCaP (Bouwman, reduction to be from interventions with positive Kram, and Goldewijk 2006). The fifth model is net benefits (Johnson and others 2008). the IEA Energy Technology Perspective, a linear 52. Bosseboeuf and others 2007. programming optimization model based on the 53. IEA 2008b; Worldwatch Institute 2009. MARKAL energy model (IEA 2008b). 54. UNEP 2003. 29. Mitigation costs include additional capi- 55. IPCC 2007. tal investment costs, operation and maintenance 56. Brown, Southworth, and Stovall 2005; costs, and fuel costs, compared to the baseline. Burton and others 2008. A comprehensive Rao and others 2008; Knopf and others, forth- review of empirical experience based on 146 coming; Calvin and others, forthcoming; Riahi, green buildings in 10 countries concluded that Grübler, and Nakic ´ ´enovic 2007; IIASA 2009. green buildings cost on average about 2 percent 30. Riahi, Grübler, and Nakic ´enovic 2007; ´ more to build than conventional buildings and IIASA 2009; Knopf and others, forthcoming; could reduce energy use by a median of 33 per- IEA 2008c. cent (Kats 2008). 31. IEA 2008b; McKinsey & Company 2009a. 57. Shalizi and Lecocq 2009. 32. Knopf and others, forthcoming; Calvin 58. Brown, Southworth, and Stovall 2005. and others, forthcoming; IEA 2008c. 59. IEA 2008b. 33. Rao and others 2008; IEA 2008b; Mignone 60. Johnson and others 2008. and others 2008. This is true in the absence of 61. Brown, Southworth, and Stovall 2005; effective and acceptable geoengineering technol- ETAAC 2008. ogy (see chapter 7 for a discussion). 62. Johnson and others 2008. 34. IEA 2008b; IEA 2008c; Riahi, Grübler, 63. Sorrell 2008. and Nakic ´ ´enovic 2007; IIASA 2009; Calvin and 64. IEA 2008c. others, forthcoming. 65. Stern 2007. A small share of the subsidies 35. Raupach and others 2007. supports clean energy technologies, such as the 36. Shalizi and Lecocq 2009. $10 billion a year for renewables. 37. Philibert 2007. 66. World Bank 2008a. 38. McKinsey & Company 2009b. 67. Sterner 2007. 39. World Bank 2001. 68. UNEP 2008. 40. IEA 2008b; Calvin and others, forthcom- 69. Ezzati and others 2004. ing; Riahi, Grübler, and Nakic ´ ´enovic 2007; IIASA 70. Wang and Smith 1999. 2009. 71. A carbon tax of $50 a ton of CO2 trans- 41. IEA 2008b; Calvin and others, forthcom- lates to a tax on coal-fired power of 4.5 cents a ing; Riahi, Grübler, and Nakic ´ ´enovic 2007; IIASA kilowatt-hour, or a tax on petroleum of 45 cents 2009. The size of emission reductions required is a gallon (12 cents a liter). critically dependent on the baseline scenarios, 72. Philibert 2007. which vary greatly among different models. 73. WBCSD 2008. 42. IEA 2008b; Riahi, Grübler, and Nakic ´en- 74. World Energy Council 2008. ´ ovic 2007; IIASA 2009; IAC 2007. It should be 75. Goldstein 2007. noted that land-use changes and methane reduc- 76. Meyers, McMahon, and McNeil 2005. tions are also critical measures in nonenergy sec- 77. Goldstein 2007. tors (see chapter 3) to achieve a 450 ppm CO2e 78. An energy-efficient mortgage allows bor- trajectory, particularly to buy some time in the rowers to qualify for a larger mortgage by includ- short term for new technology development. ing energy savings gleaned from home energy- 43. 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Wash- Institute of Energy, Environment and Econ- ington, DC: World Bank Asia Alternative omy. 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 BOX 5.1 The climate regime today The United Nations Framework Con- the Parties, which meets every year or enhance carbon sinks, more cheaply vention on Climate Change (UNFCCC), and reviews the implementation of the abroad than at home. which was adopted in 1992 and entered convention, adopts decisions to further The Bali Action Plan, adopted in 2007 into force in 1994, set an ultimate objec- develop the convention's rules, and nego- by the parties to the UNFCCC, launched tive of stabilizing atmospheric concen- tiates substantive new commitments. a comprehensive process to enable the trations of greenhouse gases at levels The Kyoto Protocol supplements and full, effective, and sustained implemen- that would prevent "dangerous" human strengthens the convention. Adopted in tation of the convention through long- interference with the climate system. It 1997, it entered into force in February 2005, term cooperative action, now, up to, and divided countries into three main groups with 184 parties as of January 14, 2009. beyond 2012 in order to reach an agreed with different types of commitments: At the heart of the protocol lie its outcome at the UNFCCC's 15th session in Annex I parties include the industrial legally binding emissions targets for Copenhagen in December 2009. countries that were members of the OECD Annex I parties, which have individual The Bali Action Plan centered negotia- (Organisation for Economic Co-operation emissions targets, decided in Kyoto after tions on four main building blocks-- and Development) in 1992, plus countries intensive negotiation. mitigation, adaptation, technology, and with economies in transition (the EIT Par- In addition to emissions targets for financing. Parties also agreed that the ties), including the Russian Federation, the Annex I parties, the Kyoto Protocol con- negotiations should address a shared Baltic states, and several Central and East- tains a set of general commitments (mir- vision for long-term cooperative action, ern European states. They commit to adopt roring those in the UNFCCC) that apply to including a global goal for emission climate-change policies and measures with all parties, such as reductions. the aim of reducing their greenhouse gas emissions to 1990 levels by the year 2000. · Taking steps to improve the quality of Annex II parties consist of the OECD emissions data, Source: Reproduced from UNFCCC 2005; · Mounting national mitigation and UNFCCC decision 1/CP.13, http://unfccc.int/ members of Annex I, but not the EIT Par- resource/docs/2007/cop13/eng/06a01.pdf ties. They are required to provide financial adaptation programs, (accessed July 6, 2009). resources to enable developing coun- · Promoting environmentally friendly a. Parties with commitments under the tries to undertake emissions reduction technology transfer, Kyoto Protocol have accepted targets for activities under the UNFCCC and to help · Cooperating in scientific research and limiting or reducing emissions. Joint Imple- them adapt to adverse effects of climate international climate observation net- mentation allows a country with a target to change. In addition, they have to "take all implement projects counted toward meet- works, and ing their own target, but conducted in other practicable steps" to promote the devel- · Supporting education, training, pub- countries that also have targets. The Clean opment and transfer of environmentally lic awareness, and capacity-building Development Mechanism (CDM) allows a friendly technologies to EIT parties and initiatives. country with commitments to implement an developing countries. emission-reduction project in developing Non­Annex I parties are mostly devel- The protocol broke new ground with countries that do not have targets. Emis- oping countries. They undertake general three innovative mechanisms--Joint sions trading allows countries that have emission units to spare--emissions permit- obligations to formulate and implement Implementation, the Clean Development ted them but not used--to sell this excess national programs on mitigation and Mechanism, and emissions tradinga-- capacity to countries that are over their adaptation. designed to boost the cost-effectiveness targets. (Adapted from http://unfccc.int/ The ultimate decision-making body of climate-change mitigation by open- kyoto_protocol/mechanisms/items/1673. of the convention is its Conference of ing ways for parties to cut emissions, php, accessed August 5, 2009.) 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 50­85 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 BOX 5.2 Some proposals for burden sharing Contraction and convergence Brazil proposal: equality today includes equity acquired The contraction-and-convergence historical responsibility in historical, current, and future approach assigns every human being In 1997, in the negotiations leading to the development. an equal entitlement to greenhouse gas Kyoto Protocol, the government of Brazil · Giving priority to basic needs means emissions. All countries would thus move proposed that "historical responsibility" that the allocation of emission entitle- toward the same per capita emissions. be used as the basis for apportioning ments should reflect differences in Total emissions would contract over time, the burden of mitigation among Annex natural environments. and per capita emissions would converge I countries (meaning the countries with If only CO2 emissions from fossil fuels on a single figure. The actual convergence firm targets). The proposal sought to are considered and emissions peak in 2015 value, the path toward convergence, and address "the relationship between the and fall to 50 percent of 2005 levels by the time when it is to be reached would emissions of greenhouse gases by Par- 2050, the annual per capita carbon budget all be negotiable. ties over a period of time and the effect for 1900 to 2050 would 2.33 metric tons of of such emissions in terms of climate Greenhouse Development Rights CO2. Initial carbon budget allocations for change, as measured by the increase The Greenhouse Development Rights each country should be proportional to in global mean surface temperature." Framework argues that those struggling base-year population, with adjustments The notable feature of the proposal was against poverty should not be expected for natural factors such as climate, geogra- the method used to distribute emission to focus their limited resources on avert- phy, and natural resources. reduction burdens among countries, ing climate change. Instead it argues for Developing nations, despite often according to which an Annex I country's wealthier countries with greater capac- being historically under budget and emission targets should be set on the ity to pay and more responsibility for therefore having the right to grow and to basis of that country's relative responsibil- the existing stock of emissions to take create emissions, have no choice but to ity for the global temperature rise. on the bulk of the costs of a global miti- transfer their carbon budgets to devel- The proposal included a "policy maker gation and adaptation program. oped nations in order to cover the histori- model" for determining emission targets The novelty of the Greenhouse cal excesses of developed nations and for countries and suggested the need for Development Rights approach is that it ensure basic future needs. an "agreed climate-change model" for defines and calculates national obliga- This historical debt amounts to some estimating a country's contribution to tions on the basis of individual rather 460 gigatons of CO2. At the current cost global temperature increase. than national income. A country's capac- of $13 a ton, the value of this debt would ity (resources to pay without sacrificing Carbon budget be $59 trillion--substantially more than necessities) and responsibility (contribu- A research group at the Chinese Academy is currently provided to developing coun- tion to the climate problem) are thus of Social Sciences argues that tries in financial assistance to combat determined by the amount of national climate change. income or emissions above a "devel- · Greenhouse gas emission rights are a Continued high per capita emissions opment threshold." This is estimated human right that ensures survival and in high-income countries could partly be at about $20 a person a day ($7,500 a development. Equality means ensuring offset through the carbon market. But person a year), with emissions assumed equality among individuals, not among progressive carbon taxes are likely to be proportional to income. The index of nations. necessary, with the excess carried over to capacity and responsibility under the · The crux of promoting equality the next round of commitments. Greenhouse Development Rights Frame- between individuals is to ensure the Sources: Contraction and convergence: work would assign to the United States rights of the current generation. Con- Meyer 2001. Greenhouse development 29 percent of the global emission reduc- trolling population growth is a policy rights: Baer, Athanasiou, and Kartha 2007. tions needed by 2020 for 2°C stabiliza- option to promote sustainable devel- Brazil: submission from the government opment and to slow climate change. of Brazil to the UNFCCC in 1997 (http:// tion, followed by the European Union (23 unfccc.int/cop3/resource/docs/1997/agbm/ percent) and China (10 percent). India's · Given the wealth accumulated during misc01a3.htm, accessed July 7, 2009). Car- share of global emission reductions development, which was accompa- bon budget: reproduced from Jiahua and would be around 1 percent. nied by greenhouse gas emissions, Ying 2008. 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 prove particularly effective in helping gov- Options for integrating ernments undertake politically difficult developing-country actions into reforms, conditionality gave way within a the global architecture decade to the almost opposite concept of Developing countries need to be persuaded borrower "ownership" of a reform agenda that there is a feasible route to integrating as a precondition for policy reform loans.12 climate change and development if they are The lesson for climate change appears to be to rapidly start the transition to a low-carbon that--even purely on pragmatic grounds, development path. If the international cli- putting aside principles connected with mate regime is to promote stronger action responsibility for the problem--condi- by developing countries, it must incorporate tionality is simply not an effective tool for new approaches appropriate to their circum- getting governments to take measures with stances. Any mitigation effort required for little domestic support. the developing countries must be grounded Fortunately, there is a more productive on "a clear understanding of the economic way to conceptualize how climate funds and governance context for their develop- might be used. A first step requires redirect- ment choices and their overriding devel- ing attention from implementing actions opment priorities."13 The future regime predetermined by a donor to organizing must be designed in a way that recognizes funding around a process to encourage their efforts to reduce their emissions while recipient-country development and owner- achieving their development objectives. ship of a low-carbon development agenda. So far, the primary vehicle for mitiga- This is similar to the poverty reduction strat- tion action within the regime has been egy approach discussed in chapter 6, whereby economywide emission targets pegged to donors align around a strategy designed and historical base-year emission levels, as in owned by the recipient government. Such an the Kyoto Protocol. Such an output-based approach would place the emphasis on the approach (focused on the emission "out- governance mechanism for fund providers put") is driven by the core objective of and fund recipients to collectively scrutinize achieving and maintaining a tolerable level and oversee climate finance. of greenhouse gas concentrations in the A second step is for mitigation financing atmosphere.14 Fixed economywide emission to support both low-carbon development targets have two advantages. They provide and well-specified mitigation actions in certainty about the environmental outcome developing countries. The concrete actions (assuming they are met). And they allow should be collectively agreed on by those countries considerable flexibility to choose providing and those receiving funds as serv- the most suitable and cost-effective means ing the dual functions of climate mitigation of implementation. This target-driven and development gains. As discussed earlier, approach remains appropriate for devel- many energy-efficiency measures would be oped countries. good candidates for easy agreement. But such a climate-centric approach is Coming to agreement on supporting perceived as problematic for developing low-carbon development is more amor- countries, at least at this stage of the climate phous and challenging. But the lesson regime. Many developing countries see a from conditionality is that the path for cap on total emissions as a cap on economic low-carbon development should be devel- growth. Having demonstrated their com- oped through a process that builds consid- petitive success, the countries fear that the erable recipient-country ownership. The climate agenda will hold them back. These efforts of a number of governments, such concerns spring from the fact that the prin- as Mexico and South Africa among others, cipal driving forces of emissions growth to develop a long-term carbon mitigation in developing countries are the develop- strategy as a basis for identifying concrete ment imperatives of energy and economic actions and seeking international support growth. And as a practical matter, setting are one interesting model. The rest of this and adhering to an economywide emission chapter discusses avenues for developing target requires the ability to accurately mea- these alternative approaches. sure and reliably project emissions across a Integrating Development into the Global Climate Regime 241 country's economy, a capacity that many be conceptualized as an "integrated multi- developing countries now lack. track" framework.15 Many international So engaging developing countries more regimes have the characteristics of such fully in the climate regime may require an approach. For example, the multilateral alternative approaches deemed more trade regime includes agreements accepted appropriate to their circumstances. These by all World Trade Organization members approaches could build on the types of and plurilateral agreements among smaller actions and strategies already being devel- groupings of members. Europe's Long- oped or implemented at the national level. Range Transboundary Air Pollution regime Unlike emission targets, these actions and the International Convention for the can generally be characterized as "policy- Prevention of Pollution from Ships include based," centering on activities that generate core agreements setting forth common emissions, rather than on emissions them- terms and annexes establishing differential selves. To achieve energy efficiency, a coun- obligations. Experiences within these arenas try could introduce a standard or incentive provide valuable lessons for climate policy to shift behavior or technology. Lower makers, but the climate regime requires a greenhouse gas emissions would be one distinct architecture matching a unique set outcome, but the policy also would produce of political and policy imperatives. benefits more closely related to a country's In broad terms, a multitrack climate core development objectives, such as greater regime could include at a minimum two energy affordability and access. Depending distinct mitigation tracks: on their circumstances, countries could put forward different sets of policies or actions · Target track. For developed countries and other countries that may be prepared to that address such development objectives undertake such commitments, the target as economic growth, energy security, and track would establish binding, absolute, improved mobility while also delivering the economywide emission targets succeed- co-benefit of reduced emissions. ing those established under the Kyoto A key question, however, is how to recon- Protocol's first commitment period. cile this approach with the urgency imparted Countries with such targets would have in chapter 4--the notion that unless mitiga- full access to the agreement's interna- tion is immediate and global it will not be tional emissions-trading mechanisms. possible to maintain warming anywhere close to 2°C. New analysis, presented below, · Policy-based track. On this track, other on multitrack frameworks and the impact of countries would agree to undertake advance commitments suggests that a flex- nationally driven policies and actions ible approach could be effective. that would have the effect of reducing emissions or emissions growth. Such An integrated multitrack climate policies could be sector based or econo- framework mywide and could include, for example, energy-efficiency standards, renewable To better integrate development concerns energy targets, fiscal measures, and into climate change efforts, the global cli- land-use policies. Countries could pro- mate regime must become more flexible and pose individual policies or put forward accommodate different national circum- comprehensive low-carbon development stances and strategies, especially for mitiga- strategies identifying priority sectors tion efforts. The Kyoto Protocol establishes and policies and the support needed for a single type of mitigation commitment-- their implementation. a binding, absolute, economywide limit on emissions. This is sound from the perspec- Recent modeling of such hybrid frame- tives of environmental effectiveness and works suggests that multitrack approaches economic efficiency, but as a political and score well on environmental effectiveness practical matter it is an unlikely avenue for and equity and that the efficiency losses may developing countries at this stage. be a reasonable tradeoff to achieve broad A more flexible regime integrating dif- participation in policies that put coun- ferent approaches by different countries can tries collectively on track to greenhouse 242 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 BOX 5.3 Multitrack approaches score well on effectiveness and equity Recent modeling by Battelle Memorial intensity goals, efficiency standards, and efficiency, costs remain below 2 percent Institute's Joint Global Change Research renewable energy targets. The specific of global gross domestic product (GDP) in Institute, in collaboration with the Pew policies, and their stringency, vary among 2050. Further, the policy-based crediting Center on Global Climate Change, indi- the developing-country regions. "Policy- approach redistributes costs globally so cates that an "integrated multitrack" based crediting" awards developing that costs as a share of GDP are signifi- climate framework, in which developed regions tradable emission credits for a cantly lower in developing regions. In the countries undertake economywide portion of the reductions their policies early years, revenue from the sale of emis- emission targets and developing coun- achieve (starting at 50 percent in 2020 sion credits exceeds domestic mitigation tries undertake nontarget policies, can and declining to zero in 2050). costs in some developing regions, produc- produce global emission reductions by The analysis shows global emission ing net economic gains. midcentury consistent with achieving reductions in 2050 nearly as steep as those Source: Calvin and others 2009. atmospheric greenhouse gas concentra- under an idealized "efficient" 450 ppm a. The model does not specifically look at tions of 450 ppm CO2 by 2100.a pathway in which full global emissions temperature increases. However 450 ppm In the global policy scenarios, devel- trading achieves reductions wherever CO2 corresponds to concentrations of about oped regions reduce their emissions and whenever they are least expensive. 550 ppm CO2e (a measure of all greenhouse 20 percent below 2005 levels by 2020, Globally, costs through 2050 are higher gases, not just CO2), hence possible tempera- ture increases of around 3°C. At the time this and 80 percent below by 2050; develop- than in the efficient case, emphasizing the report went to press, this exercise had not ing regions adopt a range of policies importance of moving toward full emis- been conducted for 450 ppm CO2e, which in the energy, transportation, industry, sions coverage and full global trading corresponds to a 40 to 50 percent probability and buildings sectors, such as carbon- by midcentury. But even with this loss in of warming remaining below 2°C. 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 gas­generat- 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 Poznan 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 A new body under the UNFCCC may be 9. EU submission to UNFCCC, http://unfccc needed to provide guidance to the parties, .int/files/kyoto_protocol/application/pdf/ assess national adaptation strategies, and ecredd191108.pdf (accessed August 5, 2009). develop criteria for allocating resources. 10. India and China's submissions to the UNFCCC, http://unfccc.int/files/kyoto_protocol/ Such a body would need to coordinate application/pdf/indiasharedvisionv2.pdf and http:// closely with other international develop- unfccc.int/files/kyoto_protocol/application/pdf/ ment agencies and have enough indepen- china240409b.pdf (accessed July 6, 2009). For a dence to credibly assess national strategies civil society perspective see Third World Network, and resource allocation. "Understanding the European Commission's As mentioned early in this chapter, the Climate Communication," http://www.twnside. current UNFCCC regime does not include org.sg/title2/climate/info.service/2009/climate. adequate provisions for adaptation. The change.20090301.htm (accessed July 8, 2009). Bali Action Plan presents a great opportu- 11. For example, McKinsey Global Institute nity to streamline the adaptation process (2008) suggests that focused action in six policy and mobilize adequate funding to support areas could deliver about 40 percent of the abate- ment potential identified in their cost-curve adaptation. approach. 12. Dollar and Pritchett 1998. Notes 13. Heller and Shukla 2003. 1. Energy-related emissions increased by 24 14. Heller and Shukla 2003. percent between 1997 (when the Kyoto Protocol 15. Bodansky and Diringer 2007. was signed) and 2006; see CDIAC database (DOE 16. Blanford, Richels, and Rutherford 2008; 2009). Richels, Blanford, and Rutherford, forthcoming. 2. The Global Environment Facility (GEF) 17. Winkler and others 2002. manages projects and investments through a 18. Lewis and Diringer 2007. number of multilateral organizations, in addi- 19. See, for instance, submissions to the tion to functioning as the financial mechanism UNFCCC from South Africa (http://unfccc.int/ for international environmental conventions, files/meetings/dialogue/application/pdf/work- including the UNFCCC. The GEF is providing ing_paper_18_south_africa.pdf) and the Republic $17.2 billion in cofinancing; see GEF 2009. of Korea (http://unfccc.int/resource/docs/2006/ 3. This section is drawn from Dubash 2009. smsn/parties/009.pdf) (accessed June 2009). 4. Absolute emission reduction entails a net 20. Submissions to the UNFCCC from South decline in emissions relative to current levels, as Africa and the Republic of Korea: http://unfccc opposed to a shift in projected emission trajectory. .int/resource/docs/2006/smsn/parties/009.pdf, 5. Baer, Athanasiou, and Kartha 2007. See (accessed June 2009). also box 5.2. 21. Submission to the UNFCCC from South 6. Baumert and Winkler 2005. Africa: http://unfccc.int/files/meetings/dialogue/ 7. Burtraw and others 2005; Barrett 2006. application/pdf/working_paper_18_south_ 8. See focus A on science and chapter 4 for a africa.pdf (accessed June 2009). discussion. "Let's put in a joint effort . . . now before it's too late to save our Mama Earth." --Sonia R. Bhayani, Kenya, age 8 Tewanat Saypan, Thailand, age 12 Integrating Development into the Global Climate Regime 249 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 References the WDR 2010. Akanle, T., A. Appleton, D. Bushey, K. Kulovesi, GEF (Global Environment Facility). 2009. C. Spence, and Y. Yamineva. 2008. Summary "Focal Area: Climate Change," Fact Sheet, of the Fourteenth Conference of Parties to GEF, Washington, DC, June. the UN Framework Convention on Climate Heller, T., and P. R. Shukla. 2003. "Development Change and Fourth Meeting of Parties to the and Climate Change: Engaging Developing Kyoto Protocol. New York: International Insti- Countries." In Beyond Kyoto: Advancing the tute for Sustainable Development. International Effort against Climate Change, Baer, P., T. Athanasiou, and S. Kartha. 2007. ed. J. E. Aldy, J. Ashton, R. Baron, D. Bodan- The Right to Development in a Climate Con- sky, S. Charnovitz, E. Diringer, T. C. Heller, J. strained World: The Greenhouse Development Pershing, P. R. Shukla, L. Tubiana, F. Tudela, Rights Framework. Berlin: Heinrich Böll and X. Wang. Arlington, VA: Pew Center on Foundation, Christian Aid, EcoEquity, and Global Climate Change. Stockholm Environment Institute. Jiahua, P., and C. Ying. 2008. "Towards a Global Barrett, S. 2006. "Managing the Global Commons." Climate Regime." China Dialogue, December In Expert Paper Series Two: Global Commons. 10. http://www.chinadialogue.net/article/ Stockholm: Secretariat of the International Task show/single/en/2616. Force on Global Public Goods. Lewis, J., and E. Diringer. 2007. "Policy-Based Baumert, K., and H. Winkler. 2005. "Sustain- Commitments in a Post-2012 Framework." able Development Policies and Measures and Working paper, Pew Center on Global Cli- International Climate Agreements." In Grow- mate Change, Arlington, VA. ing in the Greenhouse: Protecting the Climate McKinsey Gloabl Institute. 2008. The Carbon by Putting Development First, ed. R. Bradley Productivity Challenge: Curbing Climate and K. Baumert. Washington, DC: World Change and Sustaining Economic Growth. Resources Institute. McKinsey & Company. Blanford, G. J., R. G. Richels, and T. F. Ruther- Meyer, A. 2001. Contraction and Convergence: ford. 2008. "Revised Emissions Growth Pro- The Global Solution to Climate Change. Tot- jections for China: Why Post-Kyoto Climate nes, Devon: Green Books on behalf of the Policy Must Look East." Kennedy School Schumacher Society. Discussion Paper 08-06, Harvard Project on Richels, R. G., G. J. Blanford, and T. F. Ruther- International Climate Agreements, Cam- ford. Forthcoming. "International Climate bridge, MA. Policy: A Second Best Solution for a Second Bodansky, D., and E. Diringer. 2007. "Towards Best World?" Climate Change Letters. an Integrated Multi-Track Framework." Pew 250 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 SEG (Scientific Expert Group on Climate Winkler, H., R. Spalding-Fecher, S. Mwaka- Change). 2007. Confronting Climate Change: sonda, and O. Davidson. 2002. "Sustainable Avoiding the Unmanageable and Managing the Development Policies and Measures: Start- Unavoidable. Washington, DC: Sigma Xi and ing from Development to Tackle Climate The United Nations Foundation. Change." In Building on the Kyoto Protocol: UNFCCC (United Nations Framework Con- Options for Protecting the Climate, ed. K. vention on Climate Change). 2005. Caring A. Baumert, O. Blanchard, S. Llosa, and J. for Climate: A Guide to the Climate Change Perkaus. Washington, DC: World Resources Convention and the Kyoto Protocol. Bonn: Institute. UNFCCC. focus C Trade and climate change 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): 243­267. 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 Table 6.1 Existing instruments of climate finance 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- 1­3 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 Table 6.2 Estimated annual climate funding needed in developing countries 2005 $ billions Source of estimate 2010­20 2030 Mitigation costs McKinsey & Company 175 Pacific Northwest National Laboratory 139 (PNNL) Mitigation financing needs 2010­20 2030 International Institute for Applied 63­165 264 Systems Analysis (IIASA) International Energy Agency (IEA) 565a Energy Technology Perspectives McKinsey & Company 300 563 Potsdam Institute for Climate Impact 384 Research (PIK) Adaptation costs 2010­15 2030 Included measures Short term World Bank 9­41 Cost of climate-proofing development assistance, foreign and domestic investment Stern Review 4­37 Cost of climate-proofing development assistance, foreign and domestic investment United Nations Development 83­105 Same as World Bank, plus cost of adapting Poverty Reduction Strategy Papers and Programme strengthening disaster response Oxfam >50 Same as World Bank plus cost of National Adaptation Plan of Action and nongovernmental organization projects Medium term United Nations Framework Convention 28­67 2030 cost in agriculture, forestry, water, health, coastal protection, and infrastructure on Climate Change (UNFCCC) Project Catalyst 15­37 2030 cost for capacity building, research, disaster management and the UNFCCC sectors (most vulnerable countries and public sector only) World Bank (EACC) 75­100 Average annual adaptation costs from 2010 to 2050 in the agriculture, forestry, fisheries, infrastructure, water resource management, and coastal zone sectors, including impacts on health, ecosystem services, and the effects of extreme-weather events. Sources: For mitigation, IIASA 2009 and additional data provided by V. Krey; IEA 2008; McKinsey & Company 2009, and additional data provided by McKinsey (J. Dinkel) for 2030, using a dollar-to-Euro exchange rate of $1.25 to 1.00; PNNL figures from Edmonds and others 2008, and additional data provided by J. Edmonds and L. Clarke; PIK figures from Knopf and others, forthcoming, and additional data provided by B. Knopf; for adaptation, all figures from Agrawala and Fankhauser 2008, except World Bank EACC (Economics of Adaptation to Climate Change) from World Bank 2009; and Project Catalyst 2009. Note: Estimates are for stabilization of greenhouse gases at 450 ppm CO2e, which would provide a 40­50 percent chance of staying below 2°C warming by 2100. a. IEA figures are annual averages through 2050. thumb, dominated by the cost of climate- these complexities in measuring adaptation proofing future infrastructure. They costs is reported in box 6.1. underestimate the diversity of the likely Adaptation cost estimates also ignore the adaptation responses and ignore changes in close links between adaptation and devel- behavior, innovation, operational practices, opment. Although few studies are clear on or locations of economic activity. They also this point, they measure the extra spend- ignore the need for adaptation to nonmar- ing to accommodate climate change over ket impacts such as those on human health and above what would have been spent on and natural ecosystems. Some of the omit- climate-sensitive investments anyway, such ted options could reduce the adaptation as those accommodating the consequences bill (for example, by obviating the need of income and population growth or cor- for costly structural investments); others recting an existing adaptation deficit. But, would increase it.4 The estimates also do not in practice, the distinction between adapta- consider residual damages beyond effective tion funding and development funding is adaptation. A recent attempt to encompass not easy. Investments in education, health, Generating the Funding Needed for Mitigation and Adaptation 261 BOX 6.1 Costing adaptation to climate change in developing countries A World Bank study published in 2009 on energy, water and sanitation, communica- spanning the wettest and driest climate the economics of adaptation to climate tions, and urban and social infrastructure. projections, under the IPCC's A2 scenario change provides the most recent and of possible socioeconomic and emissions comprehensive estimates of adaptation Baseline. The estimates do not include the trajectories. costs in developing countries, covering existing "adaptation deficit"--the extent both country case studies and global esti- to which countries are incompletely or Based on these design elements, the mates of adaptation costs. Key elements suboptimally adapted to existing climate study arrives at bottom-line estimates of of the design of the study include: variability. the global cost of adaptation to climate Level of adaptation. For most sectors the change in developing countries of $75 to Coverage. The sectors studied comprise study estimates the cost of restoring wel- $100 billion a year on average from 2010 agriculture, forestry, fisheries, infrastruc- fare to the level that would exist without to 2050.a ture, water resource management, and climate change. coastal zones, including impacts on health and ecosystem services, and the Uncertainty. To capture the extremes of effects of extreme weather events. Infra- possible climate outcomes the study uses Source: World Bank 2009. structure is broken down into transport, results from general circulation models a. Expressed in constant 2005 dollars. 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 2002­08. 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 2002­07,7 and sustainable energy investment in developing countries totaled Malaysia 36 437 2 approximately $80 billion over 2002­08.8 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 Mitigation: Least Developed Country Fund 172 (A) As of October 2008 $139 billion­$175 billion Special Climate Change Fund 91 (A) As of October 2008 175 Adaptation Fund 300­600 (A) 2008­12 Bilateral initiatives 150 Cool Earth Partnership (Japan) 10,000 (A+M) 2008­12 ETF-IW (United Kingdom) 1,182 (A+M) 2008­12 125 Climate and Forest Initiative (Norway) 2,250 Adaptation: $28 billion­$100 billion UNDP-Spain MDG Achievement Fund 22 (A) / 92 (M) 2007­10 100 GCCA (European Commission) 84 (A) / 76 (M) 2008­10 International Climate Initiative (Germany) 200 (A) / 564 (M) 2008­12 75 IFCI (Australia) 160 (M) 2007­12 Multilateral initiatives 50 GFDRR 15 (A) (of $83 million in 2007­08 pledges) Funding for adaptation and UN-REDD 35 (M) 25 mitigation $9 billion Carbon Partnership Facility (World Bank) 500 (M) (140 committed) Forest Carbon Partnership Facility 385 (M) (160 committed) 2008­20 0 (World Bank) 2008­2012 2030 Climate Investment Funds, includes 6,200 (A+M) 2009­12 Source: For 2030 values, see table 6.2; for 2008­2012 values, see text. Clean Technology Fund 4,800 (M) Strategic Climate Fund, including 1,400 (A+M) over the medium term, depending on the Forest Investment Programme 350 (M) carbon price (see table 6.4 and endnote 7). Excluding private finance, $2.2 billion to Scaling up renewable energy 200 (M) $2.5 billion is projected to be raised for adap- Pilot Program for Climate Resilience 600 (A) tation from now to 2012, depending on what Source: UNFCCC 2008a plus updates by authors. the Adaptation Fund raises. The potential Note: For a number of bilateral initiatives, part of the funds will be distributed through multilateral initiatives (for example, some pledges to the Climate Investment Funds or the Forest Carbon Partnership Facility). This adaptation finance now available is less than leads to some double counting and makes it difficult to draw an accurate picture of upcoming climate change $1 billion a year, against funding require- resources in developing countries. The Climate Investment Funds are managed by the World Bank and implemented by all multilateral development banks. All data for the Climate Investment Funds are as of July ments of $30 to $100 billion a year over the 2009--$250 million of the Strategic Climate Fund was unallocated at that time, and the Scaling up Renewable medium term (see table 6.2). Figure 6.2 com- Energy fund will require minimum pledges of $250 million before it becomes operational. A = funding devoted to adaptation; M = funding devoted to mitigation; ETF-IW = Environmental Transformation Fund-International pares the annual climate finance available Window; GCCA = Global Climate Change Alliance; IFCI = International Forest Carbon Initiative; UN-REDD = over 2008­12 (both mitigation and adapta- UN Collaborative Program on Reduced Emissions from Deforestation and forest Degradation; GFDRR = Global Facility for Disaster Reduction and Recovery. Pledges to the Climate and Forest Initiative (Norway) stood at tion, roughly $10 billion a year), with the $430 million in June 2009. projected medium-term financing needs. funding sources, the limitations of car- Inefficiencies in existing climate- bon offset markets for mitigation, and the finance instruments potential costs of taxing certified emission Inefficiency could take what is already pro- reductions (CERs) to fi nance the Adapta- jected to be a very large and costly endeavor tion Fund. and make it even more expensive. So there is an obvious case for ensuring that climate Fragmentation of climate finance fi nance is generated and spent efficiently. There is a risk of proliferation, illustrated Three aspects of the efficiency of climate in table 6.4, of special-purpose climate fi nance are considered below: the frag- funds. Fragmentation of this sort threat- mentation of climate finance into multiple ens to reduce the overall effectiveness of 264 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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 BOX 6.2 Assessing the co-benefits of the CDM The Clean Development Mechanism Only a quarter of projects developed to contributions to economic growth and produces three broad categories of unilaterally by the host country claim to employment in particular. Just over 80 potential host- country co-benefits (apart transfer technology. Technology transfer percent of projects claim some employ- from the financial flow from carbon is also associated with larger projects. ment impact, and 23 percent contribute credit sales): the transfer and dissemina- Although only a third of projects transfer to a better livelihood. There are relatively tion of technologies; the contribution to technology, they account for two-thirds lower employment benefits from indus- employment and economic growth; and of emission reductions. Projects explicitly trial gas projects (hydrofluorocarbon, the contribution to environmentally and labeled and processed as "small" projects perfluorocarbon, and nitrous oxide reduc- socially sustainable development. lead to technology transfer in only 26 per- tion--18 percent) and fossil-fuel switching The extent to which projects con- cent of the cases. projects (43 percent) than with other sec- tribute to these three objectives can be But technology transfer is a difficult tors, where at least 65 percent of projects gauged by looking at project design concept to define. For mitigation, it tends state employment benefits. documents, which can be searched to be not so much proprietary technology Applying a more traditional and nar- for keywords associated with different that is shared but operational and mana- rower definition of sustainable develop- co-benefits. This approach was used by gerial know-how of how to run a particu- ment, 67 percent of projects claim training Haites, Maosheng, and Seres to assess lar process. A study by Dechezleprêtre or education benefits (increasing human the technology transfer benefits of the and colleagues that specifically looked at capital), 24 percent reduce pollution CDM and by Watson and Fankhauser to the transfer of technologies protected by or produce environmental co-benefits assess contributions to economic growth patent found that the Kyoto Protocol did (increasing natural capital), and 50 percent and sustainable development. not accelerate technology flows, though have infrastructural or technology benefits Haites, Maosheng, and Seres found that it may have stimulated innovation more (increasing manmade capital). only about a third of CDM projects claim generally. to transfer technology, by passing on Watson and Fankhauser found that a equipment, know-how, or both. A closer full 96 percent of projects claim to con- Sources: Haites, Maosheng, and Seres 2006; look reveals that they are predominantly tribute to environmental and social sus- Watson and Fankhauser 2009; Dechezle- projects involving foreign sponsors. tainability, but most of these claims relate prêtre and others 2009. 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 BOX 6.3 Carbon taxes versus cap-and-trade The principal market-based instruments market instrument of abating emissions, individuals, dislikes taxes. This line of rea- used for climate mitigation are carbon either too much or not enough, engen- soning may seem to favor cap-and-trade, taxes and cap-and-trade schemes. By dering either excess costs or excess dam- but tax aversion also means that firms eschewing fixed quotas or technology ages. A famous result by Weitzman shows will resist auctioning of permits and may standards (the usual regulatory instru- that the choice of instrument under instead lobby for their allocation of free ments employed by governments), these uncertainty depends on the relative slope permits. In general the process of allocat- instruments leave individual firms and of the damage and abatement cost func- ing permits, if not done through auction, households free to find the least- cost way tions. What this means in the case of cli- leads to rent seeking and potentially cor- to meet a climate target. mate change is unclear, since the shape of rupt behavior. A carbon tax is a price instrument and the damage function is highly uncertain. Administrative efficiency typically operates by taxing the carbon However, because greenhouse gases are The cost of administering climate policy content of fuel inputs, thus creating an stock pollutants, many have argued that, and the institutional and human capi- incentive either to switch to lower- carbon in the short-term, damages are likely to tal required are particularly important fuels or to use fuel more efficiently. How- be fairly constant per marginal ton, which considerations in developing countries. ever, because governments have imperfect would favor a tax. A tax on the carbon content of fuels is information about the costs of fuel switch- Price volatility potentially very cost- effective because it ing or increasing energy efficiency, there While cap-and-trade creates certainty could piggyback on existing administra- is corresponding uncertainty about how about the quantity of emissions, it may tive systems for levying excise taxes on much abatement will actually occur for lead to uncertainty about price. For exam- fuels. In contrast setting up a market for a given tax level. If a government has an ple, if there is a shift in the business cycle auctioning and trading permits could be emission cap under a global agreement, or in the relative prices of low- carbon and highly complex, and a regulator would be then it may need to adjust the tax rate high- carbon fuels, then permit prices will required to monitor the exercise of mar- iteratively to keep emissions within the cap. be directly affected. Price volatility not ket power by participants. In addition, a Under a cap-and-trade scheme, govern- only makes it difficult to plan abatement permit system would require monitoring ments issue emission permits representing strategies, it also reduces the incentive to and enforcement at the level of individual a legal right to emit carbon--these permits invest in research and development on emitters, while monitoring of a carbon are freely tradable between scheme par- new abatement technologies. Banking tax potentially could be done much more ticipants. Because firms and sectors will dif- and borrowing of allowances are two sim- cheaply at the level of fuel wholesalers. fer in their marginal costs of fuel switching ple mechanisms that can help dampen or energy efficiency, the potential for gains Carbon taxes and cap-and-trade are price volatility. from trade exists. For example, if one firm not necessarily mutually exclusive. The has a high marginal cost of mitigation while Recycling revenues European Union has opted for emissions another has a much lower cost, then the A carbon tax is a direct source of fiscal rev- trading to address emissions from large firm with the lower cost can sell a permit enue, and governments have the option sources (utilities, heat production, large at a price above its marginal cost of mitiga- of either using the tax to finance expendi- energy-intensive industrial facilities, and tion, reduce its emissions accordingly, and tures or recycling the revenues by lowering aviation, to be phased in in 2011), cover- make a profit--and as long as the price of or eliminating other taxes. To the extent ing about 40 percent of EU emissions. the permit is below the marginal mitiga- that recycling increases the overall effi- Other instruments (including a carbon tion cost of the buyer, then this is a profit- ciency of the tax system, there is a "double tax in several European countries) target able trade for the buyer as well. Because dividend"--but a double dividend is not emissions from other sectors, notably cap-and-trade is a quantitative instrument, guaranteed if the carbon taxes themselves residential and services, transport, waste there is high certainty that a country will exacerbate existing inefficiencies in the management, and agriculture. In con- stay within its cap (assuming that enforce- tax system. If emission permits are auc- trast in Australia and the United States ment is effective), but there may be a corre- tioned by the government, then these too cap-and-trade is emerging as the main sponding uncertainty about the level and become a source of fiscal revenue. instrument to regulate economywide stability of permit prices. greenhouse gas emissions (with a set of Political economy The two instruments differ in important accompanying policies and measures, like Because the world has a fixed carbon ways: renewable energy portfolio standards). budget for any chosen climate target, the Efficiency certainty associated with a quantitative Sources: Bovenberg and Goulder 1996; Because of imperfect information about instrument may be appealing to some Weitzman 1974; Aldy, Ley, and Parry 2008; mitigation costs, there is a risk with any groups. And everyone, whether firms or Newell and Pizer 2000. Generating the Funding Needed for Mitigation and Adaptation 269 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 BOX 6.4 Indonesian Ministry of Finance engagement on climate change issues Indonesia's Finance Ministry has recog- envisions a mix of mechanisms paired Indonesia has already taken steps to nized that mitigating and adapting to with integrated national policies, a strong rationalize energy pricing by reducing climate change require macroeconomic enabling framework, and long-term fossil-fuel subsidies in 2005 and 2008, to management, fiscal policy plans, revenue- incentives to attract investment. reduce deforestation through improved raising alternatives, insurance markets, The Finance Ministry's comparative enforcement and monitoring programs, and long-term investment options. With advantage is in considering the allocation and to provide incentives for import and development as the priority, Indonesia is and incentive decisions that affect the installation of pollution control equip- trying to balance economic, social, and whole economy. In managing climate- ment through tax breaks. The Finance environmental goals. The country could financing opportunities, the ministry and Development Planning ministries benefit from investing in development acknowledges the importance of investor have established a national blueprint and with climate-friendly technology for a and donor confidence in its approaches budget priorities for integrating climate cleaner, more efficient growth path. Ben- and institutions. Recognizing that donor change into the national development efits would include potential payments funds--whether grants or soft loans-- process. The Finance Ministry is examin- from carbon markets for the reductions in will always be small relative to private ing fiscal and financial policies to stimu- emissions achieved from a cleaner energy investment in energy sector develop- late climate-friendly investment, move path or from reductions in the annual rate ment, infrastructure, and housing, toward lower- carbon energy options of deforestation. The Ministry of Finance Indonesia will continue to need sound including renewables and geothermal, will play an essential role in the financing, policies and incentives to attract and and improve fiscal incentives in the for- development, and implementation of leverage private investment toward sus- estry sector. climate- change policies and programs. To tainable development and lower- carbon mobilize the financing needed, Indonesia outcomes. Source: Ministry of Finance (Indonesia) 2008. 270 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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 $400 billion, is green investment would be large enough to raise considerable in energy efficiency and renewable energy, amounts. But the global governance of the and also, in the Chinese plan, adaptation.26 sectors is complex, with considerable power Deployed over the next 12­18 months these in the hands of international bodies, such as investments could do much to shift the the International Maritime Organization. world toward a low-carbon future. At the So the administrative hurdles of setting up same time, the packages are by their very such a tax might be considerable. nature geared toward stimulating domestic activity. Their effect on international cli- Auctioning assigned amount units. The mate fi nance to developing countries will emission reduction commitments of par- at best be indirect. Generating the Funding Needed for Mitigation and Adaptation 271 Table 6.6 Potential sources of mitigation and adaptation finance Proposal Source of funding Note Annual funding ($ billions) Group of 77 and China 0.25­0.5 percent of gross national Calculated for 2007 gross domestic product 201­402 product of Annex I Parties Switzerland $2 a ton of CO2 with a basic tax Annually (based on 2012 projections) 18.4 exemption of 1.5 ton CO2e per inhabitant Norway 2 percent auctioning of AAUs Annually 15­25 Mexico Contributions based on GDP, Annually, scaling up as GDP and emissions 10 greenhouse gases, and population rise and possibly auctioning permits in developed countries European Union Continue 2 percent levy on share of Ranging from low to high demand in 2020 0.2­0.68 proceeds from CDM Bangladesh, Pakistan 3­5 percent levy on share of Ranging from low to high demand in 2020 0.3-1.7 proceeds from CDM Colombia, least developed countries 2 percent levy on share of proceeds Annually, after 2012 0.03­2.25 from Joint Implementation and emissions trading Least developed countries Levy on international air travel Annually 4­10 (IATAL) Least developed countries Levy on bunker fuels (IMERS) Annually 4­15 Tuvalu Auction of allowances for Annually 28 international aviation and marine emissions Source: UNFCCC 2008a. Note: AAU: assigned amount unit; IATAL: international air travel adaptation levy; IMERS: international maritime emission reduction scheme. Annex I Parties include the high- income countries that were members of the OECD in 1992, plus countries with economies in transition. Annex I countries have committed themselves specifically to the aim of returning individually or jointly. 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 accelerate the diffusion of climate-friendly up mitigation, provided a credible supply of technologies. offsets can be built at scale. Concern about the effectiveness and effi- Increasing the scale and efficiency ciency of the CDM has led to a broad array of carbon markets of proposals on how to enhance, expand, or The absence of market continuity beyond evolve the mechanism. Broadly speaking, 2012 is the biggest risk to the momentum these could be organized along two lines of of today's carbon market. Considerable suggestions. One track would aim at stream- uncertainties remain about the very exis- lining the CDM to make it more appropri- tence of a global carbon market beyond ate for a growing market dominated by the 2012, with questions about the ambition of private sector by improving efficiency and mitigation targets, the resulting demand for governance along the project cycle as well carbon credits, the degree of linking of dif- as by reducing transaction costs. Another ferent trading schemes, and the role for off- track would aim at scaling up the trans- sets across various existing and upcoming formational impact of CDM and carbon regimes. Defining a global mitigation goal finance beyond the limited scope of a project for 2050 supported by intermediate targets approach, focusing on investment trajecto- (to be determined through the UNFCCC ries and affecting emission trends. process) would provide long-term carbon It is probably not realistic to attain any- price signals and certainty to the private thing more than incremental changes to the sector as major investment decisions with CDM by 2012. Some practitioners clamor long-lasting impact on emission trajectories for big improvements. But many countries are made over the coming years. are still learning the ropes of the instru- The next phase in constructing a global ment, and their fi rst projects have just carbon market must put developed coun- begun to enter the pipeline in the past few tries onto a low-carbon path and provide months. Others are focused on the agree- the financial and other resources needed to ment and tools for scaling up post-2012 mit- assist the transition of developing countries igation. There is little or no political space to a lower-carbon development path. One of to undertake immediate major revisions to the main challenges for a climate agreement the CDM before 2012, a point emphasized is to define a framework that supports and by developing countries that have argued promotes this transformation and facilitates that most of those revisions would require the transition to a more comprehensive sys- an amendment to the Kyoto Protocol. So, tem where more countries assume emission to organize the steps in a possible evolu- reduction targets. As discussed in chapter 5, tion, it may help to distinguish two levels a gradual incorporation process can be envis- of improvements or changes to the current aged, with transitions toward more stringent CDM, which would ultimately result in two steps depending on responsibility and capac- financial mechanisms, operating in parallel ity: adopting climate-friendly policies (a stage and complemented by a nonmarket mecha- many developing countries have already nism funded by public sources. reached), limiting emissions growth, and set- ting emission reduction targets. To support An activity-based CDM. There is a case this gradual progress, various models using to continue operating the current activity- carbon finance have been proposed.27 based CDM within its existing rules, with But demand for international offsets some targeted improvements. In the cur- from Annex I countries will likely remain rent system the baseline and additionality for quite some time at levels well below are determined for the individual project what would be needed to reward all mitiga- activity, and the rules seek to differentiate tion achievements in developing countries and reward individual efforts that are bet- while simultaneously maintaining a suf- ter than the norm (rather than promoting a ficiently high carbon price. Setting more better norm). Most medium-to-large instal- ambitious targets for Annex I countries28 lations in small countries can be effectively will create the incentive for greater cooper- submitted as individual CDM projects, ation with developing countries in scaling and microtechnologies such as light bulbs Generating the Funding Needed for Mitigation and Adaptation 273 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 2007­12 the aggregation of unlimited similar activi- (Australia) ties resulting from the implementation of a Climate and Forest Initiative (Norway) 2,250 2008­12 policy across time and space. Proposals to support a sectoral shift can be classified in Forest Carbon Partnership Facility 300 2008­18 (World Bank) two broad groups: those that stem from an agreement among industries that operate in Forest Investment Program 350 2009­12 (part of Climate Investment Funds) the same sector but are located across dif- ferent countries; and those that evolve from UN-REDD Program 35 2008­12 a national government's decision to imple- Amazon Fund 1,000 2008­15 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 REDD mechanisms may be used to threaten BOX 6.5 Conserving agricultural soil carbon their rights of access and their use of tradi- tional lands. REDD may provide resources The mitigation potential in the agri- to play more of a role in sound land to bring areas of high biodiversity value cultural sector could be significant, management practices. Agricul- under better protection, but it could also estimated to be around 6 gigatons tural carbon sequestration can help displace logging and land clearing across of carbon dioxide equivalent (CO2e) increase agricultural productivity and a year by 2030, with soil carbon enhance farmers' capacity to adapt to international borders to high biodiversity sequestration being the main mecha- climate change. Increased soil carbon areas (another example of leakage). nism. Many mitigation opportunities improves soil structure, with corre- It is generally recognized that before forest (including cropland management, sponding reduction in soil erosion and countries can receive financial incentives for grazing land management, manage- nutrient depletion. Soils with increased REDD, they need to establish building blocks ment of organic soils, restoration of carbon stocks retain water better, in the policy, legal, institutional, and techni- degraded land, and livestock manage- thereby improving the resilience of cal areas--referred to as REDD-readiness. ment) use current technologies and agricultural systems to drought. These can be implemented immediately. In positive biophysical impacts of soil The key components of REDD-readiness addition, these options are also cost carbon sequestration lead directly to ought to be carried out at the national level competitive: assuming a price of less increased crop, forage, and plantation (not at the project level) to respond to the than $20 a ton of CO2e, the global eco- yields and land productivity. However, systemic causes of deforestation and forest nomic mitigation potential in the agri- issues of monitoring and verification degradation and to contain leakage. cultural sector is close to 2 gigatons of of the increased storage and the per- The Forest Carbon Partnership Facil- CO2e a year by 2030. manence of the carbon sequestration ity (FCPF) has been designed to help forest Extending the scope of carbon need to be resolved. markets to include agricultural soil countries in tropical and subtropical regions carbon would allow carbon finance Source: IPCC 2007. prepare for REDD and pilot performance- based incentives. In the FCPF, REDD- readiness consists of a national REDD strategy and implementation framework; only afforestation and reforestation were a national reference scenario for emissions allowed within the CDM, but the Euro- from deforestation and forest degrada- pean Union Emission Trading Scheme tion; and a national monitoring, reporting, excludes them. and verification system. The UN-REDD, a Initial attention to REDD was focused joint initiative of the Food and Agriculture on countries where deforestation is occur- Organization, the United Nations Develop- ring (table 6.7). But some heavily forested ment Programme, and the United Nations countries have little deforestation, and Environment Programme, is a similar they seek support to manage and conserve program. their forests sustainably, especially if REDD In its national REDD strategy a country activities in other countries shift logging and would assess its land use and forest policy to agricultural expansion across national bor- date, identifying the drivers of deforestation ders (leakage). Other countries already have and forest degradation. Next, it would con- policies and measures to bring their forests ceive strategic options to address these driv- under sustainable management, and they ers and would assess these options from the seek recognition of their efforts in reducing point of view of cost-effectiveness, fairness, emissions through market-based solutions and sustainability. This would be followed akin to payments for environmental ser- by an assessment of the legal and institu- vices. As discussed in chapter 3, conserving tional arrangements needed to implement soil carbon (box 6.5) through performance- the REDD strategy, including the body (or based mechanisms is also gaining traction, bodies) responsible for coordinating REDD but discussions are at a less advanced stage at the national level, promoting REDD, than for REDD. and raising funds; benefit-sharing mecha- REDD touches on many groups and other nisms for the financial flows expected from societal goals, often with a mix of potential REDD; and a national carbon registry to positive and negative effects. It could pro- manage REDD activities (both the emission vide a new source of income to indigenous reductions generated and the correspond- peoples, but they are rightly concerned that ing revenue flows). In addition, the country Generating the Funding Needed for Mitigation and Adaptation 275 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 host-country interests--a combination of carbon markets, other performance-based B OX 6 . 6 Allocating concessional development finance systems, and public funds aimed at niches overlooked by the market can allocate capi- The International Development Asso- of central government in turn has two tal fairly effectively. ciation (IDA) allocation formula offers subindexes: quality of macroeconomic, The allocation of adaptation fi nance, a possible model for allocating con- structural, and social policies and institu- cessional finance in a transparent and tions and quality of governance, derived by contrast, raises important questions of empirically driven way. This evolving from the World Bank Country Policy fairness as well as efficiency. Unlike that model of resource allocation, with 10 and Institutional Assessment. for mitigation the allocation of adapta- years of progressive refinement, has The formula gives weights of tion resources has strong distributional allocated roughly $10 billion of con- 68 percent to governance; 24 per- implications. Money spent protecting cessional finance a year to the world's cent to macroeconomic, social, and small island states is no longer available for poorest countries. structural policies; and 8 percent to African farmers. The question of how to The IDA allocation formula breaks absorptive capacity. The composite down into three basic indexes, one of these scores is then multiplied by classify adaptation fi nance is still debated, of need for concessional finance, the number of people in the country, and the controversy spills over to how to one of absorptive capacity, and one weighted by the average income of allocate this finance. Developing countries of performance of the central govern- the population (to capture need) to are inclined to view adaptation fi nance as ment. On need, the basic criterion derive the final score that drives the compensation for damages, invoking a is the average poverty level in each allocation of concessional finance. global polluter-pays principle. From the country, weighted to favor the poorest Because this formula could penal- developing-country viewpoint, therefore, countries, times the number of people ize some of the neediest countries, in the country. Absorptive capacity a portion of the annual supply of the question of how adaptation fi nance is measured by World Bank portfolio finance is allocated off the top: each is used is beyond the purview of high- performance--delays in disbursement country receives a minimum alloca- income countries. But the latter countries and cancellations of loans or credits tion; countries coming out of conflict feel strongly that scarce financial resources are clear indicators of poor ability to and with extremely fragile institu- should be used efficiently, whatever the jus- absorb additional finance. Based on tions are given additional assistance; tification for or provenance of the funds. results from the aid-effectiveness and allowance is made for natural It can certainly be argued that the effi- literature, the formula is weighted disasters. In addition IDA finance is toward countries with the strongest capped for "blend" countries, which cient and equitable allocation and use of governance because the evidence have access to commercial finance. adaptation finance are in everybody's inter- suggests that these countries most est. Wasteful use of resources can undermine successfully translate aid resources Sources: IDA 2007; Burnside and Dollar public support for the whole climate agenda. into economic growth. Performance 2000. That makes the transparent, efficient, and equitable allocation of adaptation funding paramount. As an example of how develop- ment institutions have handled the allocation are not part of the allocation process; it could of finance, consider the approach taken by support the results agenda with an allocation the International Development Association process based on empirical measures; and it (IDA), which constructs an index combining could support mutual accountability through the need for finance, the absorptive capacity transparency in allocations. of the government, and the performance of The measure of need for fi nance should the central government (box 6.6). The IDA be closely related to the concept of climate approach is not without its faults. Because vulnerability. As conceived by the IPCC, the formula is uniform across countries, it vulnerability is a function of the capacity essentially imposes the same development to adapt, the sensitivity to climate factors, model on all countries.36 This is already and the exposure to climate change.37 The problematic for standard development issues measure of need for fi nance could thus and may be even more so for climate change, be some population-weighted index of where much less is known about the right sensitivity and exposure, perhaps with a adaptation model. Even so, an empirical poverty weight as well. For large countries approach to allocating adaptation finance in particular, the distribution of impacts that aims to address these concerns could and differences in vulnerability between serve at least three purposes: it could reduce localities would also have to be taken into transaction costs if lobbying and negotiation account. 278 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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 BOX 6.7 Climate vulnerability versus social capacity The figure plots a composite index of East Asia and Pacific physical impact (taken as a function of cli- Europe and mate sensitivity and climate-change expo- Vulnerability to impacts Central Asia sure and derived from a number of global 2.50 Middle East and impact studies) against a composite index North Africa of social capacity (derived from a number 2.00 Latin America and of socioeconomic indicators). Caribbean 1.50 South Asia Social capacity and vulnerability, as Sub-Saharan Africa measured by projected impacts, are com- 1.00 posite indexes of the indicators described in the table below. 0.50 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 Indicator Metric Source Assumptions Impact Sea-level rise Percent population affected Dasgupta and others Landlocked countries assumed to experience zero by 1 meter rise 2007 impact Agriculture Percent yield loss in 2050, Parry and others 2004 Decreasing yields represent decreasing welfare IPCC SRES scenario A2b for country. Increased yields from climate change represent increasing welfare. Farm-level adaptation present Health Percent additional deaths Bosello, Roson, and Additional deaths representative of all health in 2050 Tol 2006 impacts from climate change Disaster Percent population killed by CRED 2008 Current disaster patterns to represent future areas disasters (historical data set) at risk Social Literacy Percent population, aged >15 World Bank 2007c The higher the literacy rate, the higher the social capacity years, literate (1991­2005) capacity Age dependency ratio Ratio of dependent World Bank 2007c The lower the age dependency ratio, the higher the population to working social capacity population (2006) Primary completion Percent female population World Bank 2007c The higher the completion rate, the higher the rate (female) completing primary social capacity education (1991­2006) Gini Gini coefficient (latest World Bank 2007c The lower the inequality, the higher the social available year) capacity Domestic credit to Domestic credit to private World Bank 2007c The greater the investment, the higher the social private sector sector, as percent of GDP capacity (1998­2006) Governance WGI (World Governance Kaufman, Kraay, and The higher the WGI score, the higher the social Indicator) voice and Mastruzzi 2008 capacity accountability 280 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 BOX 6.8 Climate vulnerability versus capacity to adapt The figure plots the impact index against East Asia and a measure of country performance (com- Pacific bined central government capacity and Vulnerability to impacts Europe and ability to absorb finance) derived from 2.50 Central Asia the International Development Associa- Middle East and tion allocation formula. 2.00 North Africa Latin America Capacity to adapt is a composite index 1.50 and Caribbean of the indicators described in the table South Asia below, and it is calculated by the formula: 1.00 Sub-Saharan Country performance = 0.24*average Africa 0.50 (CPIAa, CPIAb and CPIAc) + 0.68*CPIAd + 0.08*ARPP, 0.00 where CPIA = Country Policy and Insti- ­0.50 tutional Assessment and ARPP = Annual Report on Portfolio Performance. ­1.00 ­1.50 ­2.00 ­4.00 ­3.00 ­2.00 ­1.00 0.00 1.00 2.00 3.00 Capacity to adapt Indicator Metric (year) Source Assumptions Capacity Economic management CPIAa (2007) World Bank The higher the country performance, to adapt the higher the capacity to adapt Structural policies CPIAb (2007) World Bank Policies for social inclusion CPIAc (2007) World Bank and equity Public sector management CPIAd (2007) World Bank and institutions (governance) Capacity to absorb finance ARPP (2007) World World Bank Bank portfolio at risk (age-discounted) 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 2­3 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 27. These include models under which emis- Agrawala, S., and S. Fankhauser. 2008. Economic sion reductions would be rewarded in relation Aspects of Adaptation to Climate Change: to particular sectors or that are built on various Costs, Benefits and Policy Instruments. Paris: forms of targets, such as intensity or absolute or Organisation for Economic Co-operation and relative emission reduction. Crediting achieve- Development. ments could take place on the national level only Alcamo, J., and T. Henrichs. 2002. "Critical or involve project activities. Crediting could be Regions: A Model-based Estimation of World based on an initial allocation of allowances (cap- Water Resources Sensitive to Global Changes." and-trade) or ex post (baseline-and-credit). And Aquatic Sciences 64 (4): 352­62. it could be linked or separated from existing car- bon markets. Mechanisms that build on emis- Aldy, J. E., E. Ley, and I. Parry. 2008. A Tax- sions trading can be directly or indirectly linked Based Approach to Slowing Global Climate to other carbon markets and can create credits Change. Washington, DC: Resources for the that are fully, partly, or not fungible with existing Future. carbon markets. Arnell, N. W. 2004. "Climate Change and Global 28. If achieved, the total reductions of the Water Resources: SRES Emissions and Socio- various proposals of high-income countries Economic Scenarios." Global Environmental would reduce emissions in aggregate only 10­15 Change 14 (1): 31­52. percent below 1990 emissions levels by 2020. Bättig, M. B., M. Wild, and D. M. Imboden. 2007. This is far short of the 25­40 percent reductions "A Climate Change Index: Where Climate below 1990 levels that have been called for by the Change May Be Prominent in the 21st Cen- IPCC in the 2020 time frame; see Howes 2009. tury." Geophysical Research Letters 34 (1): 1­4. 29. WRI 2008; Houghton 2009. Barbier, E. B. 2009. A Global Green New Deal. 30. Danielsen and others 2009. Geneva: United Nations Environment Pro- 31. Vagliasindi 2008. gramme. 32. Pollitt 2008. Barker, T., I. Bashmakov, L. Bernstein, J. E. Bog- 33. Agrawala and Fankhauser 2008. ner, P. R. Bosch, R. Dave, O. R. Davidson, B. S. 34. Investment commitments through public- Fisher, S. Gupta, K. Halsnaes, B. Heij, S. Khan private partnerships have amounted to 0.3­0.4 Ribeiro, S. Kobayashi, M. D. Levine, D. L. Mar- percent of developing countries' GDP over the tino, O. Masera, B. Metz, L. A. Meyer, G.-J. Nab- 2005­07 period (Private Participation in Infra- uurs, A. Najam, N. Nakic ´, ´enovic H.-H. Rogner, structure Database, http://ppi.worldbank.org/). J. Roy, J. Sathaye, R. Schock, P. Shukla, R. E. H. In contrast, infrastructure investment needs are Sims, P. Smith, D. A. Tirpak, D. Urge-Vorsatz, estimated to range from 2 percent to 7 percent of and D. Zhou. 2007. "Technical Summary." 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Wash- Pipeline Analysis and Database." Roskilde, ington, DC. Denmark. CHAPTER 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 Map 7.1 Advances in wind mapping open up new opportunities Average annual wind speed (meters/second) Low High 3 6 9 Source: Data provided by 3 Tier Inc. Note: This is a 5-kilometer resolution map of average annual wind speed, with the average measured at a height of 80 meters (the height of some windmills), across the world's landmass. 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 subsidies. The international harmoniza- the deployment of existing mitigation tech- tion of regulatory incentives (such as car- nologies in high-emitting countries. bon pricing) can have a multiplier effect on But to achieve the more ambitious investment by creating economies of scale medium-term emission objectives will and by building momentum in the direc- require breakthrough technologies. Mod- tion of climate-smart technologies. Innova- els show that four future key technology tion prizes and procurement subsidies can areas could be at the core of a solution: build demand and stimulate ingenuity. And energy efficiency; carbon capture and stor- where research priorities coincide with high age; next-generation renewables, including costs, joint RDD&D can push out the tech- biomass, wind and solar power; and nuclear nical frontiers. The concept of technology power (see chapter 4).3 All four need more transfer needs to be broadened to include research, development, and demonstration country capacities to absorb existing tech- (RD&D) to determine whether they can be nologies. In this respect an international rapidly deployed in the marketplace with- climate treaty with a focus on specific tech- out adverse consequences. nological systems or subsystems presents Despite their great promise, both a unique opportunity. Bundling in cost- short- and medium-term emission reduc- sharing and technology transfer provisions tion strategies face major challenges. End- could facilitate an accord. use technologies that improve efficiency Complementary domestic policies and use sources with low emissions can can ensure that technology is effectively dampen total energy demand, but they selected, adapted, and absorbed. But iden- require changing the behavior of individu- tifying, evaluating, and integrating for- als and firms (see chapter 8). Carbon cap- eign technologies impose oft-overlooked ture and storage could play a large role if learning costs, as do their modification geologically appropriate sites can be identi- and improvement. So the knowledge infra- fied near power plants and if governments structure of universities, research institutes, provide resources and policies to enable and firms has to be supported to build this long-term sequestration.4 Biotechnology capacity. and second-generation biofuels have great This chapter draws on the analysis of potential for mitigating carbon emissions systems in which technology has withered but with increasing demands on land use or thrived and on the plethora of policies (see chapter 3). Wind and solar power and factors that have acted as barriers or (both photovoltaic and solar thermal) catalysts, suggesting what can be achieved if could expand faster if energy storage and selected policies are combined and scaled up. transmission improve. A new generation It first describes the importance of technol- of nuclear power plants could be deployed ogy in lowering greenhouse gas emissions, extensively throughout the world but would the needed tools to advance adaptation to have to overcome institutional constraints, climate change, and the role of both in cre- safety and proliferation issues, and popular ating competitive economies. It next assesses resistance in some countries. In addition, the gap between invention, innovation, and some have proposed that geoengineering widespread diffusion in the marketplace. options could not only decrease emissions It then examines how international and rates but also temper the impacts of climate domestic policies can bridge that gap. change (box 7.1). The role of technology and innovation in The right tools, technologies, and adaptation has been much less studied than institutions can put a climate-smart for mitigation, but it is clear that future cli- world well within our reach mate conditions will be fundamentally dif- To keep global temperatures from rising ferent from the ones today. Responding to more than 2°C, global greenhouse gas emis- changes outside of historic experience will sions must come down by 50­80 percent in require increased institutional coordina- the coming decades. In the short term they tion on a regional scale, new tools for plan- can be drastically reduced by accelerating ning, and the ability to respond to multiple 290 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 BOX 7.1 Geoengineering the world out of climate change Given the pace of climate change, current suggests that the approach might work, But analysis shows that the most cost- proposals for mitigation and adaptation but much more research and investiga- effective approach for implementing may not be sufficient to avoid consider- tion is needed. this strategy is to set up a manufactur- able impacts. Thus, possible geoengi- Other geoengineering options to ing plant for the deflector on the Moon, neering options are receiving increasing remove greenhouse gases include hardly a straightforward task. Similar scrutiny. Geoengineering can be defined scrubbing gases from the atmosphere ideas using multiple mirrors (such as as actions or interventions taken for the with a CO2 absorbing solution (and then 55,000 orbiting solar mirrors each roughly primary purpose of limiting the causes of sequestering the captured carbon below 10 square kilometers in size) have been climate change or the impacts that result. the land surface or in the deep ocean), or discussed. However, when each of the They include mechanisms that could using lasers to destroy long-lived halocar- orbiting mirrors passed between the Sun enhance carbon dioxide (CO2) absorp- bon molecules--best known as culprits and Earth, they would eclipse the Sun, tion or sequestration by the oceans or by in ozone depletion but also powerful causing sunlight at the earth's surface to vegetation, deflect or reflect incoming greenhouse gases (see focus A on sci- flicker. sunlight, or store CO2 produced by energy ence). These options are still in the early There are even geoengineering pro- use in reservoirs. The last of these is dis- experimental stage. posals more akin to weather modification, cussed in chapter 4, so this box focuses Several approaches to reflect incom- such as attempting to push advancing on the other two classes of options. ing sunlight have been offered. Some tropical storms out to sea and away from Possible options for sequestering addi- of these could be targeted to particular human settlements to reduce damage. tional carbon dioxide include terrestrial regions, to prevent further melting of Although research on such ideas is in its management practices that increase car- Arctic sea ice or the Greenland ice sheet, very earliest stages, the newest climate bon held in soils or trees, as discussed in for example. One approach would be models are becoming capable of analyz- chapter 3. It may also be possible to stim- to inject sulfate aerosols into the atmo- ing the potential effectiveness of such ulate phytoplankton growth and algal sphere. This has shown to be an effective proposals, something that was not pos- blooms in the oceans by adding needed method for cooling--the 1991 eruption sible when hurricane modification was nutrients such as iron or urea. As these of Mount Pinatubo resulted in the earth first attempted several decades ago. tiny plants photosynthesize, they take cooling by nearly 1°C for about a year. To Although it may be possible for geoen- up carbon dioxide from surface waters. maintain this type of cooling, however, a gineering to be undertaken by one The effectiveness of such enhanced constant stream or regular injections of nation, every nation would be affected approaches will depend on what hap- aerosol must be released. Further, sulfate by such actions taken. For this reason, it is pens to the CO2 over the longer term; if aerosols can exacerbate ozone depletion, essential that discussions begin on gover- it is integrated into the waste products increase acid rain, and cause adverse nance issues relating to geoengineering. from animals that eat the plankton and health impacts. Already, investor-funded experiments in settles to the seafloor, then the CO2 will Alternatively, sea mist could be sprayed support of iron fertilization have raised essentially be removed from the system into the sky from a fleet of automated questions over what international entity for millennia. However, recent research ships, thus "whitening" and increasing or institution has jurisdiction. Questions shows that previous quantifications of reflectivity of the low marine clouds that about using geoengineering to limit the carbon removal capacity may have been cover a quarter of the world's ocean. intensity of tropical cyclones or Arctic greatly overestimated. Also, more experi- However, uneven cloud distribution could warming would add complexity. Thus, in ments need to be done on the duration lead to regional cold and hot spots and addition to scientific research on possible of sequestration as well as the potential droughts downwind of the spray vessels. approaches and their impacts, social, eth- toxicological impacts of sudden increases Increasing the reflectivity of the land ical, legal, and economic research should in iron or urea in marine ecosystems. If surface would also help. Making roofs and be supported to explore what geoengi- further studies confirm its potential, this pavements white or light- colored would neering measures are and are not within is one geoengineering option that could help to reduce global warming by both the bounds of international acceptance. be started quickly and at relevant scale. conserving energy and reflecting sunlight Sources: S. Connor, "Climate Guru: `Paint Bringing cool, nutrient-rich water to back into space and would be the equiva- Roofs White.'" New Zealand Herald, May 28, the ocean's surface could also stimulate lent of taking all the cars in the world off 2009; American Meteorological Associa- increased marine productivity and poten- the road for 11 years. tion, http://www.ametsoc.org/policy/200 tially remove CO2 from the surface water. Another proposal would place a solar 9geoengineeringclimate_amsstatement. Such cooling would also be beneficial for deflector disk between the Sun and Earth. html (accessed July 27, 2009); Atmocean, coral, which are very sensitive to higher A disk of approximately 1,400 kilometers Inc., http://www.atmocean.com/ (accessed July 27, 2009); MacCracken 2009; "Geo- temperatures. Finally, cooling surface in diameter could reduce solar radia- engineering: Every Silver Lining Has a water could also dampen hurricane inten- tion by approximately 1 percent, about Cloud," Economist, January 29, 2009; see also sities. Initial research on a wave-powered equivalent to the radiative forcing of U.S. Energy Secretary Steven Chu, http:// pump to bring cool water to the surface emissions projected for the 21st century. www.youtube.com/watch?v=5wDIkKroOUQ. Accelerating Innovation and Technology Diffusion 291 environmental pressures occurring con- Harnessing the technological opportu- comitantly with climate change. Greater nities arising from climate change concerns investments are needed in understand- can also create opportunities for technolog- ing vulnerability, in conducting iterative ical leadership and a new competitive edge. assessments, and in developing strategies China, for example, has not yet locked in to for helping societies cope with a changing carbon-intensive growth and has enormous climate.5 (and economically attractive) potential for Integrating climate considerations into leapfrogging old inefficient technologies. development strategies will foster think- Unlike in developed countries a large share ing about adaptation.6 Chapter 2 discusses of China's residential and industrial capital how climate change will require designing stock of the next decade is yet to be built. appropriate physical infrastructure and By using existing technologies, such as protecting human health. Chapter 3 illus- optimizing motor-driven systems (pumps trates how adaptation will require new ways and compressors), China could reduce its to manage natural resources. Promoting industrial energy demand in 2020 by 20 diversification--of energy systems, agri- percent while increasing productivity.9 cultural crops, and economic activities, for The current global recession can provide example--can also help communities cope a platform for innovation and climate-smart with rapidly changing conditions. Innova- growth. Crises can spur innovation because tion will be a necessary ingredient for all of they cause an urgent focus on mobilizing these activities. resources and break down barriers that nor- Research is also required to understand mally stand in the way of innovation.10 And the effects of climate change and different the opportunity cost of research and devel- adaptation options on individual countries. opment (R&D), a long-term investment, is This research must characterize the effects lower during an economic crisis.11 In the of multiple stresses on natural and socioeco- early 1990s Finland's recovery from a severe nomic systems, biodiversity vulnerability and economic recession was credited largely to preservation, and changes in atmospheric its restructuring into an innovation-based and oceanic circulation. Such research has economy, with sharp increases in govern- to produce new monitoring tools, new strat- ment spending on R&D paving the way egies to enhance resilience, and better con- for the private sector. The same could be tingency planning. Scientific capacity at the achieved with climate-smart R&D. national level is thus required. And with high rates of return, R&D pres- ents untapped opportunities for economic The capacity to tackle mitigation growth. Most measures of rates of return and adaptation will help build strong on R&D are in the range of 20 to 50 per- competitive economies cent, much higher than on investments in Many advanced technologies, such as infor- capital.12 Estimates also show that develop- mation and communication technologies, ing countries could invest more than twice can help specifically with climate change as much as they now do.13 Yet, experience yet are generic enough for use across a wide shows that R&D is procyclical, rising and range of productivity- enhancing areas. falling with booms and busts, and fi rms Sensors are valuable in industrial auto- tend to be short-sighted during recessions, mation but can also help waste managers limiting their investments in innovation, limit pollution. Mobile phones have helped even though this is a suboptimal strategy.14 in responding to impending disaster, as in The stimulus packages developed by many the coastal village of Nallavadu, India, dur- countries in reaction to the recession offer a ing the 2004 tsunami,7 but they can also timely opportunity for new investments in increase business productivity. In parts of climate-smart innovation (see chapter 1).15 Benin, Senegal, and Zambia mobile phones The current global recession also pro- are used to disseminate information about vides opportunities for economic restruc- food prices and innovations in farming turing in high-income countries that techniques.8 are locked into high- carbon lifestyles. 292 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 Overcoming technological inertia and BRIICS countries (Brazil, the Russian institutional incumbency in these countries Federation, India, Indonesia, China, and remains one of the most critical obstacles to South Africa) accounted for only 6.5 per- the transition to a low-carbon economy.16 cent of global renewable energy patents in Inertia and incumbency are themselves 2005,19 but they are quickly catching up to attributes of existing technoeconomic sys- high-income countries, with annual pat- tems and cannot be wished away through enting growth rates more than twice those diplomatic processes. Unseating them will of the European Union (EU) or the United entail actual changes in economic struc- States. And they are developing a tech- tures. Climate-smart policies will need nological edge in renewable energy tech- to include mechanisms to identify those nologies, with roughly 0.7 percent of their who stand to lose and to minimize socio- patents fi led in this sector from 2003 to economic dislocations. 2005, compared with less than 0.3 percent Although climate-smart innovation is in the United States. In 2005 China was concentrated mostly in high-income coun- seventh in overall renewable energy patent- tries, developing countries are starting to ing and second only to Japan in geothermal make important contributions. Developing and cement inventions, two major potential countries accounted for 23 percent ($26 sources of emission reductions.20 billion) of the new investments in energy efficiency and renewable energy in 2007, up All countries will need to step up their from 13 percent in 2004.17 Eighty-two per- efforts to diffuse existing climate-smart cent of those investments were concentrated technologies and create new ones in three countries--Brazil, China, and Neither public nor private funding of India. The world's best-selling developer energy-related research, development, and manufacturer of on-road electric cars and deployment is remotely close to the is an Indian venture, the Reva Electric Car amounts needed for transitioning to a Company. As a first-mover it has penetrated climate-smart world. In absolute terms, the auto manufacturer market, including in global government energy RD&D budgets high-income countries.18 have declined since the early 1980s, falling by almost half from 1980 to 2007 (figure 7.2). Energy's share in government research Figure 7.2 Government budgets for energy RD&D are near their lows, and nuclear dominates and development budgets (not including Government RD&D ($ billions) Energy R&D/total R&D (%) demonstration) also plunged, from 11 per- 25 12.5 cent in 1985 to less than 4 percent in 2007 Hydrogen and fuel cells (the green line in figure 7.2), heavily con- Other Energy efficiency centrated in nuclear power. Comparisons 20 10.0 Renewable energy source with public subsidies for energy or petro- Fossil fuels leum products are even more stark (figure Nuclear 15 Share of energy R&D in total R&D 7.5 7.3). But recent calls for increases in energy research and development to $100 billion to $700 billion a year21 are achievable. Japan is 10 5.0 already taking the lead, spending 0.08 per- cent of its gross domestic product (GDP) on public energy RD&D, far ahead of the 0.03 5 2.5 average in the group of high-income and upper-middle-income-country members 0 0 of the International Energy Agency.22 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 Given a recent upsurge, private spend- Year ing on energy RD&D, at $40 billion to $60 Sources: IEA 2008a; IEA, http://www.iea.org/Textbase/stats/rd.asp (accessed April 2, 2009); Organisation for billion a year, far exceeds public spending. Economic Co-operation and Development (OECD), http://www.oecd.org/statsportal (accessed April 2, 2009). Even so, at 0.5 percent of revenue, it remains Note: RD&D calculated at 2007 prices and exchange rates. Values on left axis are for RD&D (that is, including an order of magnitude smaller than the demonstration in addition to research and development), as is typical in the energy sector. However because totals of cross-sectoral R&D alone are available, the right axis only includes R&D. 8 percent of revenue invested in RD&D in Accelerating Innovation and Technology Diffusion 293 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 Table 7.1 International technology-oriented agreements specific to climate change 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. harmonization of GSM communications various observation and measurement standards for mobile phones created a crit- systems (box 7.3). Prominent examples of ical mass for the mobile phone market in international coordination in labels are the Europe in the 1990s. Energy Star program agreements, whereby government agencies in various countries Knowledge-sharing and coordination agreements are useful complements Figure 7.5 Policy affects every link of the innovation chain Knowledge agreements can address market and system failures in innovation and diffu- sion. Such agreements coordinate national Enabling environment: macroeconomic stability, education, intellectual property protection, trade integration, regulations... research agendas, information exchange systems, and voluntary standards and label- Governments Markets ing schemes. Research coordination agree- ments include many of the International Energy Agency's 42 technology agreements, Financing, where countries fi nance and implement technology, and ideas their individual contributions to differ- ent sector-specific projects, ranging from advanced fuel cells to electric vehicles.30 Number of projects Such agreements can avoid duplicating investments across countries. They allow Research and Demonstration Deployment Diffusion countries to jointly decide on who works on Development what, thus ensuring that no key technolo- gies are ignored, particularly those relevant to developing countries (such as biofuels from developing-country feedstocks and lower-capacity power generation). Infor- mation exchange systems include the Feedback Global Earth Observation System of Sys- tems, which will make data available from Source: Adapted from IEA 2008a. 296 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 BOX 7.3 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 unify certain voluntary energy-efficiency to any stakeholder from any EU mem- labeling schemes by providing a single set ber state wishing to participate. A similar of energy-efficiency qualifications.31 approach could harmonize broad climate- The Montreal Protocol's Technology smart regulations across countries through and Economic Assessment Panels offer a climate treaty supported by voluntary a model for a technology agreement on standards developed separately through an climate change, in this case the effects open-consensus process.33 of ozone depletion. The panels brought Voluntary standards, labels, and research together governments, businesses, aca- coordination are lower-cost means of tech- demic experts, and nongovernmental orga- nology cooperation, but it is difficult to nizations into work groups to establish the assess whether they generate additional technical feasibility of specific technologies technology investments. 34 It is unlikely and timetables for phasing out the produc- that they alone could address the massive tion and use of chlorofluorocarbons and investment needs, urgency, and learning- other ozone-depleting chemicals. The pan- by-doing required for such technologies as els showed that technology coordination carbon capture and storage. agreements work best when linked to emis- sion mandates, which provided incentives Cost-sharing agreements have the for industry to participate.32 One challenge highest potential payoffs, if they can to replicating this model for climate change surmount implementation barriers is that a large number of panels would be Cost-sharing agreements can be "technology- required to tackle the wide range of tech- push" agreements, where the joint develop- nologies that affect climate change. A more ment of promising technologies is subsidized feasible approach would be to initially limit by multiple countries (the top-down, left- this approach to several strategic sectors. most, orange arrow in figure 7.5) before The European Union's "New Approach" knowing whether they will succeed. Or they to standardization also offers a model for can be "market-pull" agreements, where harmonization of climate- smart stan- funding, pooled from multiple countries, dards. Goods traded within the EU must rewards technologies that have demon- comply with basic safety, public health, strated commercial potential--providing consumer protection, and environmen- market signals through feedback loops. They tal protection rules. The EU fi rst tackled can also bridge the gaps in the innovation this issue by requiring member states to chain between research and the market. harmonize legislation containing detailed technical specifications. But this approach Research agreements. Only a few inter- caused deadlocks in the European Council national cost-sharing programs support and updating legislation to reflect techno- climate-change innovation, among them logical progress was difficult. In 1985, the the $12 billion ITER fusion reactor (box New Approach was designed to overcome 7.4) and several technology agreements this problem. Goods classified under the coordinated by the International Energy New Approach must simply comply with Agency, with budgets of several million dol- very broad, technology-neutral "essential lars. Another partnership model of research requirements" enshrined in legislation that institutions is the Inter-American Institute must be adopted by every EU member state. for Global Change Research, an intergov- To meet the New Approach requirements, ernmental organization supported by 19 products can comply with harmonized countries in the Americas, with a focus European standards developed by one of on the exchange of scientific information the three regional voluntary standardiza- among scientists and between scientists tion bodies. There, technical committees and policymakers. The mission of the cen- representing a mix of industry, govern- ter is to encourage a regional, rather than ments, academia, and consumers from dif- national, approach. ferent EU countries agree on standards by There is potential for massively scaling consensus. Technical committees are open up cost-sharing research agreements for 298 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 by high-income countries. But to be effec- BOX 7.4 ITER: A protracted start for energy R&D cost sharing tive, collaborative research agreements must subsidize the involvement of devel- ITER is an international research and and staffing. Several countries pulled oping countries, particularly fast-growing development project to demonstrate out of ITER, some later rejoined, and middle-income countries that must start the scientific and technical feasibility some temporarily withdrew their early to build technological capacity that of nuclear fusion to generate electric- funding. ity without producing the radioactive ITER shows the difficulties in will be essential for their long-term climate- waste associated with nuclear fission. negotiating a more than $12 bil- smart development. The private sector must The partners in the project are China, lion research project with uncertain also be included in research partnerships the European Union, India, Japan, the outcomes. Funding for construction to ensure technologies can later be diffused Republic of Korea, the Russian Fed- was finally approved in 2006. ITER through the market. eration, and the United States. is expected to be operational for 20 ITER was proposed in 1986, and the years, once construction is completed Market-pull, reward- based agreements. design of its facilities was finalized in around 2017. 1990. The initial schedule anticipated Many breakthrough innovations come Source: http://www.iter.org (accessed from unlikely places that can be easily construction of an experimental December 12, 2008). reactor beginning in 1997, but this missed by grant funding programs. In 1993 Note: ITER originally stood for Interna- was postponed by negotiations over tional Thermonuclear Experimental Shuji Nakamura, a lone engineer working experimental design, cost sharing, Reactors but now is simply known as with a limited budget in a small company the design site, the construction site, ITER. in the Japanese countryside, astonished the scientific community with the first success- ful blue-light-emitting diodes. This was the critical step for creating today's bril- fundamental research and demonstration liant high-efficiency white-light-emitting projects, where expenses and uncertainty diodes. 36 Many of the leading global are high. Research consortia are also well innovators--including the computer giant suited to conduct long-term research with Dell--spend much less than their industry economies of scale and economies of learn- peers on R&D as a share of sales.37 But they ing, such as carbon capture and storage (box are uniquely skilled at scoping the horizon 7.5), third-generation photovoltaic, deep for high-potential technologies and ideas, offshore wind, second-generation biofuels, at collaborating with others on R&D, and and climate-monitoring technologies. The at bringing new technologies to the mar- scope for cooperation is narrower for tech- ket.38 Some of the most promising climate- nologies closer to commercialization, when smart technologies are likely to come out intellectual property rights become more of sectors that are typically not associated problematic and when individual countries with climate change. For example, super- may want a first-mover advantage. water-absorbent polymers could play a key Cost-sharing agreements can focus on role in promoting revegetation of drylands a few high-priority areas and be negotiated and other degraded ecosystems by holding through centralized international institu- water in the soil. But much of the interest tions with existing negotiation structures. in this technology is concentrated among The ITER project shows that large-scale manufacturers of products such as dia- cost-sharing agreements are difficult to pers. Similarly, producers of water repel- implement when countries can renege on lent materials could manufacture clothing their commitments or disagree on imple- that requires less washing, with significant mentation. Ensuring the sustainability of reductions in water and energy use. funding for such agreements will require Financial instruments that reward risk added incentives, such as withdrawal pen- taking, rather than picking winners from alties or contractual commitments by each the start, represent a tremendous unex- party to increase their funding (up to a ploited opportunity. Solutions to tech- cap) when new parties join, in order to dis- nological problems can come from rapid courage free-riding and lock cost-sharing advances in unexpected places or from agreements into a climate treaty.35 Most new business models that traditional R&D of the technological efforts can be borne subsidy programs can easily overlook. New Accelerating Innovation and Technology Diffusion 299 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 20­30 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 funding. Since prizes do not entail com- BOX 7.6 The Super-Efficient Refrigerator: A pioneer mercialization, they could be offered to solve precommercial research problems advanced market commitment program? in such technologies as battery storage or In 1991, under the Super-Efficient exceeded the performance require- photovoltaics. Private and public organi- Refrigerator Program, a consortium ments and won the prize and national zations in search of technology solutions of utilities agreed to pool more than publicity. However, because of low could post competitions for designated $30 million to reward a manufacturer market acceptance the company cash prizes in a global technology market- that could produce and market a could not sell enough refrigerators to place. The World Bank Group is exploring refrigerator free of ozone-depleting claim the entire prize. Nonetheless, chlorofluorocarbons that used the competition likely produced spill- prize competitions for early-stage clean 25 percent less energy than required overs, with competing manufacturers technology innovations supported by the by existing regulations. The winner designing their own lines of efficient new Earth Fund launched by the Global would receive a fixed reward for each refrigerators. Environment Facility and the Interna- unit sold, up to the cap set by the Sources: Davis and Davis 2004; Newell tional Finance Corporation. fund's size. The Whirlpool company and Wilson 2005. Advanced market commitments could be useful where deployment learning costs are prohibitive, where there are no lead users funding from recipient countries if they willing to pay initial premiums for the tech- meet specified performance objectives. It is nology, or where the market is too small or still too early to judge probable success.42 risky. These include energy generation and Market-pull inducements can comple- use but also adaptation technologies (such ment but not replace technology-push as malaria treatments and drought-resistant incentives. Market-pull techniques can crop varieties), where the demand side of multiply public fi nancial resources and the market is fragmented (individual gov- foster competition to develop proof- of- ernments), fi nancial resources are limited concept and working prototypes. They have (particularly for developing countries), and low barriers to entry--because funding is the potential size of the market is blurred not awarded on past research credentials, (by long-term policy uncertainty).43 small organizations and organizations from developing countries can compete. Agreements to bridge the commercializa- But these incentives cannot reduce risk to a tion gap. A major obstacle for innovation point that private investors would be will- is the "valley of death," the lack of financing ing to finance large-scale or very early stage for bringing applied research to the market research. (figure 7.6). Governments are typically Prizes and advanced market commit- willing to fund R&D for unproven tech- ments offer good potential for multilateral nologies, and the private sector is willing to fi nance technologies that have been dem- onstrated in the marketplace--the R&D Figure 7.6 The "valley of death" between research and the market block in figure 7.3--but there is little fund- ing for technologies at the demonstration and deployment stages.44 Governments are Bank loans, often reluctant to fund early-stage ventures Availability of financing 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 The Global Environment Facility (GEF) costs of upgrading technology an obliga- is today the largest funder of projects that tion of an environmental treaty. The Mul- promote environmental protection while tilateral Fund for Implementation of the supporting national sustainable devel- Montreal Protocol provided developing opment goals. The GEF functions as the countries with incentives to join the pro- fi nancial arm of the UNFCCC and pro- tocol by committing funds for incremental vides support for technology needs assess- compliance costs.56 In exchange, develop- ments for more than 130 countries. Most ing countries agreed to gradually phase GEF mitigation funding between 1998 to out ozone-depleting substances. The fund 2006--about $250 million a year--was provided grants or loans to cover the costs directed at removing barriers to the diffu- of facilities conversion, training, person- sion of energy-efficient technologies.53 The nel, and licensing technologies. While the GEF's adaptation efforts focus on building protocol is considered a successful model capacity to identify the urgent and immedi- of technology diffusion, the sources of ate needs of least developed countries. But emissions of greenhouse gases are orders its impact is limited by its modest proposed of magnitude larger than chlorofluorocar- adaptation budget of $500 million for the bons, and many greenhouse gas reduction 2010­14 period.54 technologies are not commercially avail- The new Carbon Partnership Facility will able. A climate change fund similar to the provide complementary assistance to devel- Multilateral Fund would need to be scaled oping countries by supporting large and up appropriately.57 risky investments in clean energy and infra- structure with good potential for long-term Financial and technological resources. As emission reductions.55 The Clean Technol- chapter 6 emphasizes, substantially more ogy Fund, a $5.2 billion multidonor initiative fi nancing for developing countries is nec- established in 2008, is another effort to pro- essary. Estimates for additional required vide low-interest financing for demonstra- investments for mitigation and adapta- tion, deployment, and transfer of low-carbon tion range from $170 billion to $765 billion technologies. In 2009 the Arab Republic of annually by 2030. But fi nancial transfers Egypt, Mexico, and Turkey are to be the first alone will not be enough. Acquiring tech- countries to benefit from a combined $1 bil- nology, far from easy, is a long, costly, and lion of financing from this fund. risky process ridden with market failures. The Montreal Protocol shows how sus- Adaptation technologies depend on local tained multilateral funding can be achieved technical skills and indigenous knowledge by making the fi nancing of incremental because they involve designing systems tai- lored to local needs (box 7.7). Even when technology can be imported, BOX 7.7 A promising innovation for coastal adaptation it involves a search process, prior technical knowledge, and the skills and resources nec- Bangladesh's coastal regions expect or irrigation; is biodegradable; is inex- essary to use the technology efficiently. That more frequent storm surges and tidal pensive; and is already widely used to capacity rests on various forms of knowl- floods as a result of climate change. produce cloth, ropes, and other items The University of Alabama at Birming- in Bangladesh. Local architects are edge, many of which are tacit and cannot be ham is working with Bangladeshi helping to incorporate the technol- easily codified or transferred. Large-scale researchers on home foundations ogy in local house designs. Bangla- energy projects that can be contracted out and frames built of a lightweight deshi researchers will contribute their to foreign firms, for example, require local composite material that bends--but expertise on the mass-manufacturing capacity for policy makers to evaluate their does not break--in a hurricane and of jute products. merits, and for operation and maintenance. that can float on the rising tide of a The European Union is developing legisla- coastal surge. Fibers from jute, one Sources: University of Alabama at Bir- of Bangladesh's common plants, are mingham, http://main.uab.edu/Sites/ tion for managing risks associated with car- woven with recycled plastics to form MediaRelations/articles/55613/ (accessed bon capture and storage,58 but few countries February 17, 2009); interview with Profes- an ultrastrong building material. Jute sor Nassim Uddin, University of Alabama have the technical capacity to design such does not require fertilizer, pesticides, at Birmingham, on March 4, 2009. legislation, another barrier to deploying the technology. Accelerating Innovation and Technology Diffusion 303 Multilateral funding can have a greater supporting national knowledge infrastruc- impact on technology transfer and absorp- tures and private sectors, as discussed in tion by extending its scope from trans- the following section. ferring physical and codified technology to enhancing human and organizational absorptive capacities in developing coun- Public programs, policies, and tries. Technology absorption is about institutions power innovation and learning: learning by investing in foreign accelerate its diffusion technologies, learning through training Innovation is the outcome of a complex sys- and education, learning by interacting tem that relies on the individual capacity of and collaborating with others outside and a multitude of actors, ranging from govern- inside one's country, and learning through ments, universities, and research institutes R&D. Multilateral funding can support to businesses, consumers, and nonprofits. technology transfer in three ways: by sub- Strengthening the capacity of this diverse sidizing investments in homegrown or for- set of actors, and how these actors interact, eign technologies in developing countries; is a difficult but necessary task for tackling by subsidizing the involvement of devel- both development and climate change. oping countries in the types of knowledge Table 7.2 describes key policy priorities for exchange, coordination, and cost-sharing encouraging innovation in countries of dif- agreements as discussed above; and by ferent income levels. Table 7.2 Key national policy priorities for innovation Countries Main policies Low-income Invest in engineering, design, and management skills Increase funding to research institutions for adaptation research, development, demonstration, and diffusion Increase links between academic and research institutions, the private sector, and public planning agencies Introduce subsidies for adopting adaptation technologies Improve the business environment Import outside knowledge and technology whenever possible Middle-income Introduce climate-smart standards Create incentives for imports of mitigation technologies and, in rapidly industrializing countries, create long-term conditions for local production Create incentives for climate-smart venture capital in rapidly industrializing countries with a critical density of innovation (such as China and India) Improve the business environment Strengthen the intellectual property rights regime Facilitate climate-smart foreign direct investment Increase links between academic and research institutions, the private sector, and public planning agencies High-income Introduce climate-smart performance standards and carbon pricing Increase mitigation and adaptation innovation and diffusion through subsidies, prizes, venture capital incentives, and policies to encourage collaboration among firms and other sources and users of climate-smart innovation Assist developing countries in enhancing their technological absorptive and innovative capacities Support transfers of know-how and technologies to developing countries Support middle-income-country participation in long-term energy RDD&D projects Share climate change­related data with developing countries All countries Remove barriers to trade in climate-smart technologies Remove subsidies to high-carbon technologies Redefine knowledge-based institutions, especially universities, as loci of the diffusion of low-carbon practices Source: WDR team. 304 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 BOX 7.8 Universities need to be innovative: The case of Africa Most donor assistance to Africa does not which since the 19th century have been launch an advanced microsatellite as part address the need to harness the world's working directly with their communities of its training. The aim for the program was existing fund of knowledge for long- to diffuse agricultural knowledge. The to build competence in new technologies term development. Higher education task ahead requires qualitative change in in the fields of remote sensing, spacecraft enrollments in Africa average close to the goals, functions, and structure of the control, and earth sciences. Uganda's 5 percent, compared with typical figures university. As part of this process, funda- Makerere University has new teaching of more than 50 percent in developed mental reforms will be needed in curricu- approaches that allow students to solve economies. The challenge, however, is lum design, teaching, location, student public health problems in their com- not only to increase access to African uni- selection, and university management. munities as part of their training. Similar versities but also to make them function Training will have to become more inter- approaches can be adopted by students as engines of development. disciplinary to address the interconnected in other technical fields, such as infrastruc- There are opportunities for universities problems that transcend traditional ture development and maintenance. to forge closer links with the private sec- disciplinary boundaries. South Africa's Sources: Juma 2008; Land grant colleges, tor, train more graduates for professional Stellenbosch University offers a shining https://www.aplu.org/NetCommunity/ careers, and diffuse knowledge into the example of how to adjust curricula to the Page.aspx?pid=183; sea grant colleges, economy. As a model, the United States needs of R&D organizations. It was the http://www.seagrant.noaa.gov/ (accessed has a long tradition of land grant colleges, first university in the world to design and August 31, 2009). 306 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 BOX 7.9 CGIAR: A model for climate change? The Consultative Group on International such as genetic resource conservation found that the CGIAR has lost focus on Agricultural Research (CGIAR) is a strategic and improvement, water scarcity, micro- its comparative advantages and that its partnership of 64 members from devel- nutrient deficiency, and climate change. growing mandate has diluted its impact. oping and industrial countries, founda- In 2008 the CGIAR implemented an At the same time volatile food prices, tions, and international organizations independent review of its governance, more extreme weather patterns, growing including the World Bank. Founded in scientific work, and partnerships. The global demand for food, and increasingly 1971 in response to widespread concern review concluded that CGIAR research stressed natural resources are challenging that many developing countries were in has produced high overall returns since the CGIAR like never before. danger of succumbing to famine, it has its inception, with benefits far exceed- In December 2008 the CGIAR adopted contributed significantly to agricultural ing costs. The benefit of yield- enhancing a new business model. The reform entails productivity gains through improved crop and yield-stabilizing crop varieties pro- a programmatic approach that will focus varieties and played a pivotal role in bring- duced by the centers and their national on a limited number of strategic "mega- ing about the Green Revolution. Over time partners is estimated at more than $10 programs" on key issues. The reforms the CGIAR's mandate has expanded to billion annually, attributable largely to also emphasize results- oriented research include policy and institutional matters, improved staple crops such as wheat, rice, agenda setting and management, clear conservation of biodiversity, and manage- and maize. Natural resource management accountabilities, streamlined governance ment of natural resources including fisher- research also shows substantial benefits and programs, and stronger partnerships. ies, forests, soil, and water. and high returns on investment. However, The changes are expected to strengthen The CGIAR supports agricultural the impact of these efforts has varied the CGIAR so that it can more effectively research by assisting 15 research centers, geographically because of a complex of address many complex global issues, independent institutions with their own factors such as local collective action, including climate change, but it is still too staff and governance structures, mostly extension services, or assignment of early to gauge their success. in developing countries--and by running property rights. The review deemed the Sources: Consultative Group on International challenge programs. These are indepen- CGIAR "one of the world's most innova- Agricultural Research, http://www.cgiar dently governed broad-based research tive development partnerships," thanks .org/ (accessed March 5, 2009); CGIAR Inde- partnerships designed to confront global to its multidisciplinary research activities pendent Review Panel 2008; CGIAR Science or regional issues of vital importance, and range of collaborations. But it also Council 2008; World Bank 2008a. of well-defined, region-specific topics, such Carbon pricing and regulations to as biomass, bioenergy, energy- efficient mobilize the private sector buildings, methane mitigation, and forest As chapter 4 discusses, carbon pricing is management. essential for catalyzing market-driven inno- Knowledge institutions can help inform vation and adoption of mitigation technolo- and coordinate policy, particularly context- gies.71 As relative prices change firms are specific adaptation policies. As adaptations likely to respond with new types of techno- to climate change begin to be considered logical investments to economize on the fac- within policy processes, it becomes impor- tor that has become more expensive.72 There tant to share solutions and experiences.68 is strong evidence that pricing can induce When planners, managers, and policy technological change.73 One study found makers begin to recognize how their indi- that if energy prices had remained at their vidual decisions can combine to reduce low 1973 level until 1993, the energy effi- vulnerability to climate change, there is a ciency of air conditioners would have been tremendous opportunity to enhance coor- 16 percent lower in the United States.74 dination among sectors to improve the Regulation and its proper enforcement use of resources and to share this valuable can also induce innovation. Performance information with other nations, regions, standards for emissions or energy efficiency and localities.69 Establishing and manag- can induce technological change in much ing a "clearinghouse" that processes and the same way as carbon pricing, because makes available adaptation success stories they can be associated with implicit prices and options from around the world will that firms face in emitting pollutants.75 In help communities faced with adaptation the United States patenting activity in sulfur decisions.70 dioxide (SO2) emissions technology started Accelerating Innovation and Technology Diffusion 307 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 Cost per km (US cent) 12 10 8 6 4 2 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 a. Intellectual property rights performance Intellectual property rights index < 3.50 3.51­4.50 4.51­5.50 No data 5.51­6.50 6.51­7.50 > 7.50 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 y s 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 l a di in Ita a l iu g do o ra rw rk na ed 29 In a Ch Sp rtu nm ap Br rm la lg St Tu ng st Denmark: ng Ge d 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/ human health but also for mitigation. to customers. Project Surya, a pilot evalu- r1/kad09/ (accessed May 14, 2009); Forster 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 to biomass stoves, mostly by subsidizing improved cookstoves on climate warming .html (accessed August 31, 2009); Ramana- than and Carmichael 2008; Ramanathan, LPG, but that has proved ineffective at and people's health. The project will sup- 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. 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Washington, DC: World Bank. for Development." Background note for the WDR 2010. World Bank. 2005. Agricultural Investment Sourcebook. Washington, DC: World Bank. 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 BOX 8.1 Miscommunicating the need for climate action Reporting on climate change can have human control. They cannot prevent or to think that action is meaningless. A the counterproductive effect of immo- change it. They prepare for it, adjust to typical global warming news story-- bilizing people. A linguistic analysis of it, or move away from it. And focusing on outlining the scientific proof, stressing media coverage and environmental the long time lines and scale of climate the severe consequences of inaction, groups' communications on climate change encourages them to think "it and urging immediate steps--can lead change found that the more people are won't happen in my lifetime" and "there's people to think that preventive action is bombarded with words or images of the nothing one can do." meaningless. devastating, quasi-biblical effects of cli- Stressing the large scale of climate mate change, the more likely they are to change while telling people they can tune out and switch off. Depicting climate solve it through small actions (like change as "scary weather" can set up a changing a light bulb) creates a discon- Source: Retallack, S., www.opendemocracy pernicious set of reactions, because peo- nect that undermines the credibility of .net/globalization-climate_change_debate/ ple tend to see weather as being outside the messages and encourages people ankelohe_3550.jsp (accessed July 17, 2008). 324 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 Figure 8.3 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 Yes, I have switched 12 to a greener energy provider Higher confidence and lower intentions Higher confidence and higher intentions I am currently India 15 considering switching Yes, I am China willing to South Africa switch to Italy a greener 89 Japan Australia Brazil energy I have not provider Canada switched, and I 73 am not considering United States Ireland Argentina Netherlands France Spain Chile switching United Kingdom Germany Russian Federation No, I am Scandinavian not willing 11 countries to switch Intentions Actions taken Lower confidence and lower intentions Lower confidence and higher intentions declared in between 2007, % 2007­08, % Source: Accenture 2009. Note: The 2009 Accenture Climate Change Survey was conducted with a sample of 10,733 individuals in 22 developed and emerging economies. The sample was representative of the general population in developed countries and urban populations in developing countries. Panel a: Respondents were asked about their willingness to switch to a greener energy provider if the provider offered services that help reduce carbon emissions. Intentions did not translate into action, with most respondents staying with their old energy provider. Panel b: Based on the questionnaire, countries were ranked on two criteria--confidence and intention. Confidence measured the individual's optimism about the ability of individuals, politicians, and energy providers to find a solution. Respondents in emerging economies generally were more optimistic about humankind's ability to take action to solve global climate change. The media, in search of punchy stories, focusing on (often nonexistent) technologi- tend to shy away from the scientific com- cal silver bullets. The inertia affecting our munity's careful wording to express uncer- responses can be linked to a limited under- tainty. Readers then face messages lacking standing of stock-and-flow relationships, scientific caution and containing strong which characterize the concentration, appeals that might then be refuted by other removal, and stabilization of greenhouse similarly strongly worded statements, ham- gases. The fact that even the most drastic pering the perceived reliability of the infor- and sudden emission reductions will not mation source. In addition to confusing the prevent further warming, or make the need public (and policy makers) about causes, for adaptation disappear in the short and impacts, and potential solutions, different medium term, is something we struggle types of framing can antagonize individu- with and, without careful explanation, sim- als and induce a sense of guilt, and even of ply do not understand (box 8.2).20 being vilified, when the problem of con- sumption is characterized as a problem of Understanding does not necessarily consumers.17 This can lead people to reject lead to action the message rather than act on it. Knowledge is mediated through value sys- An added challenge in moving from tems shaped by psychological, cultural, and concern to understanding has to do with economic factors that determine whether we how the mind perceives the problem. The act or not. Again the idea here is not that we dynamics of climate change stretch our are irrational but that we need to understand mental capacities in several ways.18 Psycho- better how we make decisions. Our evolution logical research shows that individuals are as a species has shaped the way our brains ill equipped to deal with multiple-cause work. We are particularly good at acting on problems.19 Simplifying problems by adopt- threats that can be linked to a human face; ing single-cause explanations in turn leads that present themselves as unexpected, dra- to searching for individual solutions and matic, and immediate; that involve obvious Overcoming Behavioral and Institutional Inertia 325 links to human health; that challenge our moral framework, provoking visceral reac- Misunderstandings about the dynamics of climate B OX 8 . 2 tions; or that evoke recent personal experi- ence.21 The slow pace of climate change as change encourage complacency well as the delayed, intangible, and statisti- Support for policies to control green- long as emissions exceed the amounts cal nature of its risks, simply do not move house gas emissions is hampered by that can be taken up by terrestrial and us (box 8.3). people's limited understanding of aquatic systems, concentrations of Behavioral economics shows that fea- climate change's dynamics. Experi- greenhouse gases will rise. Even for ments show that a majority of people those who consider climate change tures of human decision making under misunderstand the basic stock-and- a priority, a misunderstanding of uncertainty constrain our natural instinct flow nature of the problem: they the stock-and-flow process favors to adapt.22 We tend to underestimate cumu- believe that stabilizing emissions wait-and-see policies, limiting public lative probabilities (the sum of the prob- near the current rates would stabilize pressure and political will for active abilities of an event occurring over a period concentrations of greenhouse gases policy to stabilize the climate. These of time), which explains why building in the atmosphere and halt climate misperceptions can be corrected continues in areas prone to fires, flooding, change. Instead the flow of emissions through communication strategies is best compared to the flow of water that use analogies, such as the bath- and earthquakes. People strongly favor the entering a bathtub: as long as the tub example. status quo and prefer to make only small inflow is greater than the outflow, the Sources: Sternman and Sweeney 2007; incremental adjustments to it. They are at level of water in the tub will rise. As Moxnes and Saysel 2009. a loss when measuring achievements is dif- ficult, as in disaster preparedness, where there are no clear counterfactuals. We are "myopic decision makers" who strongly environmental issues perceived as closer to discount future events and assign higher home (figure 8.4).23 priorities to problems closer in space and Even if people were indeed fully rational, time. For instance, the public tends to be knowledge would not necessarily lead to mobilized by visible environmental prob- action. Their "finite pool of worries" might lems (urban air pollution) but not by less prevent them from acting on existing infor- visible ones (species extinction). Individu- mation because they prioritize basic needs als rank climate change lower than other such as security, shelter, and the like.24 They 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 5­8, 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. tion, where the individual is considered not merely the passive receiver of information mistake. Recent work has highlighted that but an active agent in both causes and solu- information is key for the public to back tions (box 8.4). costly measures. The benefits of providing Well- designed communication cam- more accurate information about people's paigns that address individuals as members consumption decisions--say, through of a local community--and not as power- less members of an unmanageably large group--can empower them to act. This End-to-end community engagement for landslide B OX 8 . 4 treatment can help make a global phenom- risk reduction in the Caribbean enon personally relevant and immediate, A new way of delivering real landslide- maintaining surface water manage- and accentuate the local and individual risk reduction to vulnerable com- ment on high-risk slopes. It produces ownership of the solutions. It is important munities was piloted by MoSSaiC, a program owned by the community to limit "greenwash" in business and gov- a program aimed at improving the rather than imposed by the agency or ernment--the gap between agreeing pub- management of slopes in communi- government. licly on the reality of climate change while ties in the eastern Caribbean. MoSSaiC MoSSaiC has lowered landslide risk doing nothing about it--to avoid confusion identifies and implements low-cost, by offering the community employ- and public backlash (box 8.5). community-based approaches to ment and risk awareness--and has landslide-risk reduction, in which taken a participatory approach to A controversial question is whether community residents indicate areas of rolling out the program to other com- detailed public understanding of highly perceived drainage problems before munities. The program shows that complex issues such as climate change is assessing options for reducing land- changing community views of hazard feasible, even necessary, for effective policy slide risk by managing surface water. mitigation can enhance community making. The answer is no, or at least not The activities? Managing surface perceptions about climate risks. It also always. Much policy making is based on water in all forms (roof water, grey establishes a feedback loop between technicalities fully ignored by the public. water, and overland fl ow of rainfall project inputs and outputs, with more water), monitoring shallow ground- than 80 percent of funds spent in the Few people understand the intricacies of water conditions, and constructing communities, allowing communities trade policies affecting the price of the food low- cost drain systems. All the work and governments to establish a clear they buy and eat, or produce and sell. Where is bid out to contractors in the com- link between risk perceptions, inputs, buy-in is necessary, it is often encouraged munity. This end-to- end community and tangible outputs. through other means. engagement encourages participa- Yet discounting information and pub- tion in planning, executing, and Source: Anderson and Holcombe 2007. lic awareness as unnecessary would be a 328 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 BOX 8.5 Communicating climate change How an issue is framed--the words, met- Applying this approach to communica- conceptual hook to make sense of aphors, stories, and images used to com- tions on climate change could take many information and set up appropriate rea- municate information--determines the forms: soning (instead of the "greenhouse gas action. Frames trigger deeply held world effect" call it a "heat trap"). views, widely held assumptions, and cul- · Place the issue in the context of · Refocus communications to under- tural models in judging the message and higher values, such as responsibility, score the human causes of the prob- in accepting or rejecting it accordingly. If stewardship, competence, vision, and lem and the solutions that exist to the facts don't fit the frames, the facts are ingenuity. address it, suggesting that humans rejected, not the frame. · Characterize mitigation actions as can and should act to prevent the Based on that understanding, it can being about new thinking, new tech- problem now. be decided whether a cause is best nologies, planning ahead, smartness, · Evoke the existence and effectiveness served by repeating or breaking domi- farsightedness, balance, efficiency, and of solutions upfront. nant discourse, or by reframing an issue prudent caring. using different concepts, languages, and · Simplify the model, analogy, or images to evoke a different way of think- metaphor to help the public under- Source: Lorenzoni, Nicholson- Cole, and ing and facilitate alternative choices. stand how global warming works--a Whitmarsh 2007. 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 immediately apparent, based on the type of climate event under consideration and B OX 8 . 6 Inserting climate education in school curricula on the rate of change. The public at large may perceive these benefits as distant and Education can help drive behavioral change education, such as a school uncertain. It is the role of institutions to change. In the Philippines the presi- resource kit developed by the Austra- communicate clearly the direct benefits dent signed into law the National lian Greenhouse Office. Environmental Awareness and Edu- Incorporating climate change and co-benefits of both adaptation and cation Act of 2008, which promotes education in school curricula is a mitigation, particularly emphasizing those the integration of climate- change first step. Developing a new cadre of that involve human health, a subject that education in school curricula at all professionals to tackle the complex moves people. levels. The 1998 education reforms in problems posed by climate change Improved cost-benefit tools can encour- Lebanon incorporated environmental is equally important (see chapter 7). age public and private decision makers to act studies, including climate change, Finally, an educated citizenry is essen- more decisively. The estimation of costs and into science, civic, and geography tial to facilitate change. Research classes. In 2006 the U.S. Environ- shows that students and the general benefits of energy-efficiency projects often mental Protection Agency created a public hold onto misunderstandings does not include nonenergy co-benefits. climate- change-based educational about various aspects of climate These include the public health benefits resource for high school students, change, the greenhouse effects, and from cleaner air and water, the possibly allowing them to calculate emissions ozone layer depletion.a To address greater comfort of building occupants, and inventories. In 2007 Canadian prov- these shortcomings, the public must higher labor productivity.36 Switching from inces committed to include climate be informed about climate change fossil to renewable energy can create jobs.37 change in their school curricula. accurately and systematically. Under Australia's Third National Com- Case studies in manufacturing conclude munication on Climate Change the Sources: Hungerford and Volk 1990; that these benefits can be considerable, government provides support and Kastens and Turrin 2006. sometimes equivalent to the value of the develops material to promote climate a. Gautier, Deutsch, and Rebich 2006. energy savings alone.38 So the time frame for investment paybacks can be substan- tially shortened, providing better incentives A climate-relevant example comes from to invest. Similarly, earmarking revenues a psychological experiment on California from carbon or energy taxes can increase the residents to test the impact of social norms visibility of benefits of mitigation. Although on energy consumption.40 The average fiscal earmarking is deemed economically household energy consumption was com- inefficient, it can increase political accep- municated through energy bills to one tance of new taxes, because the public sees group of high-energy households and two clearly where the money goes. groups of low-energy households. This set the social norm. One group of low-energy Social norms. Social norms are the pat- households received positive feedback for terns of behavior that most people approve their energy consumption statement (a of--the yardsticks they use to assess the smiley face), conveying approval of their appropriateness of their own conduct. In energy footprint. High-energy households shaping human action, social norms can were shown their use coupled with nega- achieve socially desirable outcomes, gener- tive feedback (a sad face) to convey disap- ally at a fairly low cost. The basic idea is that proval. The result: high-energy households people want to act in a socially acceptable reduced consumption, and low-energy ones way and tend to follow the lead of others, maintained their lower-than-average con- particularly when the others are numerous sumption. The third group--low-energy and are perceived as similar. households initially exposed to the social Social norms have a particularly strong norm but receiving no positive feedback impact under conditions of uncertainty.39 about their behavior--increased their con- When looking for clues about how to behave, sumption to reach the average. Utilities people rely on what others do. Appeals for eager to reduce energy use have adopted the proenvironmental behavior based on social approach in 10 major metropolitan areas in norms are superior to traditional persua- the United States, including Chicago and sion. Not littering is an example. Seattle. 330 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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 contribution to major investment projects Climate change is expected to exacerbate in the 1980s and 1990s, private participation insurability problems, requiring renegotia- in infrastructure remains limited. Although tion of the boundary between private and the bulk of the additional investment and public insurance systems. Governments financing needed for climate-change miti- will face pressures to become insurers of gation and adaptation is expected to come last resort for more of the population and from the private sector, government poli- for more damages. In parallel, they will cies and incentives will be fundamental.48 need to address the moral hazards induc- Moreover, energy providers and electric ing people to make bad choices because of utilities are usually government-owned or insurance. government-regulated private corporations. Fourth, governments will have to do Changing the mix of generation facilities more as knowledge and learning plat- may require subsidies and up-front fi xed- forms, particularly around adaptation.49 capital investments. Business certainly has As chapter 7 argues, this will require more an incentive to secure the attractive returns investments in R&D and more effective from investments in energy efficiency, but, markets for technology innovation. It will as discussed in chapter 4, market barriers also require transforming meteorological are likely to require government action. services into climate services, overseeing Where high costs of new technology (low- the distribution of information at different emission vehicles or solar electricity gener- levels, and using international regimes and ation, for example) are constraining supply organizations as policy-learning arenas for and demand, a range of government incen- governments to learn from each other and tives may be required to expand markets. adapt policy to local circumstances. Second, mitigation and adaptation are Fifth, as the prime repositories of politi- both likely to increase public spending. cal legitimacy, governments will be expected Auctioning emission permits or taxing to steer the private sector, facilitate com- carbon generates revenues. Keeping expen- munity action, and establish the optimal diture flat would require government to decentralization of adaptation and mitiga- deliver complete tax rebates or full revenue tion decision making and action. On top of recycling. But such fiscal neutrality might steering, governments will be expected to be perceived as a luxury in countries look- play an "ensuring" function: guaranteeing ing for cash to fund new public investments that targets and goals are achieved through for adaptation and for new energy infra- new emphasis on regulation, taxation, long- structure while containing their fiscal defi- term planning, and communication.50 cits. As chapter 7 highlights, governments None of this means that the size of the need to expand their already significant state needs to expand--government size is role in technology research, development, not always associated with better provision and demonstration. Governments can of public goods.51 Instead, it is about rec- change incentives, either by subsidizing ognizing, as chapter 2 points out, that the investments with wider social benefits that added challenges of climate change will also markets tend to undersupply (such as risky increase the cost of government failures. energy R&D) or by taxing or regulating Addressing these challenges will require actions that are socially harmful. broadening government objectives and Third, the greater frequency and severity agendas and stepping up the type, scope, of extreme weather events will pressure gov- and quality of government interventions. ernments to enhance their insurance func- tion. As chapter 2 notes, insurance markets Toward climate-smart government can go only so far in securitizing climate Governments will need to review the way risks. Developed-world insurance systems they operate if they are to successfully address are already stretched in dealing with rising the climate challenge. As attention shifts hazards along the U.S. and Japanese coasts, from identifying the causes and impacts of in upper-middle-income Caribbean islands, climate change to devising responses, gov- and on floodplains in northern Europe. ernment setups will need rearranging.52 332 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 In most countries no single government pressure on developing countries' already agency can fully control climate-change limited absorptive capacity. Many of the policy; relevant mandates, responsibilities, developing countries most in need of adap- and constituencies are spread over differ- tation support are those with weaker capac- ent ministries. Yet few governments have ity to manage and absorb funding. When an agency capable of enforcing carbon bud- a recipient's capacity to manage funds is gets. In addition, the time frames of climate limited, donors engage in tighter controls impacts and required responses go well of funds and project-based modalities, put- beyond those of any elected administration. ting further strains on country systems and And bureaucracies are not quick learners.53 leading to vicious cycles of lower capacities, Because of the novelty of climate change fiscal shortfalls, and fragmentation.55 as a public policy domain and because of the urgency of action, policy makers need Enhancing the capacity of central to prepare for a degree of failure--and to government learn from it. These problems have been When political leaders take an active inter- identified in the literature as the main driv- est, focusing the minds of officials, public ers of failures to act in organizations.54 opinion, and external stakeholders, coun- Government effectiveness will be critical tries move forward. Conversely, when lead- to leveraging the impact of adaptation fund- ers fail to act, countries lag behind. This ing. As chapter 6 notes, most adaptation is hardly surprising. Decision makers are activities today are implemented through individuals, and the failures in the way stand-alone and disconnected projects. individuals make decisions also affect the Fragmented adaptation fi nance hampers way organizations, including governments, mainstreaming and scaling up in plan- work.56 However, leadership is not just an ning and development processes, increases individual issue; it is also institutional and transaction costs for recipients and donors, has to do with the way responsibility, coor- and diverts the time and attention of politi- dination, and accountability for climate cians and government officials away from policy are organized (figure 8.6). domestic priorities to manage aid-related activities. The tens of billions of dollars Assigning responsibility for climate policy. required for adaptation may put additional In most countries climate change is still the preserve of the environment ministry. But Figure 8.6 Effective governance goes hand in hand with good environmental performance climate policy spills over into domains that transcend the boundaries of environmental Environmental performance 100 protection and include trade, energy, trans- port, and fiscal policy. Environment agen- 90 cies are normally weaker than departments such as treasury, commerce, or economic 80 development. They tend to have fewer 70 resources and to be represented in cabinets by junior politicians. 60 Although there is no single recipe for 50 assigning the climate remit, reconsolidat- ing responsibility is key (box 8.7). Bureau- 40 cratic consolidation--based on budgetary 30 independence, expert personnel, and the 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 authority to propose and enforce legisla- Low Governance effectiveness High tion--concentrates authority and avoids diffusion of responsibility that can lead to Sources: Kaufman, Kraay, and Mastruzzi 2007; Esty and others 2008. Note: Environmental performance is measured by an environmental performance index (http://epi.yale.edu/). failures to act. The creation of ministerial- Governance effectiveness ranges between 0 and 1 and is derived using log transformation of the governance level agencies led by senior cabinet min- effectiveness indicator from the World Governance Indicators database for 212 countries for 1996­2007. It combines the views of a large number of enterprise, citizen, and expert survey respondents in high-income isters, or the inclusion of climate policy and developing countries. on the agenda of already-established key Overcoming Behavioral and Institutional Inertia 333 agencies are signs of a trend toward bureau- cratic consolidation. China's and India's path to institutional reform B OX 8 . 7 Facilitating integration and interagency for climate action coordination. Bureaucratic consolidation, China shows how responsibility for India is another developing-country though important, may not be enough. climate policy has moved from the example. Its Council on Climate And the mere creation of a separate agency fringes to the core of government Change is chaired by the Prime might even be counterproductive. Policy activity. The government initially set Minister. It developed the National coherence throughout an administra- up special institutions to address Action Plan on Climate Change and is climate change in 1990. Recogniz- responsible for monitoring its imple- tion requires integrating climate planning ing the relevance and intersectoral mentation. The Plan encompasses across government. Here, the challenge is nature of the issue, it established a eight National Missions that span the typical compartmentalization of gov- National Coordination Committee on sectoral ministries since they include ernment work and the tendency to treat Climate Change in 1998. Solar Energy, Enhanced Energy Effi- multidimensional problems in organiza- In 2007 the committee was trans- ciency, Sustainable Habitat, Conserv- tional silos. Approaches for integration formed into the National Leading ing Water, Sustaining the Himalayan include establishing climate units in each Group to Address Climate Change. Ecosystem, the creation of a "Green Headed by the Chinese premier, the India," Sustainable Agriculture, and the ministry or agency complemented by sec- leading group coordinates strate- establishment of a Strategic Knowl- toral plans at national and local levels for gies, policies, and measures among edge Platform for Climate Change. mitigation and adaptation. In addition to a 28 member units within government The vision of the National Action Plan revision of their mandates, relevant public agencies. During the 2008 govern- is a graduated shift from fossil fuels to agencies--such as those involved in public ment reform, the general office of the non-fossil fuels and renewable sources health, energy, forestry and land-use plan- leading group was placed within the of energy. ning, and natural resource management-- National Development and Reform Similar institutional reform measures Commission, which undertakes the have already been adopted by a range can coordinate their work under a lead general work on climate change, of other countries, developed and climate-change agency. Achieving this type supported by an expert committee developing. of coordination is likely to require rethink- providing scientific information to ing the role of hydrometeorological services inform decision making. Source: WDR team. (see chapter 7). New coordination bodies--a cabinet committee on climate change, one explic- guiding them will be updated to include itly linking climate with an already recog- low-carbon supply and energy-efficiency as nized and critical issue area such as energy, core responsibilities. or an intragovernmental coordinating Strategy documents can increase the committee chaired by the lead agency--can coordination of adaptation activities. Con- bring together officials working on climate sider the National Adaptation Programs of change across government. Coordination of Action (NAPAs) of least developed coun- climate policy can also be the prime min- tries. Born as a technical priority-setting ister's remit--say, by creating an advisory exercise, NAPAs determine country- function directly within the prime minis- specific impacts and design locally tailored ter's office. responses by engaging different agencies For both integration and coordination, and levels of government as well as broad particular attention should go to develop- constituencies of business and civil society ing sector policies and strategies. As chapter actors. In this sense, they can provide an 4 shows, energy policy in many countries institutional framework for placing adapta- emphasizes market reform and pricing, tion at the center of government's priorities. introducing competition to the energy sec- But to consolidate their strategic function, tor, and developing regulatory institutions they will require more attention from inter- to deliver low prices and reliable supplies to nal and external stakeholders (box 8.8). consumers.57 Until very recently, mitigation was not even a tangential preoccupation of Reinforcing government accountability. energy policy. As climate change moves up Governments can fail to act on specific the political agenda, the mandates of energy policy issues when accountability lines are agencies and the policies and strategies not clear, either because of the nature of the 334 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 BOX 8.8 National adaptation programs of action National Adaptation Programs of Action Although adaptation needs and proj- Despite this low price tag, little financial (NAPAs), the most prominent national ects may appear similar when viewed support has been available, raising valid efforts by the least developed countries collectively, they vary substantially across concerns about donor assistance and to identify priority areas for adapting to countries depending on the climate widening the trust gap. climate change, have been subjected to hazards and threats identified as most Poor architecture: Institutional arrange- three criticisms. First, the NAPA process relevant. The standard NAPA guidelines ments for adaptation need to be more puts in place similar projects across differ- explain some of the similarities in the permanent and better linked to different ent countries, without paying attention to language used to defend the identified ministries with support from ministries their specific adaptation needs. Second, projects as the most urgent adaptation of finance and planning and stronger many adaptation projects are difficult to needs. The preponderance of agricultural, connections to provinces and districts. A distinguish from standard development natural resource, and disaster manage- dedicated body can do the planning, but projects. Third, the NAPA process fails to ment projects reflects the fact that the implementation will have to be under- involve the major ministries and decision impacts of climate change will be felt first taken through existing institutional and makers in the country or to pay enough in sectors related to primary goods and governmental structures because many attention to subnational and local institu- disaster management. Finally, the NAPAs projects are sectoral. tional requirements. were prepared on a shoestring, so the Low capacity: Capacity for adaptation In light of these criticisms, the World planning could not extend beyond the planning and implementation continues Development Report team sponsored national level or across multiple ministries to be very low in most of the least devel- two meetings of high-level NAPA offi- and decision makers. oped countries. Improvements are needed cials in Asian and African countries, one But there is another side to the criticisms-- in technical capacity, knowledge, training, in Bangkok in October 2008 and one in the way the least developed countries equipment, and modeling; some capac- Johannesburg in November 2008. The view the NAPAs that they have prepared. ity in these areas could be gained from meetings showed a more complicated Little financial support: The total cost experts in universities and civil society. picture and suggested that some criti- of all projects identified as urgent in 38 cisms may be misplaced. NAPA documents is less than $2 billion. Source: WDR team. 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 Probably for these reasons, local author- ities often precede national governments in Enhancing government accountability for climate B OX 8 . 9 taking climate action. As chapter 2 shows, the regional and local levels are often more change in the United Kingdom appropriate for the design and implementa- By restructuring and establishing the Department of Energy and Climate tion of adaptation measures in agriculture, institutional machinery for climate Change to the Treasury for various infrastructure planning, training, and action, the United Kingdom has also policy objectives and set delivery water management. But local governments deployed measures that increase the targets to measure performance in can also lead in mitigation. States on both government's accountability for deliv- implementing them. The targets ering results. The United Kingdom include specific steps to reduce U.S. coasts have developed locally owned the total U.K. emissions, increase strategies and targets and then coalesced to · Passed a climate change bill that provided a statutory foundation the sustainable withdrawal of pilot regional carbon markets (box 8.10). water, reduce the CO2 intensity of for the official UK CO2 emissions Cities worldwide have their own climate targets in the short, medium, and the U.K. economy. action plans and strategies, adopting Kyoto long terms, through five-year car- · Established a committee on climate targets to compensate for the inaction of bon budgets that set annual levels change as an independent expert national governments and becoming active for permissible emissions. Three advisory body that can recommend members of national and transnational city budgets spanning 15 years will be to government ways to achieve tar- active at any given time, present- gets. The committee reports annu- initiatives, such as the C40 network of the ing a medium-term perspective for ally to Parliament, and government world's largest cities committed to tackling is required to reply formally. Every the evolution of carbon emissions climate change. throughout the economy. five years the committee will offer The relevance of local governments a comprehensive assessment of the · Designated a lead agency for cli- requires their inclusion in climate policy. mate change--the Department of country's overall progress toward Decentralizing climate policy has pros the long-term targets. Energy and Climate Change. and cons, and its optimal level and scope · Formalized in Public Sector Agree- are context specific.59 Local governments ment 27 the accountability of the Source: WDR team. suffer from the same limitations as cen- tral governments, though usually more severely. The climate policy remit at the local level is usually with an environment not only to the number of inhabitants and unit, with integration and coordination geographical coverage of the authority but problems. Subnational governments usu- also to the achievement of targets. Author- ally face resource and skill gaps and have ity measures include national laws requiring less fiscal power, which prevents them from local governments to develop strategic plans using environmental taxes. Despite their in relevant sectors or regulation schemes to proximity to citizens, local governments make local government officials account- often lack the same legitimacy as national able to central government, as with land-use governments, because of low turnouts in planning. local elections and weak electoral mandates or weak capacities to deliver. All this makes Thinking politically about devolution of climate policy particularly climate policy tricky. Shaping the design and outcomes of any To enhance vertical collaboration, public policy are the strength, density, and national governments can engage in extent of civil society; the bureaucratic cul- enabling, provision, and authority measures. ture and budget laws; and the factors driv- Enabling measures include transferring ing the articulation and organization of knowledge and best practice. Of interest are political interests.60 Fossil fuels, in addition benchmarking initiatives linked to compe- to powering the economies of developed tition and awards for the best-performing and developing countries, feed some of the local authorities--the provincial competi- special interests driving their politics. In tiveness index in Vietnam is a good example many developing countries, carbon is not of such subnational benchmarking. Provi- only unpriced, it is subsidized (see chap- sion measures include performance-based ter 4). At the end of 2007 roughly a fifth of public sector agreements that link funding countries were subsidizing gasoline, and 336 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 BOX 8.10 Green federalism and climate change policy Subnational jurisdictions in federalist Arguments supporting green federal- less restrictive jurisdictions. This process systems have long been recognized as ism include the ability of lower-level is often termed the race to the bottom, laboratories of policy experimentation governments to tailor policies to their since it reduces environmental quality and reform.a State, provincial, and local unique resources and demographics, as and underprovides public goods and governments have had varying degrees well as the opportunity to drive slower- services.d of success when it comes to efficiency moving national policy with innova- But for climate policy, green federal- and effectiveness of "green federalism" tive subnational experimentation and ism has shown promising results. One of policies--those environmental policies learning.c Critics of green federalism cite the most visible examples is the United where subnational governments take the risks of carbon leakage, as well as the States (box map). Despite the national lead.b incentive for businesses to relocate in government's decision not to ratify the Green federalism in the United States: State and regional action Mandatory renewable portfolio standards State adaptation plans in progress State renewable goal Adaptation plans recommended in Climate Action Program Regional Greenhouse Gas MRGRA observer Initiative (RGGI) The Climate Registry Western Climate Initiative (WCI) RGGI observer The Climate Registry + mandatory reporting WCI observer Midwestern Regional GHG Independent voluntary registries Reduction Accord (MRGRA) Individual state cap­and­trade program (continues) Overcoming Behavioral and Institutional Inertia 337 BOX 8.10 continued Kyoto Protocol, and in the absence of municipalities have also initiated com- Source: State actions are tracked by the overarching federal climate- change prehensive climate change auditing and Pew Center on Global Climate Change policy, subnational governments have planning programs, setting emissions (www.pewclimate.org). taken the lead.e Many regions have reduction goals of their own. a. Osborne 1988. greenhouse gas monitoring and register- These actions add up to significant b. Oats and Portney 2003. ing programs as well as emissions reduc- reductions, and some claim that such c. Lutsey and Sperling 2008. tion goals. And dozens of individual efforts have led to a race to the top.f If d. Kunce and Shogren 2005. states have crafted and implemented the handful of states with firm emissions e. Rabe 2002. mitigation and adaptation plans or targets achieve their 2020 goals, U.S. f. Rabe 2006. instituted renewable portfolio stan- national emissions could be stabilized at g. Lutsey and Sperling 2008. dards and reduction targets. Cities and 2010 levels by 2020.g 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 Output: policies, laws, and international agreements 1.0 0.8 0.6 0.4 0.2 0 1 2 3 4 5 6 7 Democracy Index Outcome: emission reductions 1.0 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 1990­2005 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 commitment and performance in reduc- 11. Bulkeley 2000. ing emissions. Small countries--which in 12. Kellstedt, Zahran, and Vedlitz 2008. theory should have incentives to free ride, 13. Immerwahr 1999. given their negligible role in global emission 14. Krosnick and others 2006. 15. Boykoff and Mansfield 2008. reductions--have so far undertaken more 16. Oreskes 2004; Krosnick 2008. aggressive actions than the big players. In 17. Miller 2008. some countries subnational measures and 18. Bostrom and others 1994. homegrown policy responses are already 19. Bazerman 2006. affecting national policy and the position of 20. Sternman and Sweeney 2007. countries in the international arena. And the 21. Ornstein and Ehrlich 2000; Weber 2006. private sector is showing that old practices 22. Repetto 2008. can give way to new visions (box 8.12). 23. Moser and Dilling 2007; Nisbet and Myers Reversing the institutional inertia that 2007. constrains climate policy requires fun- 24. Maslow 1970. damental changes in interpreting infor- 25. Olson 1965; Hardin 1968; Ostrom 2009. 26. Irwin 2009. mation and making decisions. A range 27. Winter and Koger 2004. of actions can be taken domestically by 28. Sandvik 2008. national and subnational governments as 29. O'Connor and others 2002; Kellstedt, Zah- well as by the private sector, the media, ran, and Vedlitz 2008; Norgaard 2006; Moser and and the scientific community. Although Dilling 2007; Dunlap 1998. establishing an effective international cli- 30. Norgaard 2009. mate regime is a justified preoccupation, it 31. Ward 2008. should not lead to a wait-and-see attitude, 32. Krosnick 2008. which can only add to the inertia and con- 33. Kallbekken, Kroll, and Cherry 2008. strain the response. 34. Swallow and others 2007. 35. 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Karmorh, George Kasali, Roy Katayama, Singh Ahluwalia, Nilufar Ahmad, Kulsum Ahmed, Sadiq Andrzej K edziora, Michael Keen, Kieran Kelleher, Claudia Ahmed, Ahmad Ahsan, Ulrika Åkesson, Mehdi Akhlaghi, Kemfert, Karin E. Kemper, Qaiser Khan, Euster Kibona, Mozaharul Alam, Vahid Alavian, Harold Alderman, Sara Richard Klein, Masami Kojima, Auguste Tano Kouamé, Jarl Amiri, David Anderson, Simon Anderson, Ken Andrasko, Krausing, Holger A. Kray, Alice Kuegler, Norman Kuring, Juliano Assunçao, Giles Atkinson, Varadan Atur, Jessica Yevgeny Kuznetsov, Christina Lakatos, Julian A. Lampietti, Ayers, Abdulhamid Azad, Sushenjit Bandyopadhyay, Ian Perpetua Latasi, Judith Layzer, Danny Leipziger, Robert Bannon, Ellysar Baroudy, Rhona Barr, Scott Barrett, Wim Lempert, Darius Lilaoonwala, James A. Listorti, Feng Liu, Bastiaanssen, Daniel Benitez, Craig Bennett, Anthony Bertrand Loiseau, Laszlo Lovei, Magda Lovei, Susanna Bigio, Yvan Biot, Jeppe Bjerg, Brian Blankespoor, Melinda Lundstrom, Kathleen Mackinnon, Marília Magalhães, Bohannon, Jan Bojo, Benoît Bosquet, Aziz Bouzaher, Olivier Mahul, Ton Manders, McKinsey & Company (Jeremy Richard Bradley, Milan Brahmbhatt, Carter Brandon, Oppenheim, Jens Dinkel, Per-Anders Enkvist, and Biniam Gernot Brodnig, Marjory-Anne Bromhead, Andrew Burns, Gebre), Marília Telma Manjate, Michael Mann, Sergio Anil Cabraal, Duncan Callaway, Simon Caney, Karan Margulis, Will Martin, Ursula Martinez, Michel Matera, Capoor, Jean-Christophe Carret, Rafaello Cervigni, Rita J. M. Mauskar, Siobhan McInerney-Lankford, Robin Mearns, E. Cestti, Muyeye Chambwera, Vandana Chandra, David Malte Meinshausen, Abel Mejía, Stephen Mink, Rogerio de Chapman, Joelle Chassard, Flávia Chein Feres, Ashwini Miranda, Lucio Monari, Paul Moreno López, Roger Morier, Chhatre, Kenneth Chomitz, David A. Cieslikowski, Hugh Richard Moss, Valerie Müller, Robert Muir-Wood, Enrique Compston, Luis Constantino, Jonathan Coony, Charles Murgueitio Restrepo, Siobhan Murray, Everhart Nangoma, Cormier, Christophe Crepin, Richard Damania, Stephen Mudit Narain, John Nash, Vikram Nehru, Dan Nepstad, Danyo, Michael Davis, Melissa Dell, Shantayanan Devarajan, Michele de Nevers, Ken Newcombe, Brian Ngo, Carlo del Charles E. Di Leva, William J. Dick, Simeon Djankov, Carola Ninno, Andy Norton, Frank Nutter, Erika Odendaal, Ellen Donner, Diletta Doretti, Krystel Dossou, Navroz Dubash, Olafsen, Ben Olken, Sanjay Pahuja, Alessandro Palmieri, Hari Bansha Dulal, Mark Dutz, Jane Olga Ebinger, M. 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Gomez, Arturo Gomez Pompas, Christophe de Ashok Sarkar, John Scanlon, Hartwig Schäfer, Imme Scholz, Gouvello, Chandrasekar Govindarajalu, Margaret Grosh, Sebastian Scholz, Claudia Sepúlveda, Diwesh Sharan, Bernard Michael Grubb, Arnulf Grübler, José Luis Guasch, Eugene Sheahan, Susan Shen, Xiaoyu Shi, Jas Singh, Emmanuel Gurenko, Stéphane Hallegatte, Tracy Hart, Marea Eleni Skoufias, Leopold Some, Richard Spencer, Frank Sperling, Hatziolos, Johannes Heister, Rasmus Heltberg, Fernando Sir Nicholas Stern, Thomas Sterner, Andre Stochniol, Rachel L. Hernandez, Jason Hill, Ron Hoffer, Daniel Hoornweg, Strader, Charlotte Streck, Ashok Subramanian, Vivek Suri, Chris Hope, Nicholas Howard, Rafael de Hoyos, Veronika Joanna Syroka, Mark Tadross, Patrice Talla Takoukam, Huber, Vijay Iyer, Michael Friis Jensen, Peter Johansen, Todd Robert P. Taylor, Dipti Thapa, Augusto de la Torre, Jorge E. 349 350 BIBLIO GRAPHICAL NOTE Uquillas Rodas, Maria Vagliasindi, Hector Valdes, Rowena Irwin, Tim. 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"Tunisia's Experience in Water Resource Mobilization and Management." Glossary Abatement / see mitigation sale of offsets from a CDM project lacking additionality may lead to an increase in Adaptation: Adjustment in natural or emissions to the atmosphere, relative to human systems, in response to actual or the emissions released if the potential pur- expected climatic stimuli or their effects, chaser of the offset instead directly reduced which moderates harm or exploits benefi- their own emissions at home. cial opportunities. Various types of adap- tation can be distinguished, including Afforestation: Planting a new forest on anticipatory and reactive, autonomous and land that has either never or not recently planned, public and private. been forested. Adaptation Fund: The Adaptation Fund Annex I parties: Annex I parties include was established to fi nance concrete adap- the industrial countries that were members tation projects and programs in develop- of the OECD (Organization for Economic ing countries that are Parties to the Kyoto Co-operation and Development) in 1992, Protocol. The Fund is financed with a share plus countries with economies in transition of proceeds from the Clean Development (the EIT Parties), including the Russian Mechanism (CDM) and receives funds Federation, the Baltic states, and several from other sources. Central and Eastern European states. They have committed to limit their greenhouse Adaptive capacity: The ability of a system gas emissions. Non-Annex-I parties: The to adjust to climate change (including cli- group of primarily developing countries mate variability and extremes) in order to without such commitments, which instead take advantage of opportunities, moder- have acknowledged general obligations to ate potential damages, or cope with the formulate and implement national pro- consequences. grams on mitigation and adaptation. Adaptive management: A systematic pro- Anthropogenic: Directly caused by human cess for continually improving manage- actions. For example, burning fossil fuels ment policies and practices by learning to supply energy leads to anthropogenic from the outcomes of previously employed GHG emissions, whereas natural decay policies and practices, through an explicitly of vegetation leads to non-anthropogenic experimental approach. emissions. Additionality: In the CDM context this Assigned amount units (AAUs): The total refers to whether the carbon offsets gener- volume greenhouse gases--measured in ated by a project are backed up by emission tons CO2e--that each Annex I country is reductions additional to those that other- allowed to emit during the first phase of the wise would occur without the financial and Kyoto Protocol. technical incentive of the CDM mecha- nism. An activity's emissions as they would Bali Action Plan: The two year plan have been in the absence of the CDM proj- launched at the 2007 United Nations Cli- ect constitute the baseline against which mate Change Conference in Bali, Indonesia additionality is measured. The creation and to negotiate long-term cooperative action 353 354 G LO S S A RY 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 they remove carbon dioxide through climate-projection models or data analyses. photosynthesis. Dynamic downscaling uses high resolution models for a particular region run within a Clean Development Mechanism (CDM): large-scale global model; statistical down- A mechanism under the Kyoto Protocol scaling uses statistical relationships that through which developed countries may link the large-scale atmospheric variables finance greenhouse-gas emission reduction with local or regional climate variables. or removal projects in developing coun- tries, and thereby receive credits for doing Early warning system: A mechanism to so which they may apply towards meeting generate and disseminate timely and mean- mandatory limits on their own emissions. ingful warning information to enable indi- The CDM allows greenhouse gas emission viduals, communities and organizations reduction projects to take place in countries threatened by a hazard to prepare and to that are signatories but have no emission act appropriately and in sufficient time to targets under the Kyoto Protocol. reduce the possibility of harm or loss. Climate sensitivity: The change in global Ecosystem services: The ecosystem pro- mean surface temperature in response to cesses or functions that have value to a doubling of the atmospheric CO2e con- individuals or society, for example, the centration. A key parameter for translat- provision of food, water purification, and ing projected emissions into projections of recreational opportunities. warming and thus impacts. Evapotranspiration: An important part of Consumptive use of water: Water removed the water cycle, it is the combined process from available supplies without return to a of evaporation from the Earth's surface water resources system (for example, water (from sources such as the soil and bodies used in manufacturing, agriculture, and of water) and transpiration from vegetation food preparation that is not returned to a (loss of water as vapor from plants, primar- stream, river, or water treatment plant). ily through their leaves). Coping capacity: The ability of people, Forest degradation: The reduction in forest organizations and systems, using avail- biomass through unsustainable harvest or able skills and resources, to face and man- land-use practices including logging, fi re, age adverse conditions, emergencies or and other anthropogenic disturbances. disasters. Refers to short-term capacity Geoengineering: Geoengineering is the in response to an event, whereas adaptive large-scale engineering of our environment capacity refers to the long-term ability to to combat or to counteract the effects of cli- make systematic changes to reduce the mate change. Proposed measures include impact of climate change. injecting particles into the upper atmo- Damage function: In the climate change sphere to reflect sunlight and the fertiliza- context, the relation between changes in tion of the oceans with iron to increase the climate and reductions in production or uptake of CO2 by algae. consumption, or losses of assets (potentially Gini coefficient: A commonly used mea- including ecosystems or human health). sure of inequality of income or wealth Deadweight loss: A cost that generates no distribution, varying between 0 (perfect benefit. equality) and 1. Discount rate: The rate at which individu- Green tax: A tax that aims to increase envi- als or enterprises trade off present versus ronmental quality by taxing actions which future consumption or wellbeing, usually harm the environment. expressed as a percentage. Greenhouse gas (GHG): Any of the atmo- Downscaling: A method that derives spheric gases that cause climate change local- to regional-scale (10 to 100 km) by trapping heat from the sun in Earth's information from larger-scale (200+ km) atmosphere--producing the greenhouse 356 G LO S S A RY 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 variability and extremes. Vulnerability is a on the realization of pre-agreed values of an function of the character, magnitude, and index of a specific weather parameter, mea- rate of climate change and variability to sured over a pre-specified period of time, at which a system is exposed, as well as the a particular weather station. The insurance system's sensitivity and adaptive capacity. can be structured to protect against index realizations that are either so high or so low Weather derivatives: Financial instru- that they are expected to cause crop losses. ments to reduce risk associated with adverse The indemnity is calculated based on a pre- weather conditions by, for example, provid- agreed sum insured per unit of the index ing for payments associated with a specified (e.g. US$/millimeter of rainfall). weather event (such as an unusually cool or hot month of August). Win-win-(win): In the Report, this refers to measures that are beneficial for adapta- Weather-index insurance: Insurance tion and mitigation (and development). where the indemnity (or payout) is based Selected Indicators Table A1 Energy-related emissions and carbon intensity Table A2 Land-based emissions Table A3 Total primary energy supply Table A4 Natural disasters Table A5 Land, water, and agriculture Table A6 Wealth of nations Table A7 Innovation, research, and development Sources and definitions Selected world development indicators Introduction Classification of economies by region and income, FY2010 Table 1 Key indicators of development Table 2 Millennium Development Goals: eradicating poverty and improving lives Table 3 Economic activity Table 4 Trade, aid, and finance Table 5 Key indicators for other economies Technical notes 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 1990­2005 a 1990 2005 2005 1850­2005 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 1992­2006. 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 1992­2006. 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 A2 Land-based emissions Table A2a CO2 emissions from deforestation Annual average Total emissions Per capita Average share of total Metric tons (millions) Rank Metric tons Rank % 1990­2005 a 1990­2005 a 1990­2005 a 1990­2005 a 1990­2005 a Argentina 33 25 0.9 48 0.6 Bolivia 139 7 15.2 1 2.5 Brazil 1,830 1 9.8 5 32.4 Cambodia 84 10 6.0 13 1.5 Cameroon 70 12 3.9 18 1.2 Canada 70 12 2.2 29 1.2 China 57 18 0.0 83 1.0 Congo, Dem. Rep. of 176 4 3.0 24 3.1 Ecuador 84 10 6.5 12 1.5 Guatemala 62 16 4.9 17 1.1 Honduras 48 20 7.0 10 0.8 Indonesia 1,459 2 6.6 11 25.9 Malaysia 139 7 5.4 15 2.5 Mexico 40 23 0.4 63 0.7 Myanmar 158 5 3.3 20 2.8 Nigeria 158 5 1.1 40 2.8 Papua New Guinea 44 21 7.2 8 0.8 Peru 70 12 2.6 27 1.2 Philippines 70 12 0.8 50 1.2 Russian Federation 58 17 0.4 61 1.0 Tanzania 51 19 1.3 35 0.9 Turkey 34 24 0.5 58 0.6 Venezuela, R. B. de 187 3 7.0 9 3.3 Zambia 106 9 9.3 6 1.9 Zimbabwe 40 22 3.1 22 0.7 a. Data are an average for the period 1990­2005. Table A2b Non-CO2 emissions (Methane (CH4), Nitrous Oxide (N2O)) from agriculture Annual total Share of total Per capita Metric tons of CO 2 equivalent (millions) % Metric tons of CO 2 equivalent Rank 1990 2005 2005 1990 2005 1990 2005 Argentina 114 139 2.3 3.5 3.6 6 7 Australia 97 110 1.8 5.7 5.4 4 4 Bangladesh 60 80 1.3 0.5 0.5 77 70 Bolivia 22 46 0.8 3.3 5.0 7 5 Brazil 426 591 9.7 2.9 3.2 8 8 Canada 57 73 1.2 2.1 2.3 15 10 China 905 1,113 18.3 0.8 0.9 62 48 Colombia 61 89 1.5 1.8 2.1 19 11 Congo, Dem. Rep. of 36 75 1.2 0.9 1.3 53 21 Ethiopia 39 55 0.9 0.8 0.7 60 58 France 110 103 1.7 1.9 1.7 18 15 Germany 110 84 1.4 1.4 1.0 32 37 India 330 403 6.6 0.4 0.4 84 83 Indonesia 106 132 2.2 0.6 0.6 73 66 Mexico 67 77 1.3 0.8 0.7 61 57 Myanmar 50 78 1.3 1.2 1.6 38 16 Nigeria 75 115 1.9 0.8 0.8 63 52 Pakistan 58 79 1.3 0.5 0.5 76 73 Russian Federation 222 118 1.9 1.5 0.8 25 50 Thailand 79 89 1.5 1.4 1.4 27 18 Turkey 80 76 1.3 1.4 1.1 29 31 United Kingdom 54 48 0.8 0.9 0.8 57 54 United States 427 442 7.3 1.7 1.5 20 17 Venezuela, R. B. de 47 52 0.9 2.4 1.9 11 12 Vietnam 48 65 1.1 0.7 0.8 67 55 364 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 Table A3 Total primary energy supply Total primary energy supply (TPES) Electricity consumption Share of renewable energy Share of fossil fuels in TPES in TPES Share of nuclear in Electrifi cation Annual total % of total % of total TPES Per capita rate 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 1990­2006 2000­2006 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 Total primary energy supply (TPES) Electricity consumption Share of renewable energy Share of fossil fuels in TPES in TPES Share of nuclear in Electrifi cation Annual total % of total % of total TPES Per capita rate 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 1990­2006 a 2000­2006 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 Table A4 Natural disasters Mortality People affected Economic losses Population in Area in Floods and Floods and Share of Floods and Largest per low-elevation low-elevation Droughts storms Droughts storms population Droughts storms event loss Coastline coastal zones coastal zones Number of people Number of people (thousands) % $ (thousands) % of GDP kilometers % % a a a a a a a b 1971­2008 1971­2008 1971­2008 1971­2008 1971­2008 1971­2008 1971­2008 1961­2008 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 1971­2008. b. Denotes largest per-event loss in the period 1961­2008. c. Data prior to 1990 are based on detailed EM-DAT disaster information in Yugoslavia, Czechoslovakia, and the Soviet Union. Selected indicators 367 Table A5 Land, water, and agriculture Projected physical impacts by 2050 Projected agricultural impacts Share Aquaculture Change in Change in heat Precipitation Agricultural Agricultural Arable land irrigated land production temperature wave duration Precipitation intensity output yield hectares number (millions) % of cropland $ (millions) °C of days % change % change a a 2005 2003 2007 2000­2050 2000­2050 2000­2050 2000­2050 2000­2080 a 2000­2050 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 Table A6 Wealth of nations Produced Non-timber capital and Intangible Natural Protected forest Timber Subsoil Total wealth urban land capital capital Pastureland Cropland areas resources resources assets $ 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 Table A7 Innovation, research, and development Research and Availability Firm-level development Researchers Triadic patent Knowledge of latest technology expenditure in R&D families Economy Index technologies absorption per million per million % of GDP people people Index Index Index 2005­2006 a 2005­2006 a 2005 2008 2008­2009 a 2007­2009 a Austria 2.4 3,473 39.7 8.9 6.2 6.2 Belgium 1.9 3,188 34.4 8.7 6.1 5.5 Canada 2.0 .. 24.0 9.2 6.2 5.6 China 1.3 .. 0.3 4.4 4.2 5.1 Czech Republic 1.4 2,371 .. 7.8 5.1 5.4 Denmark 2.5 5,202 42.2 9.6 6.5 6.2 Estonia 0.9 2,478 .. 8.3 5.8 5.5 Finland 3.5 7,545 53.0 9.4 6.6 6.1 France 2.1 3,353 39.4 8.5 6.2 5.6 Germany 2.5 3,359 76.4 8.9 6.2 6.0 Greece 0.5 1,744 .. 7.4 4.7 4.4 Hungary 0.9 1,574 4.1 7.9 4.7 4.7 Iceland 2.8 7,287 .. 8.9 6.7 6.6 India .. .. 0.1 3.1 5.2 5.5 Ireland 1.3 2,797 15.0 8.9 5.5 5.5 Israel 4.5 .. 60.3 8.2 6.1 6.0 Italy 1.1 1,407 12.3 7.9 4.7 4.6 Japan 3.3 5,512 117.2 8.6 6.2 6.3 Korea, Rep. of 3.0 3,756 58.4 7.7 5.8 5.8 Kuwait .. 74 .. 6.0 5.4 5.5 Lithuania 0.8 2,230 .. 7.7 5.0 5.0 Luxembourg 1.6 4,877 50.5 8.7 5.7 5.5 Macedonia, FYR 0.2 547 .. 5.3 3.6 3.4 Netherlands 1.7 2,477 66.9 9.3 6.2 5.5 New Zealand 1.2 4,207 15.3 8.9 .. 5.5 Norway 1.5 4,668 25.6 9.3 6.4 6.1 Poland 0.1 1,627 .. 7.4 4.4 4.7 Portugal .. 2,007 .. 7.5 5.7 5.4 Russian Federation 1.1 3,227 0.4 5.4 3.9 4.1 Singapore 2.4 5,497 24.3 8.2 6.2 6.0 Slovak Republic 0.5 2,027 .. 7.3 5.1 5.4 Slovenia 1.5 2,627 .. 8.3 5.1 4.9 South Africa 0.9 361 0.6 5.6 5.4 5.5 Spain 1.1 2,528 4.5 8.2 5.2 5.0 Sweden 3.9 6,095 81.0 9.5 6.6 6.2 Switzerland .. .. 107.6 9.2 6.4 6.2 Tunisia 1.0 1,450 .. 4.7 5.4 5.4 Ukraine 1.0 .. .. 5.8 4.2 4.5 United Kingdom 1.8 2,995 27.4 9.1 6.2 5.6 United States 2.6 4,651 53.1 9.1 6.5 6.3 Note: The 40 countries shown in the table were chosen based on availability of data for at least four out of six variables. a. Data are for the most recent year available. 370 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 Definitions and notes Table A1 Energy-related emissions Column Indicator Notes Carbon dioxide emissions 1, 2 annual total Total CO2 emissions from the energy sector, including electricity and heat production, manufacturing and (million metric tons) construction, gas flaring, transportation, and other industries from WRI (2008). Emissions from industrial processes (primarily cement production) that amount to approximately 4% of global energy-related CO2 emissions are not included. Annual CO2 emissions in 2005 were used to truncate the table to the 65 economies that account for 96% of annual global CO2 emissions in the energy sector. Aggregates are based on full 210-country list. 2, 3 change Percentage change in energy-related CO2 emissions between 1990 (base year) and 2005. (%) 4, 5 per capita Annual emissions divided by midyear population (World Bank 2009) expressed in tons of CO2 per person. (metric tons) 6 share of world total Share of world's total energy-related CO2 emissions attributed to a given country, income group, or region. (%) 7 cumulative since 1850 Cumulative CO2 emissions between 1850 and 2005 from DOE (2009). Sources of emissions include (billion metric tons) combustion of solid, liquid, and gaseous fuels, as well as cement production and gas flaring. For historical consistency, data on fuel-production was used rather than fuel consumption. CO2 emissions do not include emissions from waste, agriculture, land-use change, or bunker fuels used in international transportation. Cumulative emissions are based on data availability--data coverage for the majority of the largest 25 emitters starts in 1850 and for smaller countries and island nations starts between 1900 and 1950. 8, 9 Annual total non-CO2 Total methane (CH4) and nitrous oxide (N2O) emissions in CO2 equivalent from the energy sector based emissions on WRI (2008). This indicator includes emissions from biomass combustion, oil and natural gas systems, (million tons of CO2 equivalent) coal mining and other stationary and mobile sources. CO2 equivalent expresses the quantity of a mixture of greenhouse gases in terms of the quantity of CO2 that would produce the same amount of warming as would the mixture of gases (see Glossary). 10, 11 Carbon intensity of energy The ratio of carbon dioxide emissions to energy production. This ratio measures the greenness of energy (metric tons of CO2 per ton of production and is expressed in tons of CO2 (WRI 2008) per ton of oil equivalents (IEA 2008a, 2008b). oil equivalent) 12, 13 Carbon intensity of income The ratio of carbon dioxide emissions to gross domestic product. This measure is an indicator of the (metric tons of CO2 per greenness of the economy and is expressed in tons of CO2 per 1000 PPP dollars of GDP. Emissions are from thousand PPP $ of GDP) WRI (2008), GDP data is from World Bank (2009). Table A2 Land-based emissions Table A2.a CO2 emissions from deforestation Column Indicator Notes 1, 2 Annual average CO2 emissions CO2 emission estimates due to deforestation are based on Houghton (2009) and are derived from estimates (million metric tons) and rank of tropical forest cover change by the 2005 UN Forest Resources Assessment (FAO 2005). Estimates of CO2 emissions from deforestation vary across time and also as a result of uncertain data: There is variation among estimates of deforestation rates and estimates of carbon stocks in the forests converted to other uses. To account for year-to-year trends and measurement uncertainty, the numbers reported here are based on average annual emissions between 1990 and 2005. The 25 largest contributors to CO2 emissions from deforestation in 2005, shown in the table, account for approximately 95% of the world total. Net deforestation from high-income countries is estimated to be close to zero or slightly negative. The rank is based on the average annual emission for the period 1990-2005. 3, 4 Per capita CO2 emissions Annual average emissions from deforestation divided by midyear population expressed in tons of CO2 per (metric tons) and rank person. Population numbers are from World Bank (2009). The ranking of per capita emissions is based on 186 countries (see chapter 1, Figure 1.1). 5 Average share of world total Share of CO2 emissions based on average annual emissions between 1990 and 2005 as a percentage of (%) global emissions due to deforestation. Selected indicators 371 Table A2.b Non-CO2 emissions from agriculture Column Indicator Notes 1, 2 Annual emissions Total methane and nitrous oxide emissions from the agriculture sector measured in CO2 equivalent from (million metric tons of CO2 WRI (2008). CO2 equivalent expresses the quantity of a mixture of greenhouse gases in terms of the quantity equivalent) of CO2 that would produce the same amount of warming as would the mixture of gases (see Glossary). Emissions in the agricultural sector result primarily from rice cultivation, agricultural soils, manure management and enteric fermentation (belching) from livestock. Consistent with IPCC categories for carbon sources and sinks, CO2 associated with fuel combustion in the agricultural sector is included under the energy, not the agricultural sector. The 25 largest contributors to agricultural emissions shown in the table account for approximately 70 percent of the global total. 3 Share of world total (%) Share of world's total emissions from the agriculture sector attributed to a given country or a region. 4­7 Per capita emissions (million Annual emissions from the agriculture sector divided by midyear population in 1990 and 2005 (World Bank metric tons of CO2 equivalent) 2009) expressed in tons of CO2 equivalent per person. Per capita emissions rank is based on the full set of and rank more than 200 countries. Table A3 Total primary energy supply Column Indicator Notes 1, 2 Annual total primary energy Total primary energy supply (TPES) is a measure of commercial energy consumption. TPES is the sum of supply (million metric tons of indigenous production, imports, and stock changes, minus exports and international marine bunkers. A oil equivalent) lower share of fossil fuels and higher share of renewable sources in TPES is an indicator of countries' path toward a green economy. Data for 135 OECD and non-OECD countries are from IEA (2008a) and IEA (2008b), respectively. 3­5 Share of fossil fuels in TPES Share of total primary energy derived from fossil fuels, including coal, oil, and natural gas. Share of (%) coal includes coal and coal products (IEA 2008a, 2008b). Share of oil includes crude, natural gas liquids, feedstocks, and petroleum products. Share of natural gas includes natural gas only. 6, 7 Share of renewable energy Share of total primary energy derived from hydropower, solar, wind, geothermal, biomass, and waste (IEA in TPES 2008a, 2008b). Biomass, also referred to as traditional fuel, is comprised of animal and plant materials (%) (wood, vegetal waste, ethanol, animal materials/wastes, and sulphite lyes). Waste is comprised of municipal waste (wastes produced by the residential, commercial, and public service sectors that are collected by local authorities for disposal in a central location for the production of heat and/or power) and industrial waste. 8 Share of nuclear in TPES Share of total energy derived from nuclear power (IEA 2008a, 2008b). (%) 9, 10 Electricity consumption per Electricity consumption per capita measures the average kilowatt-hours (kWh) of electrical power capita generated per person in a particular country or region from IEA (2008c) and IEA (2008d). It includes public (kilowatt-hours) and private electricity plants, and combined heat and power plants as well as production by nuclear and hydro (excluding pumped storage production), geothermal, hydro, wind, solar, and other renewables. Electricity produced by heat from chemical processes is not included here. Electricity consumption equals the sum of production and imports minus exports and distribution losses. 11 Electrification rate The share of population with access to electricity between 2000 and 2006 from IEA (2002, 2006). (%) 372 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 Table A4 Natural disasters Column Indicator Notes 1, 2 Mortality Number of people confirmed as dead and persons missing and presumed dead (official figures when (number of people) available) during a disaster event (includes droughts, floods, and storms) based on CRED (2009). Numbers are annual averages for the period from 1971­2008. 3­5 People affected People injured, homeless and requiring immediate assistance during a disaster (includes droughts, floods, (thousands of people) and storms); it can also include displaced or evacuated people based on CRED (2009). Numbers are annual averages for the period from 1971­2008. 6, 7 Economic losses Estimated damage cause by the disaster event in $ based on CRED (2009). Numbers are annual average (thousands of $) damages for the period from 1971­2008. 8 Largest per-event loss Estimates of total damage caused by the single largest loss due to a slow or fast onset event between (% of GDP) 1961 and 2008 (Mechler and others 2009). The table lists economies that had a at least one per-event loss exceeding 0.8% of GDP during this period. Event type includes droughts, floods, storms, cold waves and forest fires. The largest per-event loss is defined as the total loss from an event expressed in $ (CRED 2009) divided by the total GDP (World Bank 2009). 9 Coastline (kilometers) The total length of the boundary between the land area (including islands) and the sea from CIA (2009). 10 Population in low-elevation Share of total population living in low-elevation coastal zones (defined as land areas contiguous with the coastal zones (%) coast and 10 meters or less in elevation) from CIESIN (2006). 11 Area in low-elevation coastal Share of total area in low-elevation coastal zones (defined as land areas contiguous with the coast and 10 zones (%) meters or less in elevation) from CIESIN (2006). Table A5 Land, water and projected impacts of climate change Column Indicator Notes 1 Arable land Arable land is land fit for cultivation of crops that are replanted after each harvest like wheat, maize, and (million hectares) rice. From World Bank (2009). 2 Share of irrigated land Share of total cropland under irrigation from World Bank (2009). (% of cropland) 3 Aquaculture production Aquaculture production includes farming of aquatic organisms including fish, molluscs, crustaceans, (millions $) and aquatic plants in brackish water, freshwater, or marine environment; both in inland waters and marine areas. Aquaculture production specifically refers to output from aquaculture activities, which are designated for final harvest for consumption. Data is from FAO (2009). 4­7 Projected physical impacts Projected physical impacts of climate change by the middle of the 21st century. Selected indicators include change in average annual temperature, change in precipitation and precipitation intensity, and change in heat wave duration. These projections estimates represent an ensemble mean of 19 general circulation models used for the IPCC Fourth Assessment (IPCC 2007). The changes are estimated for the future time period 2030­2049 relative to 1980­1999. Indicators are spatially-weighted averages for each country. 8, 9 Projected agricultural impacts Percentage change in agricultural output (defined as revenue per hectare) between 2000 and 2080 based on "preferred estimates" from Cline (2007). Impacts in agricultural yield are defined as an average percentage change in crop yields between 2000 and 2050 for wheat, rice, maize, millet, field pea, sugar beet, sweet potato, soybean, groundnut, sunflower, and rapeseed based on Müller and others (2009). Selected indicators 373 Table A6 Wealth of nations Column Indicator Notes 1 Total wealth The aggregate wealth nations have produced in the past, reflecting the value of all goods, resources, and ($ per capita) services, including natural, produced, and intangible capital. Sub-categories of natural capital include forest, soil, and agricultural resources, which are indicative of a country's reliance on natural resources and vulnerability to climate change. All indicators are expressed in per capita US$ value obtained after dividing the total value by midyear population (World Bank 2005). 2 Produced capital Produced capital includes machinery, equipment, and structures and urban land. ($ per capita) 3 Intangible capital Intangible capital includes raw labor, human capital, social capital, and other factors such as the quality of ($ per capita) institutions. It is calculated as a residual, the difference between total wealth and the sum of produce and natural capital. 4 Natural capital Natural capital includes energy resources (oil, natural gas, hard coal, and lignite), mineral resources ($ per capita) (bauxite, copper, gold, iron, lead, nickel, phosphate, silver, tin, and zinc), timber resources, nontimber forest resources, cropland, pastureland, and protected areas. 5 Pastureland Natural capital associated with pastureland reflects the annual value of pastureland for production ($ per capita) of goods. Returns to pastureland are assumed to be 45 percent of output value, which is based on the production of beef, lamb, milk, and wool valued at international prices. 6 Cropland Natural capital associated with cropland reflects the annual value of agricultural production based on ($ per capita) available cropland. Return to cropland is computed as the difference between the market value of crops and crop-specific production costs. 7 Protected areas Natural capital associated with protected area reflects the annual value of benefits associated with ($ per capita) protected areas including recreational value, tourism and other existence values. 8 Nontimber forest resources Nontimber forest benefits include minor forest products, hunting, recreation, and watershed protection. ($ per capita) Annual benefits were derived assuming that one-tenth of the forest area in each country is accessible with benefits ranging from $190 per hectare in developed countries to $145 per hectare in developing countries. 9 Timber resources Timber resources are based on coniferous and non-coniferous roundwood (wood in the rough) production. ($ per capita) Since market values are used to estimate the value of standing timber a distinction is made between forests available and forests not available for wood supply. The area of forest available for wood supply is defined as within 50 kilometers of infrastructure. 10 Subsoil assets Subsoil assets are proven reserves of mineral deposits located on or below the earth's surface that are ($ per capita) economically exploitable, given current technology and relative prices. Table A7 Innovation, research, and development Column Indicator Notes 1 Research and development Expenditures for research and development (R&D) are current and capital expenditures (both public expenditure and private) on creative work undertaken systematically to increase knowledge, including knowledge of (% of GDP) humanity, culture, and society, and the use of knowledge for new applications. R&D covers basic research, applied research, and experimental development. Share of R&D expenditures is total R&D expenditures divided by GDP for a given year. Data are from the World Bank. 2 Researchers in R&D Number of researchers in R&D is expressed as a number per million people. (per million people) 3 Triadic patent families Defined as a set of patents, for a single invention, granted by the European Patent Office, the Japan Patent (per million people) Office, and the United States Patent and Trademark Office. It is a good indicator of the number of patents filed and patents per capita (OECD 2008). 4 Knowledge Economy Index Knowledge Economy Index (World Bank 2008) is an aggregate index based on the World Bank Knowledge Assessment Methodology 2008 (KAM) and represents the overall preparedness of a country or region for the knowledge economy. The KEI is constructed as the simple average of 4 sub-indexes, which represent the following 4 pillars of the knowledge economy: (1) Economic Incentive and Institutional Regime, (2) Education and Training, (3) Innovation and Technological Adoption, and (4) Information and Communications Technologies Infrastructure. 5 Availability of latest Index defining the availability of latest technologies in the country. The index ranges between 1 technologies (technologies are not widely available and used) and 7 (technologies are widely available and used). For a full list of countries see the World Economic Forum (2009). 6 Firm-level technology Index defining the country's capacity to absorb new technologies. It ranges between 1 (not able to absorb absorption index technology) and 7 (aggressive in absorbing new technology). For a full list of countries see the World Economic Forum (2009). 374 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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. References OECD. 2008. Compendium of Patent Statistics 2008. Paris: Organi- CIA. 2009. "The World Factbook 2009." Washington, DC: Central sation for Economic Co-operation and Development. Intelligence Agency. Available at https://www.cia.gov/library/ ------. 2009. "OECD Science and Technology Database - Main publications/the-world-factbook/index.html (accessed July Science and Technology Indicators." Paris, Organisation for Eco- 2009). nomic Co-operation and Development. Available at http://www CIESIN. 2006. "Low Elevation Coastal Zone (LECZ) Urban-Rural .sourceoecd.org (accessed July 2009). Estimates, Global Rural-Urban Mapping Project (GRUMP), World Bank. 2005. Where is the Wealth of Nations? Measuring Cap- Alpha Version." Palisades, NY: Socioeconomic Data and Applica- ital for the 21st Century. Washington, DC: World Bank. tions Center (SEDAC), Columbia University. Available at http:// sedac.ciesin.columbia.edu/gpw/lecz (accessed July 2009). ------. 2008. "Knowledge Assessment Methodology - Knowledge Economy Index (KEI)." Washington, DC: World Bank. Avail- Cline, W. R. 2007. Global Warming and Agriculture: Impact Esti- able at http://info.worldbank.org/etools/kam2/KAM_page5.asp mates by Country. Washington, DC: Center for Global Develop- (accessed August 2009). ment and Peterson Institute for International Economics. ------. 2009. World Development Indicators 2009. Washington, CRED. 2008. "EM-DAT: The OFDA/CRED International Emer- DC: World Bank. gency Disaster Database." Brussels, Belgium: Centre for Research on the Epidemiology of Disasters (CRED), Université World Economic Forum. 2009. Global Information Technol- Catholique de Louvain - Ecole de Santé Publique. ogy Report 2008­2009. Geneva, Switzerland: World Economic Forum. DOE (U.S. Department of Energy). 2009. "Carbon Dioxide Infor- mation Analysis Center (CDIAC)." DOE, Oak Ridge, TN. WRI. 2008. "Climate Analysis Indicators Tool (CAIT)." Washing- ton, DC: World Resources Institute. FAO. 2009. "Global Aquaculture Production 1950­2007." Rome, Italy: UN Food and Agriculture Organization Fisheries and Aquaculture Department. Available at http://www.fao.org/ fishery/statistics/global-aquaculture-production/query/en (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 and upper-middle-income economies. The classification of Technical notes economies based on per capita income occurs annually, so Because data quality and intercountry comparisons are the country composition of the income groups may change often problematic, readers are encouraged to consult the annually. When these changes in classification are made Technical notes, the table on Classification of Economies by based on the most recent estimates, aggregates based on the Region and Income, and the footnotes to the tables. For new income classifications are recalculated for all past peri- more extensive documentation, see World Development ods to ensure that a consistent time series is maintained. Indicators 2009. See the table on classification of economies at the end of this volume for a list of economies in each group (including Symbols those with populations of less than 3 million). .. means that data are not available or that aggregates can- Summary measures are either totals (indicated by t if not be calculated because of missing data in the years the aggregates include estimates for missing data and non- shown. reporting countries or by an s for simple sums of the data available), weighted averages (w), or median values (m) 0 or 0.0 means zero or small enough that the number calculated for groups of economies. Data for the countries would round to zero at the displayed number of decimal excluded from the main tables (those presented in table 6) places. have been included in the summary measures, where data / in dates, as in 2003/04, means that the period of time, usu- are available, or by assuming that they follow the trend of ally 12 months, straddles two calendar years and refers to reporting countries. This gives a more consistent aggregated a crop year, a survey year, or a fiscal year. measure by standardizing country coverage for each period $ means current U.S. dollars unless otherwise noted. shown. Where missing information accounts for a third or > means more than. more of the overall estimate, however, the group measure is < means less than. reported as not available. The section on Statistical meth- ods in the Technical notes provides further information on Data presentation conventions aggregation methods. Weights used to construct the aggre- · A blank means not applicable or, for an aggregate, not gates are listed in the technical notes for each table. analytically meaningful. · A billion is 1,000 million. Terminology and country coverage · A trillion is 1,000 billion. The term country does not imply political independence but may refer to any territory for which authorities report sepa- · Figures in italics refer to years or periods other than those specified or to growth rates calculated for less than the rate social or economic statistics. Data are shown for econo- full period specified. mies as they were constituted in 2008, and historical data are revised to reflect current political arrangements. Through- · Data for years that are more than three years from the range shown are footnoted. out the tables, exceptions are noted. Unless otherwise noted, data for China do not include data for Hong Kong, China; Readers may find more information on the WDI 2009, and Macao, China; or Taiwan, China. Data for Indonesia include orders can be made online, by phone, or fax as follows: Timor-Leste through 1999 unless otherwise noted. Monte- For more information and to order online: http://www negro declared independence from Serbia and Montenegro .worldbank.org/data/wdi2009/index.htm. on June 3, 2006. When available, data for each country are shown separately. However, some indicators for Serbia con- To order by phone: 1-800-645-7247 or 703-661-1580; or by tinue to include data for Montenegro through 2005; these fax: 703-661-1501 data are footnoted in the tables. Moreover, data for most To order by mail: The World Bank, P.O. Box 960, Herndon, VA indicators from 1999 onward for Serbia exclude data for 20172-0960, U.S.A. Kosovo, which in 1999 became a territory under interna- tional administration pursuant to UN Security Council Resolution 1244 (1999); any exceptions are noted. Selected World Development Indicators 2010 377 Classification of economies by region and income, FY2010 East Asia and the Pacific Latin America and the Caribbean South Asia High-income OECD American Samoa UMC Argentina UMC Afghanistan LIC Australia Cambodia LIC Belize LMC Bangladesh LIC Austria China LMC Bolivia LMC Bhutan LMC Belgium Fiji UMC Brazil UMC India LMC Canada Indonesia LMC Chile UMC Maldives LMC Czech Republic Kiribati LMC Colombia UMC Nepal LIC Denmark Korea, Dem. People's Rep. LIC Costa Rica UMC Pakistan LMC Finland Lao PDR LIC Cuba UMC Sri Lanka LMC France Malaysia UMC Dominica UMC Germany Marshall Islands LMC Dominican Republic UMC Sub-Saharan Africa Greece Micronesia, Federated LMC Ecuador LMC Angola LMC Hungary States of LMC El Salvador LMC Benin LIC Iceland Mongolia LIC Grenada UMC Botswana UMC Ireland Myanmar UMC Guatemala LMC Burkina Faso LIC Italy Palau LMC Guyana LMC Burundi LIC Japan Papua New Guinea LMC Haiti LIC Cameroon LMC Korea, Rep. of Philippines LMC Honduras LMC Cape Verde LMC Luxembourg Samoa LMC Jamaica UMC Central African Republic LIC Netherlands Solomon Islands LMC Mexico UMC Chad LIC New Zealand Thailand LMC Nicaragua LMC Comoros LIC Norway Timor-Leste LMC Panama UMC Congo, Dem. Rep. of LIC Portugal Tonga LMC Paraguay LMC Congo, Rep. of LMC Slovak Republic Vanuatu LIC Peru UMC Côte d'Ivoire LMC Spain Vietnam St. Kitts and Nevis UMC Eritrea LIC Sweden St. Lucia UMC Ethiopia LIC Switzerland Europe and Central Asia LMC St. Vincent and the Grenadines UMC Gabon UMC United Kingdom Albania LMC Suriname UMC Gambia, The LIC United States Armenia LMC Uruguay UMC Ghana LIC Azerbaijan UMC Venezuela, R. B. de UMC Guinea LIC Other high income Belarus UMC Guinea-Bissau LIC Andorra Bosnia and Herzegovina UMC Middle East and North Africa Kenya LIC Antigua and Barbuda Bulgaria LMC Algeria UMC Lesotho LMC Aruba Georgia UMC Djibouti LMC Liberia LIC Bahamas, The Kazakhstan LMC Egypt, Arab Rep. of LMC Madagascar LIC Bahrain Kosovo LIC Iran, Islamic Rep. of LMC Malawi LIC Barbados Kyrgyz Republic UMC Iraq LMC Mali LIC Bermuda Latvia UMC Jordan LMC Mauritania LIC Brunei Darussalam Lithuania UMC Lebanon UMC Mauritius UMC Cayman Islands Macedonia, FYR LMC Libya UMC Mayotte UMC Channel Islands Moldova UMC Morocco LMC Mozambique LIC Croatia Montenegro UMC Syrian Arab Rep. LMC Namibia UMC Cyprus Poland UMC Tunisia LMC Niger LIC Equatorial Guinea Romania UMC West Bank and Gaza LMC Nigeria LMC Estonia Russian Federation UMC Yemen, Republic of LIC Rwanda LIC Faeroe Islands Serbia LIC São Tomé and Principe LMC French Polynesia Tajikistan UMC Senegal LIC Greenland Turkey LMC Seychelles UMC Guam Turkmenistan LMC Sierra Leone LIC Hong Kong, China Ukraine LIC Somalia LIC Isle of Man Uzbekistan South Africa UMC Israel Sudan LMC Kuwait Swaziland LMC Liechtenstein Tanzania LIC Macao, China Togo LIC Malta Uganda LIC Monaco Zambia LIC Netherlands Antilles Zimbabwe LIC New Caledonia Northern Mariana Islands Oman Puerto Rico Qatar San Marino Saudi Arabia Singapore Slovenia Taiwan, China Trinidad and Tobago United Arab Emirates Virgin Islands (U.S.) This table classifies all World Bank member economies and all other economies with populations of more than 30,000. Economies are divided among income groups according to 2008 GNI per capita, calculated using the World Bank Atlas method. The groups are low income (LIC), $975 or less; lower middle income (LMC), $976­3,855; upper middle income (UMC), $3,856­11,905; and high income, $11,906 or more. Source: World Bank data. 378 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 Table 1 Key indicators of development Gross national PPP gross national Population Gross Life expectancy Adult Population income (GNI) a income (GNI) b age domestic at birth literacy Average Density composition $ product rate annual % people % $ per $ $ per capita Male Female % ages 15 Millions growth per sq. km ages 0­14 billions capita billions per capita % growth Years Years and older 2008 2000­08 2008 2008 2008 2008 2008 2008 2007­08 2007 2007 2007 Afghanistan .. .. .. .. 9.8 ..c 30.6 d .. .. .. .. .. Albania 3 0.3 115 24 12.1 3,840 25.0 7,950 5.6 73 80 99 Algeria 34 1.5 14 28 146.4 4,260 272.8d 7,940d 1.5 71 74 75 Angola 18 2.9 14 45 62.1 3,450 90.5 5,020 11.8 45 49 .. Argentina 40 1.0 15 25 287.2 7,200 559.2 14,020 6.0 72 79 98 Armenia 3 0.0 109 21 10.3 3,350 19.4 6,310 6.6 70 77 99 Australia 21 1.4 3 19 862.5 40,350 727.5 34,040 1.9 79 84 .. Austria 8 0.5 101 15 386.0 46,260 314.5 37,680 1.5 77 83 .. Azerbaijan 9 0.9 105 25 33.2 3,830 67.4 7,770 9.6 64 71 100 Bangladesh 160 1.6 1,229 32 82.6 520 230.6 1,440 4.7 65 67 53 Belarus 10 ­0.4 47 15 52.1 5,380 117.6 12,150 10.2 65 76 100 Belgium 11 0.5 354 17 474.5 44,330 372.1 34,760 0.4 77 83 .. Benin 9 3.3 78 43 6.0 690 12.7 1,460 1.8 60 62 41 Bolivia 10 1.9 9 37 14.1 1,460 40.1 4,140 4.3 63 68 91 Bosnia and Herzegovina 4 0.3 74 16 17.0 4,510 32.5 8,620 6.2 72 78 .. Brazil 192 1.2 23 26 1,411.2 7,350 1,932.9 10,070 4.1 69 76 90 Bulgaria 8 ­0.7 70 13 41.8 5,490 91.1 11,950 6.5 69 76 98 Burkina Faso 15 3.1 56 46 7.3 480 17.6 1,160 1.5 51 54 29 Burundi 8 2.8 314 39 1.1 140 3.1 380 1.4 49 52 .. Cambodia 15 1.7 83 34 8.9 600 26.8 1,820 3.4 57 62 76 Cameroon 19 2.2 41 41 21.8 1,150 41.3 2,180 1.9 50 51 .. Canada 33 1.0 4 17 1,390.0 41,730 1,206.5 36,220 ­0.6 78 83 .. Central African Republic 4 1.7 7 41 1.8 410 3.2 730 0.9 43 46 .. Chad 11 3.4 9 46 5.9 530 12.9 1,160 ­3.1 49 52 32 Chile 17 1.0 22 23 157.5 9,400 222.4 13,270 2.2 75 82 97 China 1,326 0.6 142 21 3,899.3 2,940 7,984.0 6,020 8.4 71 75 93 Hong Kong, China 7 0.6 6,696 13 219.3 31,420 306.8 43,960 1.6 79 85 .. Colombia 45 1.4 40 30 207.4 4,660 379.1 8,510 1.3 69 77 93 Congo, Dem. Rep. of 64 3.0 28 47 9.8 150 18.4 290 3.2 45 48 .. Congo, Rep. of 4 2.2 11 41 7.1 1,970 11.2 3,090 3.7 53 55 .. Costa Rica 5 1.8 89 26 27.5 6,060 49.6d 10,950d 1.5 76 81 96 Côte d'Ivoire 21 2.2 65 41 20.3 980 32.6 1,580 ­0.1 56 59 .. Croatia 4 0.0 79 15 60.2 13,570 81.7 18,420 2.4 72 79 99 Czech Republic 10 0.2 135 14 173.2 16,600 237.6 22,790 2.3 74 80 .. Denmark 5 0.4 130 18 325.1 59,130 205.0 37,280 ­1.8 76 81 .. Dominican Republic 10 1.5 203 32 43.2 4,390 77.6d 7,890d 4.1 69 75 89 Ecuador 13 1.1 49 31 49.1 3,640 104.7 7,760 5.4 72 78 84 Egypt, Arab Rep. of 82 1.9 82 32 146.9 1,800 445.4 5,460 5.1 68 72 66 El Salvador 6 0.4 296 33 21.4 3,480 40.9d 6,670d 2.1 67 76 82 Eritrea 5 3.8 49 42 1.5 300 3.1d 630d ­1.2 56 60 .. Ethiopia 81 2.6 81 44 22.7 280 70.2 870 8.5 54 56 .. Finland 5 0.3 17 17 255.7 48,120 189.5 35,660 0.4 76 83 .. France 62 0.7 113 18 2,702.2e 42,250e 2,134.4 34,400 ­0.2 78 85 .. Georgia 4 ­1.0 63 17 10.8 2,470 21.2 4,850 2.8 67 75 .. Germany 82 0.0 236 14 3,485.7 42,440 2,952.4 35,940 1.5 77 82 .. Ghana 23 2.2 103 39 15.7 670 33.4 1,430 4.0 56 57 65 Greece 11 0.4 87 14 322.0 28,650 320.0 28,470 2.5 77 82 97 Guatemala 14 2.5 126 42 36.6 2,680 64.2d 4,690d 1.5 67 74 73 Guinea 10 2.0 40 43 3.7 390 11.7 1,190 6.0 56 60 .. Haiti 10 1.6 355 37 6.5 660 11.5d 1,180d ­0.5 59 63 .. Honduras 7 1.9 65 38 13.0 1,800 28.0d 3,870d 2.2 67 74 84 Hungary 10 ­0.2 112 15 128.6 12,810 178.6 17,790 0.8 69 77 99 India 1,140 1.4 383 32 1,215.5 1,070 3,374.9 2,960 5.7 63 66 66 Indonesia 228 1.3 126 27 458.2 2,010 875.1 3,830 4.9 69 73 92 Iran, Islamic Rep. of 72 1.5 44 24 251.5 3,540 769.7 10,840 4.2 69 73 82 Iraq .. .. .. .. .. ..f .. .. .. .. .. .. Ireland 4 2.0 65 21 221.2 49,590 166.6 37,350 ­4.4 77 82 .. Israel 7 1.9 338 28 180.5 24,700 200.6 27,450 2.3 79 83 .. Italy 60 0.6 204 14 2,109.1 35,240 1,810.6 30,250 ­1.8 79 84 99 Japan 128 0.1 350 13 4,879.2 38,210 4,497.7 35,220 ­0.7 79 86 .. Jordan 6 2.6 67 35 19.5 3,310 32.7 5,530 2.3 71 74 91 Kazakhstan 16 0.6 6 24 96.2 6,140 152.0 9,690 1.9 61 72 100 Kenya 39 2.6 68 43 29.5 770 60.9 1,580 0.9 53 55 .. Korea, Rep. of 49 0.4 492 17 1,046.3 21,530 1,366.9 28,120 1.9 76 82 .. Kyrgyz Republic 5 1.0 28 30 3.9 740 11.3 2,130 6.2 64 72 99 Lao PDR 6 1.7 27 38 4.7 750 12.8 2,060 5.6 63 66 73 Lebanon 4 1.2 405 26 26.3 6,350 45.0 10,880 6.9 70 74 90 Liberia 4 3.7 39 43 0.6 170 1.1 300 2.4 57 59 56 Libya 6 2.0 4 30 72.7 11,590 98.1d 15,630d 5.0 72 77 87 Lithuania 3 ­0.5 54 15 39.9 11,870 61.1 18,210 3.6 65 77 100 Madagascar 19 2.8 33 43 7.8 410 19.9 1,040 4.1 59 62 .. Malawi 14 2.6 152 46 4.1 290 11.9 830 7.0 48 48 72 Malaysia 27 1.9 82 30 188.1 6,970 370.8 13,740 2.9 72 77 92 Mali 13 3.0 10 44 7.4 580 13.9 1,090 1.9 52 57 26 Mauritania 3 2.8 3 40 2.6 840 6.3 2,000 ­0.6 62 66 56 Selected World Development Indicators 2010 379 Table 1 Key indicators of development Gross national PPP gross national Population Gross Life expectancy Adult Population income (GNI) a income (GNI) b age domestic at birth literacy Average Density composition $ product rate annual % people % $ per $ $ per capita Male Female % ages 15 Millions growth per sq. km ages 0­14 billions capita billions per capita % growth Years Years and older 2008 2000­08 2008 2008 2008 2008 2008 2008 2007­08 2007 2007 2007 Mexico 106 1.0 55 29 1,061.4 9,980 1,517.2 14,270 0.8 73 77 93 Moldova 4 ­1.5 111 17 5.3g 1,470g 11.7 3,210 8.2 65 72 99 Morocco 31 1.2 70 29 80.5 2,580 135.3 4,330 4.6 69 73 56 Mozambique 22 2.2 28 44 8.1 370 16.7 770 4.5 42 42 44 Myanmar 49 0.9 75 27 .. ..c 63.1 d 1,290 d 11.7 59 65 .. Nepal 29 2.0 200 37 11.5 400 32.1 1,120 3.6 63 64 57 Netherlands 16 0.4 485 18 824.6 50,150 685.1 41,670 1.7 78 82 .. New Zealand 4 1.3 16 21 119.3 27,940 107.1 25,090 ­2.5 78 82 .. Nicaragua 6 1.3 47 36 6.1 1,080 14.9d 2,620d 2.2 70 76 78 Niger 15 3.5 12 50 4.8 330 10.0 680 6.0 58 56 29 Nigeria 151 2.4 166 43 175.6 1,160 293.1 1,940 3.0 46 47 72 Norway 5 0.8 16 19 415.3 87,070 279.0 58,500 0.7 78 83 .. Pakistan 166 2.3 215 37 162.9 980 448.8 2,700 3.7 65 66 54 Panama 3 1.8 46 30 21.0 6,180 39.5d 11,650 7.5 73 78 93 Papua New Guinea 6 2.3 14 40 6.5 1,010 12.9d 2,000 3.7 55 60 58 Paraguay 6 1.9 16 34 13.6 2,180 30.0 4,820 4.0 70 74 95 Peru 29 1.3 23 31 115.0 3,990 230.0 7,980 8.6 71 76 90 Philippines 90 1.9 303 34 170.4 1,890 352.4 3,900 2.0 70 74 93 Poland 38 ­0.1 124 15 453.0 11,880 659.7 17,310 4.8 71 80 99 Portugal 11 0.5 116 15 218.4 20,560 234.6 22,080 ­0.2 75 82 95 Romania 22 ­0.5 94 15 170.6 7,930 290.3 13,500 9.4 69 76 98 Russian Federation 142 ­0.4 9 15 1,364.5 9,620 2,216.3 15,630 7.5 62 74 100 Rwanda 10 2.5 394 42 4.0 410 9.9 1,010 8.2 48 52 .. Saudi Arabia 25 2.2 11 33 374.3 15,500 554.4 22,950 2.1 71 75 85 Senegal 12 2.6 63 44 11.8 970 21.5 1,760 ­0.2 54 57 42 Serbia 7 ­0.3 83 18 41.9 5,710 81.9 11,150 6.1 71 76 .. Sierra Leone 6 3.4 78 43 1.8 320 4.2 750 2.4 46 49 38 Singapore 5 2.3 7,024 17 168.2 34,760 232.0 47,940 ­4.1 78 83 94 Slovak Republic 5 0.0 112 16 78.6 14,540 115.2 21,300 6.2 71 78 .. Somalia 9 3.0 14 45 .. ..c .. .. .. 47 49 .. South Africa 49 1.3 40 31 283.3 5,820 476.2 9,780 1.3 49 52 88 Spain 46 1.5 91 15 1,456.5 31,960 1,418.7 31,130 ­0.3 78 84 98 Sri Lanka 20 0.9 310 24 35.9 1,790 89.9 4,480 5.8 69 76 91 Sudan 41 2.1 17 40 46.5 1,130 79.8 1,930 5.9 56 60 .. Sweden 9 0.5 22 17 469.7 50,940 352.0 38,180 ­1.0 79 83 .. Switzerland 8 0.8 191 16 498.5 65,330 354.5 46,460 0.5 79 84 .. Syrian Arab Rep. 21 3.1 116 35 44.4 2,090 92.4 4,350 1.6 72 76 83 Tajikistan 7 1.3 49 38 4.1 600 12.7 1,860 6.2 64 69 100 Tanzania 42 2.7 48 45 18.4h 440h 52.1 1,230 4.4 55 56 72 Thailand 67 1.0 132 22 191.7 2,840 403.4 5,990 2.0 66 72 94 Togo 6 2.6 119 40 2.6 400 5.3 820 ­1.4 61 64 .. Tunisia 10 1.0 66 24 34.0 3,290 73.0 7,070 4.1 72 76 78 Turkey 74 1.3 96 27 690.7 9,340 1,017.6 13,770 2.5 69 74 89 Turkmenistan 5 1.4 11 30 14.3 2,840 31.2d 6,210d 8.4 59 68 100 Uganda 32 3.2 161 49 13.3 420 36.1 1,140 6.0 52 53 74 Ukraine 46 ­0.8 80 14 148.6 3,210 333.5 7,210 2.7 63 74 100 United Arab Emirates 4 4.0 54 19 .. ..i .. .. 5.7 77 81 90 United Kingdom 61 0.5 254 18 2,787.2 45,390 2,218.2 36,130 0.1 77 82 .. United States 304 0.9 33 20 14,466.1 47,580 14,282.7 46,970 0.2 75 81 .. Uruguay 3 0.1 19 23 27.5 8,260 41.8 12,540 8.6 72 80 98 Uzbekistan 27 1.3 64 30 24.7 910 72.6d 2,660d 7.2 64 70 .. Venezuela, R. B. de 28 1.7 32 30 257.8 9,230 358.6 12,830 3.1 71 77 95 Vietnam 86 1.3 278 27 77.0 890 232.9 2,700 4.7 72 76 .. West Bank and Gaza 4 3.4 638 45 .. ..f .. .. .. 72 75 94 Yemen, Republic of 23 3.0 44 44 21.9 950 50.9 2,210 0.9 61 64 59 Zambia 13 2.3 17 46 12.0 950 15.5 1,230 3.4 45 46 71 Zimbabwe 12 0.0 32 40 .. .. .. .. .. 43 44 91 World 6,692s 1.2w 52w 27w 57,637.5t 8,613w 69,309.0t 10,357w 0.8w 67w 71w 84w Low income 973 2.1 52 38 509.6 524 1,368.8 1,407 4.1 57 60 64 Middle income 4,651 1.1 60 27 15,159.6 3,260 28,619.5 6,154 5.0 67 71 83 Lower middle income 3,702 1.2 119 28 7,691.9 2,078 17,001.7 4,592 6.3 66 70 81 Upper middle income 948 0.8 21 25 7,471.9 7,878 11,663.5 12,297 3.8 68 75 93 Low and middle income 5,624 1.3 59 29 15,683.1 2,789 29,971.3 5,330 4.9 65 69 81 East Asia & Pacific 1,931 0.8 122 23 5,080.5 2,631 10,425.9 5,398 7.2 70 74 93 Europe & Central Asia 441 0.1 19 19 3,274.0 7,418 5,393.2 12,219 5.2 65 74 98 Latin America & 565 1.2 28 29 3,833.0 6,780 5,827.4 10,309 3.2 70 76 91 the Caribbean Middle East & North Africa 325 1.9 38 31 1,052.9 3,242 2,330.6 7,308 3.9 68 72 73 South Asia 1,543 1.6 323 33 1,521.6 986 4,217.6 2,734 5.3 63 66 63 Sub-Saharan Africa 818 2.5 35 43 885.3 1,082 1,628.3 1,991 2.5 51 53 62 High income 1,069 0.7 32 18 42,041.4 39,345 39,686.3 37,141 0.0 77 82 99 a. Calculated using the World Bank Atlas method. b. PPP is purchasing power parity; see Technical notes. c. Estimated to be low income ($975 or less). d.The estimate is based on regression; others are extrapolated from the latest International Comparison Program benchmark estimates. e. The GNI and GNI per capita estimates include the French overseas departments of French Guiana, Guadeloupe, Martinique, and Réunion. f. Estimated to be lower middle income ($976 to $3,855). g. Excludes data for Transnistria. h. Data refers to mainland Tanzania only. i. Estimated to be high income ($11,906 or more). 380 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 Population below national poverty line Population Poverty Population Poverty below gap at Population below gap at Population $1.25 $1.25 below $1.25 $1.25 below Survey National Survey National Survey a day a day $2 a day Survey a day a day $2 a day year % year % year % % % year % % % Afghanistan 2007 42.0 .. .. .. .. .. .. .. Albania 2002 25.4 2005 18.5 2002a <2.0 <0.5 8.7 2005a <2.0 <0.5 7.8 Algeria 1988 12.2 1995 22.6 1988a 6.6 1.8 23.8 1995a 6.8 1.4 23.6 Angola .. .. .. .. .. 2000a 54.3 29.9 70.2 Argentina 1998 28.8b 2002 53.0b 2002b,c 9.9 2.9 19.7 2005b,c 4.5 1.0 11.3 Armenia 1998­99 55.1 2001 50.9 2002a 15.0 3.1 46.7 2003a 10.6 1.9 43.4 Australia .. .. .. .. .. .. .. .. Austria .. .. .. .. .. .. .. .. Azerbaijan 1995 68.1 2001 49.6 2001a 6.3 1.1 27.1 2005a <2 <0.5 <2.0 Bangladesh 2000 48.9 2005 40.0 2000a 57.8d 17.3d 85.4d 2005a 49.6d 13.1d 81.3d Belarus 2002 30.5 2004 17.4 2002a <2.0 <0.5 <2.0 2005a <2.0 <0.5 <2.0 Belgium .. .. .. .. .. .. .. .. Benin 1999 29.0 2003 39.0 .. .. .. 2003a 47.3 15.7 75.3 Bolivia 1999 62.0 2002 64.6 2002c 22.8 12.4 34.2 2005a 19.6 9.7 30.3 Bosnia and 2001­02 19.5 .. 2001a <2.0 <0.5 <2.0 2004a <2.0 <0.5 <2.0 Herzegovina Brazil 1998 22.0 2002­03 21.5 2005c 7.8 1.6 18.3 2007c 5.2 1.3 12.7 Bulgaria 1997 36.0 2001 12.8 2001a 2.6 <0.5 7.8 2003a <2.0 <0.5 <2.0 Burkina Faso 1998 54.6 2003 46.4 1998a 70.0 30.2 87.6 2003a 56.5 20.3 81.2 Burundi 1998 68.0 .. 1998a 86.4 47.3 95.4 2006a 81.3 36.4 93.4 Cambodia 1994 47.0 2004 35.0 1993­94a,e 48.6 13.8 77.8 2004a 40.2 11.3 68.2 Cameroon 1996 53.3 2001 40.2 1996a 51.5 18.9 74.4 2001a 32.8 10.2 57.7 Canada .. .. .. .. .. .. .. .. Central African .. .. 1993a 82.8 57.0 90.7 2003a 62.4 28.3 81.9 Republic Chad 1995­96 43.4 .. .. .. .. 2002­03a 61.9 25.6 83.3 Chile 1996 19.9 1998 17.0 2003c <2.0 <0.5 5.3 2006c <2.0 <0.5 2.4 China 1998 4.6 2004 2.8 2002a 28.4f 8.7f 51.1f 2005a 15.9f 4.0f 36.3f Hong Kong, China .. .. .. .. .. .. .. .. Colombia 1995 60.0 1999 64.0 2003c 15.4 6.1 26.3 2006c 16.0 5.7 27.9 Congo, Dem. Rep. of 2004­05 71.3 .. .. .. .. 2005­06a 59.2 25.3 79.5 Congo, Rep. of 2005 42.3 .. .. .. .. 2005a 54.1 22.8 74.4 Costa Rica 1989 31.7 2004 23.9 2003c 5.6 2.4 11.5 2005c 2.4 <0.5 8.6 Côte d'Ivoire .. .. 1998a 24.1 6.7 49.1 2002a 23.3 6.8 46.8 Croatia 2002 11.2 2004 11.1 2001a <2.0 <0.5 <2.0 2005a <2.0 <0.5 <2.0 Czech Republic .. .. 1993c <2.0 <0.5 <2.0 1996c <2.0 <0.5 <2.0 Denmark .. .. .. .. .. .. .. .. Dominican Republic 2000 27.7 2004 42.2 2003c 6.1 1.5 16.3 2005c 5.0 0.9 15.1 Ecuador 1998 46.0 2001 45.2 2005c 9.8 3.2 20.4 2007c 4.7 1.2 12.8 Egypt, Arab Rep. of 1995­96 22.9 1999­2000 16.7 1999­2000a <2.0 <0.5 19.3 2004­05a <2.0 <0.5 18.4 El Salvador 1995 50.6 2002 37.2 2003c 14.3 6.7 25.3 2005c 11.0 4.8 20.5 Eritrea 1993­94 53.0 .. .. .. .. .. .. .. Ethiopia 1995­96 45.5 1999­2000 44.2 1999­2000a 55.6 16.2 86.4 2005a 39.0 9.6 77.5 Finland .. .. .. .. .. .. .. .. France .. .. .. .. .. .. .. .. Georgia 2002 52.1 2003 54.5 2002a 15.1 4.7 34.2 2005a 13.4 4.4 30.4 Germany .. .. .. .. .. .. .. .. a Ghana 1998­99 39.5 2005­06 28.5 1998­99 39.1 14.4 63.3 2006a 30.0 10.5 53.6 Greece .. .. .. .. .. .. .. .. Guatemala 1989 57.9 2000 56.2 2002c 16.9 6.5 29.8 2006c 11.7 3.5 24.3 Guinea 1994 40.0 .. 1994a 36.8 11.5 63.8 2002­03a 70.1 32.2 87.2 Haiti 1987 65.0 1995 66.0g .. .. .. 2001c 54.9 28.2 72.1 Honduras 1998­99 52.5 2004 50.7 2005c 22.2 10.2 34.8 2006c 18.2 8.2 29.7 Hungary 1993 14.5 1997 17.3 2002a <2.0 <0.5 <2.0 2004a <2.0 <0.5 <2.0 India 1993­94 36.0 1999­2000 28.6 1993­94a 49.4f 14.4f 81.7f 2004­05a 41.6f 10.8f 75.6f Indonesia 1996 17.6 2005 16.0 .. .. .. .. .. .. Iran, Islamic Rep. of .. .. 1998a <2.0 <0.5 8.3 2005a <2.0 <0.5 8.0 Iraq .. .. .. .. .. .. .. .. Ireland .. .. .. .. .. .. .. .. Israel .. .. .. .. .. .. .. .. Italy .. .. .. .. .. .. .. .. Japan .. .. .. .. .. .. .. .. Jordan 1997 21.3 2002 14.2 2002­03a <2.0 <0.5 11.0 2006a <2.0 <0.5 3.5 Kazakhstan 2001 17.6 2002 15.4 2002a 5.2 0.9 21.5 2003a 3.1 <0.5 17.2 Kenya 1994 40.0 1997 52.0 1997a 19.6 4.6 42.7 2005­06a 19.7 6.1 39.9 Korea, Rep. of .. .. .. .. .. .. .. .. Kyrgyz Republic 2003 49.9 2005 43.1 2002a 34.0 8.8 66.6 2004a 21.8 4.4 51.9 Lao PDR 1997­98 38.6 2002­03 33.0 1997­98a 49.3d 14.9d 79.9d 2002­03a 44.0d 12.1d 76.8d Lebanon .. .. .. .. .. .. .. .. Liberia .. .. .. .. .. 2007a 83.7 40.8 94.8 Libya .. .. .. .. .. .. .. .. a Lithuania .. .. 2002 <2.0 <0.5 <2.0 2004a <2.0 <0.5 <2.0 Madagascar 1997 73.3 1999 71.3 2001a 76.3 41.4 88.7 2005a 67.8 26.5 89.6 Malawi 1990­91 54.0 1997­98 65.3 1997­98a 83.1 46.0 93.5 2004­05a,h 73.9 32.3 90.4 Malaysia 1989 15.5 .. 1997c <2.0 <0.5 6.8 2004­05c <2.0 <0.5 7.8 Mali 1998 63.8 .. 2001a 61.2 25.8 82.0 2006a 51.4 18.8 77.1 Mauritania 1996 50.0 2000 46.3 1995­96a 23.4 7.1 48.3 2000a 21.2 5.7 44.1 Mexico 2002 20.3 2004 17.6 2004a 2.8 1.4 7.0 2006a <2.0 <0.5 4.8 Moldova 2001 62.4 2002 48.5 2002a 17.1 4.0 40.3 2004a 8.1 1.7 28.9 Morocco 1990­91 13.1 1998­99 19.0 2000a 6.3 0.9 24.3 2007a 2.5 0.5 14.0 Mozambique 1996­97 69.4 2002­03 54.1 1996­97a 81.3 42.0 92.9 2002­03a 74.7 35.4 90.0 Myanmar .. .. .. .. .. .. .. .. Selected World Development Indicators 2010 381 Table 2 Poverty National poverty line International poverty line Population below national poverty line Population Poverty Population Poverty below gap at Population below gap at Population $1.25 $1.25 below $1.25 $1.25 below Survey National Survey National Survey a day a day $2 a day Survey a day a day $2 a day year % year % year % % % year % % % Nepal 1995­96 41.8 2003­04 30.9 1995­96a 68.4 26.7 88.1 2003­04a 55.1 19.7 77.6 Netherlands .. .. .. .. .. .. .. .. New Zealand .. .. .. .. .. .. .. .. Nicaragua 1998 47.9 2001 45.8 2001c 19.4 6.7 37.5 2005c 15.8 5.2 31.8 Niger 1989­93 63.0 .. 1994a 78.2 38.6 91.5 2005a 65.9 28.1 85.6 Nigeria 1985 43.0 1992­93 34.1 1996­97a 68.5 32.1 86.4 2003­04a 64.4 29.6 83.9 Norway .. .. .. .. .. .. .. .. Pakistan 1993 28.6 1998­99 32.6 2001­02a 35.9 7.9 73.9 2004­05a 22.6 4.4 60.3 Panama 1997 37.3 .. 2004c 9.2 2.7 18.0 2006c 9.5 3.1 17.8 Papua New Guinea 1996 37.5 .. .. .. .. 1996a 35.8 12.3 57.4 Paraguay 1990 20.5i .. 2005c 9.3 3.4 18.4 2007c 6.5 2.7 14.2 Peru 2001 54.3 2004 53.1 2005c 8.2 2.0 19.4 2006c 7.9 1.9 18.5 Philippines 1994 32.1 1997 25.1 2003a 22.0 5.5 43.8 2006a 22.6 5.5 45.0 Poland 1996 14.6 2001 14.8 2002a <2.0 <0.5 <2.0 2005a <2.0 <0.5 <2.0 Portugal .. .. .. .. .. .. .. .. Romania 1995 25.4 2002 28.9 2002a 2.9 0.8 13.0 2005a <2.0 <0.5 3.4 Russian Federation 1998 31.4 2002 19.6 2002a <2.0 <0.5 3.7 2005a <2.0 <0.5 <2.0 Rwanda 1993 51.2 1999­2000 60.3 1984­85a 63.3 19.7 88.4 2000a 76.6 38.2 90.3 Saudi Arabia .. .. .. .. .. .. .. .. Senegal 1992 33.4 .. 2001a 44.2 14.3 71.3 2005a 33.5 10.8 60.3 Serbia .. .. .. .. .. .. .. .. a Sierra Leone 1989 82.8 2003­04 70.2 1989­90 62.8 44.8 75.0 2002­03a 53.4 20.3 76.1 Singapore .. .. .. .. .. .. .. .. c Slovak Republic 2004 16.8 .. 1992 <2.0 <0.5 <2.0 1996c <2.0 <0.5 <2.0 Somalia .. .. .. .. .. .. .. .. South Africa .. .. 1995a 21.4 5.2 39.9 2000a 26.2 8.2 42.9 Spain .. .. .. .. .. .. .. .. a Sri Lanka 1995­96 25.0 2002 22.7 1995­96 16.3 3.0 46.7 2002a 14.0 2.6 39.7 Sudan .. .. .. .. .. .. .. .. Sweden .. .. .. .. .. .. .. .. Switzerland .. .. .. .. .. .. .. .. Syrian Arab Rep. .. .. .. .. .. .. .. .. Tajikistan 1999 74.9 2003 44.4 2003a 36.3 10.3 68.8 2004a 21.5 5.1 50.8 Tanzania 1991 38.6 2000­01 35.7 1991­92a 72.6 29.7 91.3 2000­01a 88.5 46.8 96.6 Thailand 1994 9.8 1998 13.6 2002a <2.0 <0.5 15.1 2004a <2.0 <0.5 11.5 Togo 1987­89 32.3 .. .. .. .. 2006a 38.7 11.4 69.3 Tunisia 1990 7.4 1995 7.6 1995a 6.5 1.3 20.4 2000a 2.6 <0.5 12.8 Turkey 1994 28.3 2002 27.0 2002a 2.0 <0.5 9.6 2005a 2.7 0.9 9.0 Turkmenistan .. .. 1993c 63.5 25.8 85.7 1998a 24.8 7.0 49.6 Uganda 1999­2000 33.8 2002­03 37.7 2002a 57.4 22.7 79.8 2005a 51.5 19.1 75.6 Ukraine 2000 31.5 2003 19.5 2002a <2.0 <0.5 3.4 2005a <2.0 <0.5 <2.0 United Arab Emirates .. .. .. .. .. .. .. .. United Kingdom .. .. .. .. .. .. .. .. United States .. .. .. .. .. .. .. .. Uruguay 1994 20.2b 1998 24.7b 2005b,c <2.0 <0.5 4.5 2006b,c <2.0 <0.5 4.2 Uzbekistan 2000­01 31.5 2003 27.2 2002a 42.3 12.4 75.6 2003a 46.3 15.0 76.7 Venezuela, R. B. de 1989 31.3 1997­99 52.0 2003c 18.4 8.8 31.7 2006c 3.5 1.2 10.2 Vietnam 1998 37.4 2002 28.9 2004a 24.2 5.1 52.5 2006a 21.5 4.6 48.4 West Bank and Gaza .. .. .. .. .. .. .. .. Yemen, Republic of 1998 41.8 .. 1998a 12.9 3.0 36.3 2005a 17.5 4.2 46.6 Zambia 1998 72.9 2004 68.0 2002­03a 64.6 27.1 85.1 2004­05a 64.3 32.8 81.5 Zimbabwe 1990­91 25.8 1995­96 34.9 .. .. .. .. .. .. 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 15­49 people tons population peoplea b b 1990­2007 2007 2000­07 2007 2007 2007 2005 2007 2007 2005 2006 2008 Afghanistan .. .. 32.9 38 58 257 1,800 .. 168 .. 30 1.9 Albania 7.8c .. 17.0 96 97 15 92 .. 17 1.1 97 15.1 Algeria 6.9c .. 10.2 95 99 37 180 0.1 57 4.2 94 10.3 Angola 2.0c .. 27.5 .. .. 158 1,400 2.1 287 0.5 50 3.1 Argentina 3.4d,e 20 f 2.3 99 104 16 77 0.5 31 3.9 91 28.1 Armenia 8.6c .. 4.2 98 104 24 76 0.1 72 1.4 91 5.6 Australia 5.9e 9 .. .. 97 6 4 0.2 6 18.1 100 55.7 Austria 8.6e 9 .. 102 97 4 4 0.2 12 8.9 100 59.3 Azerbaijan 13.3c 53 14.0 113 97 39 82 0.2 77 4.4 80 10.8 Bangladesh 9.4c 85 39.2 56 107 61 570 .. 223 0.3 36 0.3 Belarus 8.8c .. 1.3 92 101 13 18 0.2 61 6.5 93 29.0 Belgium 8.5e 10 .. 86 98 5 8 0.2 12 9.8 .. 65.9 Benin 6.9c .. 21.5 64 73 123 840 1.2 91 0.3 30 1.8 Bolivia 1.8c .. 5.9 98 99 57 290 0.2 155 1.0 43 10.5 Bosnia and Herzegovina 6.9c .. 1.6 .. 99 14 3 <0.1 51 6.9 95 34.7 Brazil 3.0e 27 2.2 106 103 22 110 0.6 48 1.7 77 35.5 Bulgaria 8.7c 8 1.6 98 97 12 11 .. 39 5.7 99 30.9 Burkina Faso 7.0c .. 35.2 37g 84g 191 700 1.6 226 0.1 13 0.9 Burundi 9.0c .. 38.9 39 90 180 1,100 2.0 367 0.0 41 0.8 Cambodia 7.1c .. 28.4 85 90 91 540 0.8 495 0.0 28 0.5 Cameroon 5.6c .. 15.1 55 85 148 1,000 5.1 192 0.2 51 3.0 Canada 7.2e 10f .. 96 99 6 7 0.4 5 16.6 100 72.8 Central African Republic 5.2c .. 21.8 30g .. 172 980 6.3 345 0.1 31 0.4 Chad 6.3c .. 33.9 30 64 209 1,500 3.5 299 0.0 9 1.2 Chile 4.1e 25 0.6 95 99 9 16 0.3 12 4.1 94 32.6 China 5.7c .. 6.8 101 100 22 45 0.1h 98 4.3 65 22.5 Hong Kong, China 5.3e 7 .. 102 98 .. .. .. 62 5.7 .. 59.1 Colombia 2.3e 41 5.1 107 104 20 130 0.6 35 1.4 78 38.4 Congo, Dem. Rep. of 5.5c .. 33.6 51 73 161 1,100 .. 392 0.0 31 0.5 Congo, Rep. of 5.0c .. 11.8 72 91 125 740 3.5 403 0.6 20 4.3 Costa Rica 4.2e 20 .. 91 102 11 30 0.4 11 1.7 96 33.6 Côte d'Ivoire 5.0c .. 16.7 45 .. 127 810 3.9 420 0.5 24 3.2 Croatia 8.7c 16 .. 101 102 6 7 <0.1 40 5.2 99 50.6 Czech Republic 10.2e 12 2.1 93 101 4 4 .. 9 11.7 99 48.3 Denmark 8.3e .. .. 101 102 4 3 0.2 8 8.5 100 84.2 Dominican Republic 4.0e 43 4.2 91g 103g 38 150 1.1 69 2.0 79 26.0 Ecuador 3.4e 34 f 6.2 106 100 22 210 0.3 101 2.2 84 9.7 Egypt, Arab Rep. of 9.0c 25 5.4 98 95 36 130 .. 21 2.2 66 15.4 El Salvador 3.3e 36 6.1 91 101 24 170 0.8 40 1.1 86 12.5 Eritrea .. .. 34.5 46 78 70 450 1.3 95 0.2 5 3.0 Ethiopia 9.3c 52 f 34.6 46 83 119 720 2.1 378 0.1 11 0.4 Finland 9.6e .. .. 98 102 4 7 0.1 6 10.1 100 78.8 France 7.2e 6 .. .. 100 4 8 0.4 14 6.2 .. 51.2 Georgia 5.4c 62 .. 92 98 30 66 0.1 84 1.1 93 8.2 Germany 8.5e .. .. 103 99 4 4 0.1 6 9.5 100 76.1 Ghana 5.2c .. 13.91 78g 95g 115 560 1.9 203 0.3 10 4.3 Greece 6.7e 28 .. 101 97 4 3 0.2 18 8.6 98 32.3 Guatemala 3.4e .. 17.7 77 93 39 290 0.8 63 0.9 84 10.1 Guinea 5.8c .. 22.5 64 76 150 910 1.6 287 0.1 19 0.9 Haiti 2.5e .. 18.9 .. .. 76 670 2.2 306 0.2 19 10.4 Honduras 2.5e .. 8.6 89 106 24 280 0.7 59 1.1 66 9.1 Hungary 8.6c 7 .. 92 99 7 6 0.1 17 5.6 100 54.8 India 8.1c .. 43.5 86 91 72 450 0.3 168 1.3 28 7.2 Indonesia 7.1c 63 24.4 105 98 31 420 0.2 228 1.9 52 11.1 Iran, Islamic Rep. of 6.4c 43 .. 105 105 33 140 0.2 22 6.5 .. 32.0 Iraq .. .. 7.1 75 78 44 300 .. 56 .. 76 0.9 Ireland 7.4e 11 .. 97 103 4 1 0.2 13 10.2 .. 63.5 Israel 5.7e 7 .. 102 101 5 4 0.1 8 9.2 .. 27.9 Italy 6.5e 22 .. 102 99 4 3 0.4 7 7.7 .. 48.6 Japan 10.6e 11 .. .. 100 4 6 .. 21 9.6 100 69.0 Jordan 7.2c .. 3.6 102 102 24 62 .. 7 3.8 85 25.4 Kazakhstan 7.4c .. 4.9 104g 99g 32 140 0.1 129 11.9 97 12.3 Kenya 4.7c .. 16.5 93 95 121 560 .. 353 0.3 42 8.7 Korea, Rep. of 7.9e 25 .. 102 96 5 14 <0.1 90 9.4 .. 77.1 Kyrgyz Republic 8.1c 47 2.7 95 100 38 150 0.1 121 1.1 93 14.3 Lao PDR 8.5c .. 36.4 77 86 70 660 0.2 151 0.2 48 1.6 Lebanon .. .. .. 83g 103g 29 150 0.1 19 4.2 .. 38.3 Liberia 6.4c .. 20.4 55g .. 133 1,200 1.7 277 0.1 32 0.6 Libya .. .. .. .. 105 18 97 .. 17 9.5 97 4.7 Lithuania 6.8c .. .. 95 100 8 11 0.1 68 4.1 .. 52.9 Madagascar 6.2c 86 36.8 62 96 112 510 0.1 251 0.2 12 1.7 Malawi 7.0c .. 18.4 55 100 111 1,100 11.9 346 0.1 60 2.2 Malaysia 6.4e 22 .. 96 104 11 62 0.5 103 9.3 94 62.6 Mali 6.5c .. 27.9 52 76 196 970 1.5 319 0.0 45 1.0 Mauritania 6.2c .. 30.4 59 103 119 820 0.8 318 0.6 24 1.4 382 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 15­49 people tons population peoplea b b 1990­2007 2007 2000­07 2007 2007 2007 2005 2007 2007 2005 2006 2008 Mexico 4.6c 29 3.4 105 99 35 60 0.3 20 4.1 81 21.9 Moldova 7.3c 32 3.2 93 102 18 22 0.4 141 2.1 79 19.1 Morocco 6.5c 52 9.9 83 88 34 240 0.1 92 1.6 72 33.0 Mozambique 5.4c .. 21.2 46 85 168 520 12.5 431 0.1 31 1.6 Myanmar .. .. 29.6 .. .. 103 380 0.7 171 0.2 82 0.1 Nepal 6.1c .. 38.8 78g 98g 55 830 0.5 173 0.1 27 1.4 Netherlands 7.6e .. .. .. 98 5 6 0.2 8 7.7 100 86.8 New Zealand 6.4e 12 .. .. 102 6 9 0.1 7 7.2 .. 69.2 Nicaragua 3.8e 45 7.8 74 103 35 170 0.2 49 0.7 48 2.8 Niger 5.9c .. 39.9 40 71 176 1,800 0.8 174 0.1 7 0.5 Nigeria 5.1c .. 27.2 72 84 189 1,100 3.1 311 0.8 30 7.3 Norway 9.6e 6 .. 97 99 4 7 0.1 6 11.4 .. 84.8 Pakistan 9.1c 62 31.3 63 80 90 320 0.1 181 0.9 58 11.1 Panama 2.5e 28 .. 99 101 23 130 1.0 47 1.8 74 22.9 Papua New Guinea 4.5c .. .. .. .. 65 470 1.5 250 0.7 45 1.8 Paraguay 3.4e 47 .. 95 99 29 150 0.6 58 0.7 70 8.7 Peru 3.9e 40f 5.2 104 102 20 240 0.5 126 1.3 72 24.7 Philippines 5.6c 45 20.7 94 102 28 230 .. 290 0.9 78 6.0 Poland 7.3c 19 .. 96 99 7 8 0.1 25 7.9 .. 44.0 Portugal 5.8e 18 .. 104 101 4 11 0.5 30 5.9 99 41.9 Romania 8.2c 32 3.5 120 99 15 24 0.1 115 4.1 72 23.9 Russian Federation 6.4c 6 .. 93 98 15 28 1.1 110 10.5 87 21.1 Rwanda 5.3c .. 18.0 35 100 181 1,300 2.8 397 0.1 23 3.1 Saudi Arabia .. .. .. 93 94 25 18 .. 46 16.5 99 29.2 Senegal 6.2c .. 14.5 50 94 114 980 1.0 272 0.4 28 8.4 Serbia 8.3c,i 23 1.8 .. 102 8 .. 0.1 32 6.5j 92 32.1 Sierra Leone 6.1c .. 28.3 81 86 262 2,100 1.7 574 0.2 11 0.3 Singapore 5.0e 10 3.3 .. .. 3 14 0.2 27 13.2 100 67.7 Slovak Republic 8.8e 10 .. 94 100 8 6 <0.1 17 6.8 100 51.3 Somalia .. .. 32.8 .. .. 142 1,400 0.5 249 0.1 23 1.1 South Africa 3.1c 3 .. 84 100 59 400 18.1 948 8.7 59 8.6 Spain 7.0e 12 .. 99 103 4 4 0.5 30 7.9 100 57.4 Sri Lanka 6.8c 41f 22.8 104 .. 21 58 .. 60 0.6 86 5.7 Sudan .. .. 38.4 50 88 109 450 1.4 243 0.3 35 9.2 Sweden 9.1e .. .. 95 99 3 3 0.1 6 5.4 100 79.7 Switzerland 7.6e 10 .. 88 97 5 5 0.6 6 5.5 100 75.2 Syrian Arab Rep. .. .. .. 114 96 17 130 .. 24 3.6 92 16.8 Tajikistan 7.7c .. 14.9 95 89 67 170 0.3 231 0.8 92 7.2 Tanzania 7.3c 88 f 16.7 112g .. 116 950 6.2 297 0.1 33 1.2 Thailand 6.1c 53 7.0 101 104g 7 110 1.4 142 4.1 96 20.0 Togo 7.6c .. .. 57 75 100 510 3.3 429 0.2 12 5.4 Tunisia 5.9c .. .. 100 104 21 100 0.1 26 2.2 85 27.1 Turkey 5.2c 36 3.5 97 90 23 44 .. 30 3.5 88 33.1 Turkmenistan 6.0c .. .. .. .. 50 130 <0.1 68 8.6 .. 1.4 Uganda 6.1 .. 19.0 54 98 130 550 5.4 330 0.1 33 7.9 Ukraine 9.0c .. 4.1 101 100 24 18 1.6 102 6.9 93 22.4 United Arab Emirates .. .. .. 105 101 8 37 .. 16 30.1 97 86.1 United Kingdom 6.1e .. .. .. 102 6 8 0.2 15 9.1 .. 79.4 United States 5.4e .. 1.3 96 100 8 11 0.6 4 19.5 100 72.4 Uruguay 4.5e 25 6.0 104 98 14 20 0.6 22 1.7 100 40.2 Uzbekistan 7.1c .. 4.4 97 98 41 24 0.1 113 4.3 96 8.8 Venezuela, R. B. de 4.9e 30 .. 95g 102g 19 57 .. 34 5.6 .. 25.6 Vietnam 7.1c .. 20.2 .. .. 15 150 0.5 171 1.2 65 21.0 West Bank and Gaza .. 36 .. 83 104 27 .. .. 20 .. 80 9.6 Yemen, Republic of 7.2c .. .. 60 66 73 430 .. 76 1.0 46 1.4 Zambia 3.6c .. 23.3 88 96 170 830 15.2 506 0.2 52 5.5 Zimbabwe 4.6c .. 14.0 .. 97 90 880 15.3 782 0.9 46 11.4 World ..w 23.1w 87w 95w 68w 400w 0.8w 139w 4.5w, k 60w 21.3w Low income .. 27.8 65 91 120 790 2.3 275 0.5 38 3.7 Middle income .. 22.7 91 96 58 320 0.6 138 3.1 58 14.7 Lower middle income .. 25.8 90 94 65 370 0.4 147 2.6 52 11.7 Upper middle income 24 .. 98 100 25 110 1.5 105 5.1 82 26.6 Low and middle income .. 24.0 86 95 74 440 0.9 162 2.7 55 12.8 East Asia & Pacific .. 12.6 100 100 27 150 0.2 136 3.6 66 23.3 Europe & Central Asia 19 .. 98 97 23 45 0.6 84 7.0 89 23.4 Latin America & the Caribbean 31 4.5 97 101 26 130 0.5 50 2.5 78 26.6 Middle East & North Africa 37 .. 91 93 38 200 0.1 41 3.6 74 24.2 South Asia .. 40.9 79 90 78 500 0.3 174 1.1 33 6.6 Sub-Saharan Africa .. 26.5 63 88 146 900 5.0 369 0.9 31 4.5 High income .. .. 98 99 7 10 0.3 16 12.6 100 67.1 a. Data are from the International Telecommunication Union's (ITU) World Telecommunication Development Report database. Please cite ITU for third-party use of these data. b. Data are for the most recent year available. c. Refers to expenditure shares by percentiles of population, ranked by per capita expenditure. d. Urban data. e. Refers to income shares by percentiles of population, ranked by per capita income. f. Limited coverage. g. Data are for 2008. h. Includes Hong Kong, China. i. Includes Montenegro. j. Includes Kosovo and Montenegro. k. Includes emissions not allocated to specific countries. 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 Table 4 Economic activity Gross domestic Agricultural General External GDP product productivity Value added as % of GDP Household government balance implicit agricultural value fi nal fi nal Gross of defl ator Average added per worker consumption consumption capital goods and average Millions annual 2000 $ Agriculture Industry Services expenditure expenditure formation services annual of dollars % growth % of GDP % of GDP % of GDP % of GDP % growth 2008 2000­08 1990­92 2003­05 2008 2008 2008 2008 2008 2008 2008 2000­08 Afghanistan 10,170 .. .. .. 37 25 38 98 11 31 ­39 7.1 Albania 12,295 5.4 778 1,449 21 20 59 85 10 32 ­27 3.5 Algeria 173,882 4.3 1,911 2,225 9 69 23 22 7 37 35 9.4 Angola 83,383 13.7 165 174 10 86 4 37 ..a 12 50 48.1 Argentina 328,385 5.3 6,767 10,072 9 34 57 59 13 24 4 12.8 Armenia 11,917 12.4 1,476b 3,692 18 45 37 75 12 38 ­25 4.6 Australia 1,015,217 3.3 20,839 29,908 .. .. .. 55 18 29 ­2 3.8 Austria 416,380 2.1 12,048 21,920 2 31 67 54 18 21 7 1.8 Azerbaijan 46,259 18.1 1,084b 1,143 6 71 23 25 10 23 42 10.9 Bangladesh 78,992 5.9 254 338 19 29 52 79 5 24 ­8 4.8 Belarus 60,302 8.6 1,977b 3,153 9 39 53 54 16 35 ­6 25.5 Belgium 497,586 2.0 .. 39,243 1 24 75 52 22 22 3 2.0 Benin 6,680 3.9 326 519 .. .. .. .. .. .. .. 3.3 Bolivia 16,674 4.1 670 773 14 42 44 61 12 16 12 7.0 Bosnia and Herzegovina 18,452 5.5 .. 8,270 .. .. .. 85 22 23 ­30 3.8 Brazil 1,612,539 3.6 1,507 3,119 7 28 65 61 20 19 0 8.1 Bulgaria 49,900 5.8 2,500 7,159 7 31 61 70 16 37 ­23 5.6 Burkina Faso 7,948 5.6 110 173 33 22 44 75 22 18 ­15 2.4 Burundi 1,163 2.9 108 70 .. .. .. 91 29 16 ­36 9.6 Cambodia 9,574 9.7 .. 314 32 27 41 83 3 21 ­8 4.7 Cameroon 23,396 3.5 389 648 20 33 48 68 13 19 1 2.2 Canada 1,400,091 2.5 28,243 44,133 .. .. .. 56 19 23 3 2.0 Central African Republic 1,970 0.6 287 381 53 14 32 95 3 10 ­9 2.2 Chad 8,361 10.4 173 215 23 42 35 69 6 15 10 8.3 Chile 169,458 4.4 3,573 5,309 4 47 49 55 10 21 14 6.6 China 4,326,187 10.4 258 407 11 49 40 37 14 43 7 4.3 Hong Kong, China 215,355 5.2 .. .. 0 8 92 60 8 20 11 ­1.7 Colombia 242,268 4.9 3,080 2,749 9 34 57 64 13 24 ­1 6.9 Congo, Dem. Rep. of 11,588 5.5 184 149 41 27 31 82 11 17 ­10 28.3 Congo, Rep. of 10,699 4.0 .. .. 5 60 35 29 14 27 30 7.0 Costa Rica 29,834 5.5 3,143 4,506 7 29 64 69 13 27 ­10 10.2 Côte d'Ivoire 23,414 0.6 598 795 24 25 51 77 8 10 5 3.4 Croatia 69,333 4.6 5,425b 11,354 6 28 65 59 19 31 ­8 3.8 Czech Republic 216,485 4.6 .. 5,521 2 38 60 48 20 27 5 2.2 Denmark 342,672 1.7 15,190 38,441 1 26 73 50 26 23 1 2.3 Dominican Republic 45,790 5.4 1,924 3,305 11 28 61 81 6 20 ­7 15.0 Ecuador 52,572 5.0 1,686 1,676 7 36 57 67 12 24 ­3 9.5 Egypt, Arab Rep. of 162,818 4.7 1,528 2,072 14 36 50 72 11 24 ­7 7.8 El Salvador 22,115 2.9 1,633 1,638 13 28 58 98 9 15 ­22 3.7 Eritrea 1,654 1.3 .. 71 24 19 56 86 31 11 ­28 18.0 Ethiopia 26,487 8.2 .. 158 43 13 45 85 11 21 ­17 8.7 Finland 271,282 3.0 18,818 31,276 3 32 65 52 21 22 5 1.1 France 2,853,062 1.7 22,234 44,080 2 21 77 57 23 22 ­2 2.1 Georgia 12,793 8.1 2,443b 1,791 10 24 66 76 21 31 ­28 7.3 Germany 3,652,824 1.2 13,724 25,657 1 30 69 57 18 18 7 1.1 Ghana 16,123 5.6 293 320 32 26 42 81 14 32 ­26 18.7 Greece 356,796 4.2 7,536 8,818 4 23 73 71 17 26 ­13 3.3 Guatemala 38,977 3.9 2,120 2,623 11 28 62 90 4 24 ­18 5.2 Guinea 4,266 3.1 142 190 8 35 58 85 5 13 ­2 20.2 Haiti 6,953 0.5 .. .. .. .. .. 98 ..a 26 ­23 16.7 Honduras 14,077 5.3 1,193 1,483 13 27 61 83 14 30 ­28 6.5 Hungary 154,668 3.6 4,122 6,922 4 29 66 67 9 22 1 5.0 India 1,217,490 7.9 324 392 18 29 53 56 11 39 ­6 4.6 Indonesia 514,389 5.2 484 583 14 48 37 63 8 28 1 10.9 Iran, Islamic Rep. of 385,143 6.0 1,954 2,561 10 45 45 45 14 31 10 17.9 Iraq .. .. .. 1,756 .. .. .. .. .. .. .. .. Ireland 281,776 5.0 .. 17,107 2 35 63 46 16 27 11 2.9 Israel 199,498 3.5 .. .. .. .. .. 58 25 19 ­2 1.1 Italy 2,293,008 0.9 11,528 23,967 2 27 71 59 20 21 0 2.6 Japan 4,909,272 1.6 20,445 35,668 1 30 68 57 18 24 1 ­1.2 Jordan 20,013 6.7 1,892 1,360 4 32 64 108 18 19 ­45 4.2 Kazakhstan 132,229 9.5 1,795b 1,557 6 42 52 35 10 35 20 15.1 Kenya 34,507 4.6 334 333 21 13 65 79 11 25 ­14 6.5 Korea, Rep. of 929,121 4.5 .. 11,451 3 37 60 55 15 31 ­1 2.2 Kyrgyz Republic 4,420 4.4 675b 979 34 19 48 101 18 26 ­45 6.8 Lao PDR 5,431 6.9 360 459 40 31 29 69 8 38 ­15 9.4 Lebanon 28,660 4.0 .. 29,950 5 22 73 91 14 20 ­25 2.2 Liberia 870 ­1.1 .. .. 54 19 27 116 15 20 ­51 10.5 Libya 99,926 4.1 .. .. .. .. .. .. .. .. .. 22.2 Lithuania 47,341 7.7 .. 3,790 4 33 63 66 18 27 ­11 4.0 Madagascar 8,970 3.8 186 174 25 17 57 85 5 36 ­25 11.5 Malawi 4,269 4.2 72 116 34 21 45 85 11 32 ­28 19.3 Malaysia 194,927 5.5 386 525 10 48 42 46 12 22 20 4.4 Mali 8,740 5.2 208 241 37 24 39 76 11 23 ­10 4.2 Mauritania 2,858 5.1 574 356 13 47 41 61 20 26 ­7 11.3 Selected World Development Indicators 2010 385 Table 4 Economic activity Gross domestic Agricultural General External GDP product productivity Value added as % of GDP Household government balance implicit agricultural value fi nal fi nal Gross of defl ator Average added per worker consumption consumption capital goods and average Millions annual 2000 $ Agriculture Industry Services expenditure expenditure formation services annual of dollars % growth % of GDP % of GDP % of GDP % of GDP % growth 2008 2000­08 1990­92 2003­05 2008 2008 2008 2008 2008 2008 2008 2000­08 Mexico 1,085,951 2.7 2,256 2,793 4 37 59 66 10 26 ­2 8.2 Moldova 6,048 6.3 1,286b 816 11 15 74 97 19 37 ­53 11.6 Morocco 86,329 5.0 1,430 1,746 16 20 64 61 16 33 ­9 1.6 Mozambique 9,735 8.0 107 148 28 26 46 75 12 23 ­10 8.1 Myanmar .. .. .. .. .. .. .. .. .. .. .. .. Nepal 12,615 3.5 191 207 34 17 50 79 10 32 ­21 6.2 Netherlands 860,336 1.8 24,914 42,049 2 24 74 47 25 20 8 2.2 New Zealand 130,693 3.0 19,155 27,189 .. .. .. 60 19 23 ­1 3.0 Nicaragua 6,592 3.5 .. 2,071 19 30 51 90 12 32 ­34 8.5 Niger 5,354 4.4 152 157b .. .. .. .. .. .. .. 2.6 Nigeria 212,080 6.6 .. .. 31 41 28 .. .. .. 13 17.0 Norway 449,996 2.5 19,500 37,039 1 43 56 42 20 23 16 4.7 Pakistan 168,276 5.8 594 696 20 27 53 80 9 22 ­10 7.3 Panama 23,088 6.6 2,363 3,904 6 17 76 65 11 23 1 2.2 Papua New Guinea 8,168 2.8 500 595 33 48 19 44 10 19 27 7.3 Paraguay 15,977 3.7 1,596 2,052 23 20 57 69 9 20 3 10.5 Peru 127,434 6.0 930 1,481 7 38 55 61 9 27 2 3.5 Philippines 166,909 5.1 905 1,075 15 32 53 77 10 15 ­2 5.2 Poland 526,966 4.4 1,502b 2,182 4 30 65 66 15 23 ­3 2.6 Portugal 242,689 0.9 4,642 6,220 3 24 73 65 20 22 ­7 2.9 Romania 200,071 6.3 2,196 4,646 8 34 58 73 11 26 ­10 17.0 Russian Federation 1,607,816 6.8 1,825b 2,519 5 38 57 45 19 25 11 16.5 Rwanda 4,457 6.7 167 182 35 12 53 90 9 21 ­19 10.0 Saudi Arabia 467,601 4.1 7,875 15,780 2 70 27 26 20 19 35 8.9 Senegal 13,209 4.4 225 215 15 23 62 82 10 30 ­22 2.9 Serbia 50,061 5.7 .. .. 13 28 59 84 17 23 ­24 17.2 Sierra Leone 1,953 10.3 .. .. 43 24 33 80 13 20 ­12 9.3 Singapore 181,948 5.8 22,695 40,419 0 28 72 39 11 31 19 1.5 Slovak Republic 94,957 6.3 .. 5,026 4 41 55 54 16 28 1 3.7 Somalia .. .. .. .. .. .. .. .. .. .. .. .. South Africa 276,764 4.3 1,786 2,495 3 31 66 61 20 22 ­4 7.1 Spain 1,604,174 3.3 9,511 18,619 3 30 67 57 18 31 ­7 3.9 Sri Lanka 40,714 5.5 679 702 13 29 57 70 16 27 ­13 10.6 Sudan 58,443 7.4 414 667 26 34 40 59 16 24 1 9.9 Sweden 480,021 2.8 22,533 35,378 2 29 70 47 26 20 8 1.7 Switzerland 488,470 1.9 19,884 23,588 1 28 71 59 11 22 8 1.0 Syrian Arab Rep. 55,204 4.4 2,344 3,261 20 35 45 75 12 14 0 8.4 Tajikistan 5,134 8.6 346b 409 18 23 59 114 8 20 ­42 21.0 Tanzaniac 20,490 6.8 238 295 45 17 37 73 16 17 ­6 9.4 Thailand 260,693 5.2 497 624 12 46 43 51 13 28 8 2.4 Togo 2,823 2.5 312 347 .. .. .. .. 16 .. ­27 1.1 Tunisia 40,180 4.9 2,422 2,700 10 28 62 65 14 25 ­3 2.9 Turkey 794,228 5.9 1,770 1,846 10 28 62 71 13 22 ­5 16.9 Turkmenistan 18,269 14.5 1,222b .. .. .. .. .. .. .. 11 12.2 Uganda 14,529 7.5 155 175 23 26 52 82 12 24 ­18 5.1 Ukraine 180,355 7.2 1,195b 1,702 8 37 55 64 17 25 ­6 15.7 United Arab Emirates 163,296 7.7 10,454 25,841 2 59 39 45 10 21 24 7.7 United Kingdom 2,645,593 2.5 22,664 26,942 1 23 76 63 22 19 ­4 2.7 United States 14,204,322 2.5 20,793 42,744 1 22 77 70 16 20 ­6 2.6 Uruguay 32,186 3.8 6,304 8,797 11 27 63 69 12 23 ­4 8.2 Uzbekistan 27,918 6.6 1,272b 1,800 23 33 43 55 16 19 10 25.5 Venezuela, R. B. de 313,799 5.2 4,483 6,331 .. .. .. 53 10 23 14 26.3 Vietnam 90,705 7.7 214 305 20 42 38 66 6 42 ­13 7.8 West Bank and Gaza .. ­0.9 .. .. .. .. .. .. .. .. .. 3.4 Yemen, Republic of 26,576 3.9 271 328b .. .. .. .. .. .. .. 13.6 Zambia 14,314 5.3 159 204 21 46 33 66 9 22 3 17.1 Zimbabwe .. ­5.7 240 222 .. .. .. .. .. .. .. 232.0 World 60,587,016t 3.2w 731w 908w 3w 28w 69w 61w 17w 22w 0w Low income 568,504 5.8 222 268 25 29 46 75 9 27 ­11 Middle income 16,826,866 6.4 470 650 10 37 53 56 14 30 1 Lower middle income 8,377,130 8.3 359 499 14 41 45 50 13 36 1 Upper middle income 8,445,380 4.6 1,998 2,721 6 33 61 61 15 23 1 Low and middle income 17,408,313 6.4 432 577 11 37 53 57 14 29 1 East Asia & Pacific 5,658,322 9.1 295 438 12 48 41 42 13 39 6 Europe & Central Asia 3,860,600 6.3 1,749 2,076 7 34 60 60 15 24 0 Latin America & 4,247,077 3.9 2,125 3,044 6 32 62 63 14 23 0 the Caribbean Middle East & North Africa 1,117,198 4.7 1,583 2,204 12 41 48 57 12 28 3 South Asia 1,531,499 7.4 335 406 18 29 53 61 11 36 ­7 Sub-Saharan Africa 987,120 5.2 263 279 14 32 54 67 16 23 ­3 High income 43,189,942 2.3 15,906 25,500 1 26 73 62 18 21 ­1 a. Data on general government final consumption expenditure are not available separately; they are included in household final consumption expenditure. b. Data for all three years are not available. c. Data refer to mainland Tanzania only. 386 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 Table 5 Trade, aid, and finance Merchandise trade Domestic Exports Imports High Foreign External debt credit Manufactured technology Current direct Net offi cial provided exports exports account investment development Present by % of total % of balance net infl ows assistancea Total value banking Net $ $ merchandise manufactured $ $ $ $ % of sector migration millions millions exports exports millions millions per capita millions GNI % of GDP thousands 2008 2008 2007 2007 2008 2007 2007 2007 2007 2008 2000­05 b Afghanistan 680 3,350 .. .. .. 288 .. 2,041 18d 0 .. Albania 1,353 5,230 70 12 ­1,924 477 97 2,776 22 68 ­100 Algeria 78,233 39,156 1 2 .. 1,665 12 5,541 4 ­12 ­140 Angola 66,300 21,100 .. .. 9,402 ­893 14 12,738 32 10 175 Argentina 70,588 57,413 31 7 7,588 6,462 2 127,758 63 24 ­100 Armenia 1,069 4,412 56 2 ­1,356 699 114 2,888 38 17 ­100 Australia 187,428 200,272 19 14 ­44,040 39,596 .. .. .. 151 641 Austria 182,158 184,247 82 11 14,269 30,717 .. .. .. 129 220 Azerbaijan 31,500 7,200 6 4 16,454 ­4,749 26 3,021 14 17 ­100 Bangladesh 15,369 23,860 91 .. 857 653 10 22,033 22 60 ­700 Belarus 32,902 39,483 53 3 ­5,050 1,785 9 9,470 25 31 20 Belgium 476,953 469,889 78 7c ­12,015 72,195 .. .. .. 115 196 Benin 1,050 1,990 9 0 ­217 48 56 857 12d 15 99 Bolivia 6,370 4,987 7 5 1,800 204 50 4,947 24d 48 ­100 Bosnia and Herzegovina 5,064 12,282 61 3 ­2,765 2,111 117 6,479 42 59 62 Brazil 197,942 182,810 47 12 ­28,191 34,585 2 237,472 25 102 ­229 Bulgaria 23,124 38,256 55 6 ­12,577 8,974 .. 32,968 100 67 ­41 Burkina Faso 620 1,800 .. .. .. 600 63 1,461 14d 16 100 Burundi 56 403 21 4 ­116 1 59 1,456 97d 35 192 Cambodia 4,290 6,510 .. .. ­1,060 867 46 3,761 46 16 10 Cameroon 4,350 4,360 3 3 ­547 433 104 3,162 5d 6 ­12 Canada 456,420 418,336 53 14 27,281 111,772 .. .. .. 191 1,089 Central African Republic 185 310 36 0 .. 27 41 973 48d 18 ­45 Chad 4,800 1,700 .. .. .. 603 33 1,797 19d ­3 219 Chile 67,788 61,901 10 7 ­3,440 14,457 7 58,649 45 83 30 China 1,428,488 1,133,040 93 30 426,107 138,413 1 373,635 13 126 ­2,058 Hong Kong, China 370,242e 392,962 68e 19 30,637 54,365 .. .. .. 125 113 Colombia 37,626 39,669 39 3 ­6,761 9,040 17 44,976 28 43 ­120 Congo, Dem. Rep. of 3,950 4,100 .. .. .. 720 20 12,283 111d 5 ­237 Congo, Rep. of 9,050 2,850 .. .. ­2,181 4,289 36 5,156 93d ­19 4 Costa Rica 9,675 15,374 63 45 ­1,578 1,896 12 7,846 35 54 84 Côte d'Ivoire 10,100 7,150 18 32 ­146 427 8 13,938 67d 20 ­339 Croatia 14,112 30,728 68 9 ­6,397 4,916 37 48,584 109 75 ­13 Czech Republic 146,934 141,882 90 14 ­6,631 9,294 .. .. .. 58 67 Denmark 117,174 112,296 66 17 6,938 11,858 .. .. .. 210 46 Dominican Republic 6,910 16,400 .. .. ­2,068 1,698 13 10,342 33 39 ­148 Ecuador 18,511 18,686 8 7 1,598 183 16 17,525 50 18 ­400 Egypt, Arab Rep. of 25,483 48,382 19 0 412 11,578 14 30,444 25 78 ­291 El Salvador 4,549 9,755 55 4 ­1,119 1,526 14 8,809 50 45 ­340 Eritrea 20 530 .. .. .. ­3 32 875 41d 125 229 Ethiopia 1,500 7,600 13 3 ­828 223 31 2,634 8d 47 ­340 Finland 96,714 91,045 81 21 10,121 11,568 .. .. .. 88 33 France 608,684 707,720 79 19 ­52,911 159,463 .. .. .. 126 761 Georgia 1,498 6,058 45 7 ­2,851 1,728 87 2,292 20 33 ­309 Germany 1,465,215 1,206,213 83 14 243,289 51,543 .. .. .. 126 930 Ghana 5,650 10,400 11 1 ­2,151 970 50 4,479 22d 33 12 Greece 25,311 77,970 52 8 ­51,313 1,959 .. .. .. 109 154 Guatemala 7,765 14,545 50 3 ­1,697 724 34 6,260 21 37 ­300 Guinea 1,300 1,600 .. .. ­456 111 23 3,268 64d .. ­425 Haiti 490 2,148 .. .. ­80 75 73 1,598 20d 23 ­140 Honduras 6,130 9,990 29 1 ­1,225 816 65 3,260 21d 50 ­150 Hungary 107,904 107,864 81 25 ­12,980 37,231 .. .. .. 81 70 India 179,073 291,598 64 5 ­9,415 22,950 1 220,956 20 70 ­1,540 Indonesia 139,281 126,177 42 11 606 6,928 4 140,783 43 37 ­1,000 Iran, Islamic Rep. of 116,350 57,230 10 6 .. 755 1 20,577 8 51 ­993 Iraq 59,800 31,200 0 0 2,681 383 .. .. .. .. .. Ireland 124,158 82,774 84 28 ­12,686 26,085 .. .. .. 194 230 Israel 60,825 67,410 76 8 1,596 9,664 .. .. .. 81 115 Italy 539,727 556,311 84 7 ­78,029 40,040 .. .. .. 133 1,750 Japan 782,337 761,984 90 19 156,634 22,180 .. .. .. 293 82 Jordan 7,790 16,888 76 1 ­2,776 1,835 88 8,368 54 122 104 Kazakhstan 71,184 37,889 13 23 6,978 10,189 13 96,133 131 34 ­200 Kenya 4,972 11,074 37 5 ­1,102 728 34 7,355 26 35 25 Korea, Rep. of 422,007 435,275 89 33 ­6,350 1,579 .. .. .. 113 ­65 Kyrgyz Republic 1,642 4,058 35 2 ­631 208 52 2,401 43d 14 ­75 Lao PDR 1,080 1,390 .. .. 107 324 65 3,337 84 7 ­115 Lebanon 4,454 16,754 .. .. ­1,395 2,845 229 24,634 111 177 100 Liberia 262 865 .. .. ­211 132 192 2,475 978d 161 62 Libya 63,050 11,500 .. .. 28,454 4,689 3 .. .. ­47 14 Lithuania 23,728 30,811 64 11 ­5,692 2,017 .. .. .. 64 ­36 Madagascar 1,345 4,040 57 1 .. 997 48 1,661 21d 9 ­5 Malawi 790 1,700 11 2 .. 55 53 870 9d 16 ­30 Malaysia 199,516 156,896 71 52 28,931 8,456 8 53,717 34 115 150 Mali 1,650 2,550 3 7 ­581 360 82 2,018 16d 13 ­134 Mauritania 1,750 1,750 0 .. .. 153 117 1,704 85d .. 30 Selected World Development Indicators 2010 387 Table 5 Trade, aid, and finance Merchandise trade Domestic Exports Imports High Foreign External debt credit Manufactured technology Current direct Net offi cial provided exports exports account investment development Present by % of total % of balance net infl ows assistancea Total value banking Net $ $ merchandise manufactured $ $ $ $ % of sector migration millions millions exports exports millions millions per capita millions GNI % of GDP thousands 2008 2008 2007 2007 2008 2007 2007 2007 2007 2008 2000­05 b Mexico 291,807 323,151 72 17 ­15,957 24,686 1 178,108 20 37 ­2,702 Moldova 1,597 4,899 32 5 ­1,009 493 73 3,203 72 40 ­320 Morocco 20,065 41,699 65 9 ­122 2,807 35 20,255 29 98 ­550 Mozambique 2,600 4,100 6 2 ­975 427 83 3,105 15d 14 ­20 Myanmar 6,900 4,290 .. .. 802 428 4 7,373 46 .. ­1,000 Nepal 1,100 3,570 .. .. 6 6 21 3,645 22d 53 ­100 Netherlands 633,974 573,924 60 26 65,391 123,609 .. .. .. 198 110 New Zealand 30,586 34,366 25 10 ­11,317 2,753 .. .. .. 151 103 Nicaragua 1,489 4,287 10 4 ­1,475 382 149 3,390 31d 66 ­206 Niger 820 1,450 6 14 ­314 27 38 972 12d 6 ­29 Nigeria 81,900 41,700 1 8 21,972 6,087 14 8,934 6 26 ­170 Norway 167,941 89,070 18 18 83,497 3,788 .. .. .. .. 84 Pakistan 20,375 42,326 79 1 ­8,295 5,333 14 40,680 25 46 ­1,239 Panama 1,180 9,050 11 0 ­2,792 1,907 ­40 9,862 70 86 8 Papua New Guinea 5,700 3,550 .. .. .. 96 50 2,245 42 26 0 Paraguay 4,434 10,180 14 6 ­345 196 18 3,570 35 22 ­45 Peru 31,529 29,981 12 2 1,505 5,343 9 32,154 42 19 ­525 Philippines 49,025 59,170 51 54 4,227 2,928 7 65,845 51 46 ­900 Poland 167,944 203,925 80 4 ­29,029 22,959 .. 195,374 53 60 ­200 Portugal 55,861 89,753 74 9 ­29,599 5,534 .. .. .. 185 291 Romania 49,546 82,707 80 4 ­24,642 9,492 .. 85,380 67 41 ­270 Russian Federation 471,763 291,971 17 7 102,331 55,073 .. 370,172 39 27 964 Rwanda 250 1,110 5 16 ­147 67 75 496 8d .. 6 Saudi Arabia 328,930 111,870 9 1 95,080 ­8,069 ­5 .. .. 10 285 Senegal 2,390 5,702 36 4 ­1,311 78 71 2,588 21d 25 ­100 Serbia 10,973 22,999 66 4 ­15,989 3,110 113 26,280 86 38 ­339 Sierra Leone 220 560 .. .. ­181 94 99 348 10d 14 336 Singapore 338,176e 319,780 76e 46 39,106 24,137 .. .. .. 84 139 Slovak Republic 70,967 73,321 87 5 ­4,103 3,363 .. .. .. 54 10 Somalia .. .. .. .. .. 141 44 2,944 .. .. ­200 South Africa 80,781 99,480 51f 6 ­20,981 5,746 17 43,380 19 88 700 Spain 268,108 402,302 75 5 ­154,184 60,122 .. .. .. 213 2,504 Sri Lanka 8,370 14,008 70 2 ­3,775 603 29 14,020 42 43 ­442 Sudan 12,450 9,200 0 1 ­3,268 2,426 52 19,126 93d 17 ­532 Sweden 183,975 166,971 77 16 40,317 12,286 .. .. .. 136 186 Switzerland 200,387 183,491 91 22 41,214 49,730 .. .. .. 185 200 Syrian Arab Rep. 14,300 18,320 32 1 920 600 4 .. .. 37 300 Tajikistan 1,406 3,270 .. .. ­495 360 33 1,228 30 28 ­345 Tanzania 2,870 6,954 17 1 ­1,856 647 68 5,063 15d,g 17 ­345 Thailand 177,844 178,655 76 27 15,755 9,498 ­5 63,067 29 136 1,411 Togo 790 1,540 62 0 ­340 69 19 1,968 80d 25 ­4 Tunisia 19,319 24,612 70 5 ­904 1,620 30 20,231 65 73 ­81 Turkey 131,975 201,960 81 0 ­41,685 22,195 11 251,477 47 51 ­71 Turkmenistan 10,780 4,680 .. .. .. 804 6 743 7 .. ­25 Uganda 2,180 4,800 21 11 ­1,088 484 56 1,611 9d 12 ­5 Ukraine 67,049 84,032 74 4 ­12,933 9,891 9 73,600 66 82 ­173 United Arab Emirates 231,550 158,900 3 1 .. .. .. .. .. 67 577 United Kingdom 457,983 631,913 74 20 ­78,765 197,766 .. .. .. 215 948 United States 1,300,532 2,165,982 77 28 ­673,261 237,541 .. .. .. 220 5,676 Uruguay 5,949 8,933 30 3 ­1,119 879 10 12,363 69 33 ­104 Uzbekistan 10,360 5,260 .. .. .. 262 6 3,876 20 .. ­400 Venezuela, R. B. de 93,542 49,635 5 3 39,202 646 3 43,148 26 20 40 Vietnam 62,906 80,416 51 6 ­6,992 6,700 29 24,222 35 95 ­200 West Bank and Gaza .. .. .. .. .. .. 504 .. .. .. 11 Yemen, Republic of 9,270 9,300 1 1 ­1,508 917 10 5,926 23 11 ­100 Zambia 5,093 5,070 13 2 ­505 984 85 2,789 7d 19 ­82 Zimbabwe 2,150 2,900 48 3 .. 69 37 5,293 121 .. ­700 World 16,129,607t 16,300,527t 72w 18w 2,139,338s 16w ..s 158w ..wh Low income 167,308 239,464 44 4 19,975 37 156,551 46 ­3,728 Middle income 4,905,095 4,547,215 61 19 501,721 9 3,260,910 74 ­14,512 Lower middle income 2,627,173 2,376,905 71 23 232,806 9 1,228,986 98 ­11,119 Upper middle income 2,276,454 2,164,216 52 13 268,916 9 2,031,924 53 ­3,393 Low and middle income 5,072,412 4,786,667 60 19 521,696 19 3,417,461 74 ­18,240 East Asia & Pacific 2,081,208 1,762,013 77 31 175,340 4 741,471 117 ­3,722 Europe & Central Asia 1,141,248 1,146,612 45 6 151,521 13 1,214,038 42 ­2,138 Latin America & 873,299 896,683 54 12 107,270 12 825,697 62 ­5,738 the Caribbean Middle East & North Africa 418,183 315,621 16 4 28,905 55 136,448 48 ­1,850 South Asia 225,882 380,660 66 5 29,926 7 304,713 69 ­3,181 Sub-Saharan Africa 336,637 296,944 30 8 28,734 44 195,094 41 ­1,611 High income 11,060,159 11,522,679 75 18 1,617,642 0 191 18,091 a. The distinction between official aid, for countries on the Part II list of the Organisation for Economic Co-operation and Development Development Assistance Committee (DAC), and official development assistance was dropped in 2005. Regional aggregates include data for economies not listed in the table. World and income group totals include aid not allocated by country or region. b. Total for the five-year period. c. Includes Luxembourg. d. Data are from debt sustainability analysis for low-income countries. e. Includes reexports. f. Data on total exports and imports refer to South Africa only. Data on export commodity shares refer to the South African Customs Union (Botswana, Lesotho, Namibia, and South Africa). g. GNI refers to mainland Tanzania only. h. World total computed by the UN sums to zero, but because the aggregates shown here refer to World Bank definitions, regional and income group totals do not equal zero. 388 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 Table 6 Key indicators for other economies PPP Life Gross national gross national expectancy Population Population income (GNI) a income (GNI) b at birth Adult age Gross literacy density composition domestic rate Average people % Per Per product % ages annual per ages $ capita $ capita per capita Male Female 15 and Thousands % growth sq. km 0­14 millions dollars millions dollars % growth years years older 2008 2000­08 2008 2008 2008 2008 2008 2008 2007­08 2007 2007 2007 American Samoa 66 1.7 331 .. .. ..d .. .. .. .. .. .. Andorra 84 3.7c 178 .. .. ..e .. .. .. .. .. .. Antigua and Barbuda 86 1.3 194 .. 1,165 13,620 1,760f 20,570f 1.6 .. .. .. Aruba 105 1.9 586 20 .. ..e .. .. .. 72 77 98 Bahamas, The 335 1.3 33 26 .. ..e .. .. ­0.2 71 76 .. Bahrain 767 2.1 1,080 27 .. ..e .. .. .. 74 77 89 Barbados 255 0.2 594 18 .. ..e .. .. .. 74 80 .. Belize 311 2.7 14 36 1,186 3,820 1,875f 6,040f 0.9 73 79 .. Bermuda 64 0.4 1,284 .. .. ..e .. .. 4.3 76 82 .. Bhutan 687 2.5 15 31 1,302 1,900 3,349 4,880 12.0 64 68 53 Botswana 1,905 1.2 3 34 12,328 6,470 24,964 13,100 ­2.2 50 51 83 Brunei Darussalam 397 2.2 75 27 10,211 26,740 19,540 50,200 ­1.3 75 80 95 Cape Verde 499 1.6 124 37 1,561 3,130 1,720 3,450 4.5 68 74 84 Cayman Islands 54 3.7 209 .. .. ..e .. .. .. .. .. 99 Channel Islands 149 0.2 787 16 10,241 68,640 .. .. 5.7 77 81 .. Comoros 644 2.2 346 38g 483 750 754 1,170 ­1.4 63 67 75 Cuba 11,247 0.1 102 18 .. ..d .. .. .. 76 80 100 Cyprus 864 1.2 93 18 19,617h 22,950 h 20,549 24,040 3.3 77 82 98 Djibouti 848 1.9 37 37 957 1,130 1,972 2,330 2.1 54 56 .. Dominica 73 0.3 98 .. 349 4,770 607f 8,300f 2.9 .. .. .. Equatorial Guinea 659 2.8 24 41 9,875 14,980 14,305 21,700 8.4 49 51 .. Estonia 1,341 ­0.3 32 15 19,131 14,270 25,848 19,280 ­3.6 67 79 100 Faeroe Islands 49 0.7 35 .. .. ..e .. .. .. 77 81 .. Fiji 839 0.6 46 32 3,300 3,930 3,578 4,270 ­0.3 67 71 .. French Polynesia 266 1.5 73 26 .. ..e .. .. .. 72 77 .. Gabon 1,448 2.0 6 37 10,490 7,240 17,766 12,270 0.2 59 62 86 Gambia, The 1,660 3.0 166 42 653 390 2,130 1,280 3.0 54 57 .. Greenland 57 0.1 0i .. .. ..e .. .. .. .. .. .. Grenada 106 0.6 310 28 603 5,710 850f 8,060f 2.2 67 70 .. Guam 175 1.5 325 28 .. ..e .. .. .. 73 78 .. Guinea-Bissau 1,575 2.4 56 43 386 250 832 530 0.5 46 49 .. Guyana 763 0.1 4 30 1,081 1,420 1,916f 2,510f 3.1 64 70 .. Iceland 317 1.5 3 21 12,702 40,070 7,993 25,220 ­1.6 79 83 .. Isle of Man 81 0.6 141 .. 3,516 43,710 .. .. 7.3 .. .. .. Jamaica 2,689 0.5 248 30 13,098 4,870 19,785f 7,360f ­1.8 70 75 86 Kiribati 97 1.7 119 .. 193 2,000 353f 3,660f 1.8 59 63 .. Korea, Dem. People's Rep. of 23,858 0.5 198 22 .. ..j .. .. .. 65 69 .. Kosovo .. .. .. .. .. ..k .. .. .. .. .. .. Kuwait 2,728 2.7 153 23 99,865 38,420 136,748 52,610 3.7 76 80 94 Latvia 2,266 ­0.6 36 14 26,883 11,860 37,943 16,740 ­4.2 66 77 100 Lesotho 2,017 0.8 66 39 2,179 1,080 4,033 2,000 3.4 43 42 .. Liechtenstein 36 1.1 222 .. .. ..e .. .. .. .. .. .. Luxembourg 488 1.4 188 18 41,406 84,890 31,372 64,320 ­2.5 76 82 .. Macao, China 526 2.2 18,659 13 18,142 35,360 26,811 52,260 10.4 79 83 94 Macedonia, FYR 2,038 0.2 80 18 8,432 4,140 20,266 9,950 5.0 72 77 97 Maldives 310 1.6 1,035 29 1,126 3,630 1,639 5,280 4.0 68 69 97 Malta 411 0.7 1,286 16 6,825 16,680 9,192 22,460 3.1 77 82 92 Marshall Islands 60 1.9 331 .. 195 3,270 .. .. ­0.8 .. .. .. Mauritius 1,269 0.8 625 23 8,122 6,400 15,841 12,480 4.7 69 76 87 Mayotte 191 2.9l 511 40 .. ..d .. .. .. .. .. .. Micronesia, Federated States 111 0.5 159 37 260 2,340 334f 3,000f ­1.3 68 69 .. Monaco 33 0.3c 16,821 .. .. ..e .. .. .. .. .. .. Mongolia 2,632 1.2 2 27 4,411 1,680 9,158 3,480 7.9 64 70 97 Montenegro 622 ­0.7 45 20 4,008 6,440 8,661 13,920 6.9 72 76 .. Namibia 2,114 1.5 3 37 8,880 4,200 13,248 6,270 1.0 52 53 88 Netherlands Antilles 194 0.9 242 21 .. ..e .. .. .. 71 79 96 New Caledonia 246 1.8 13 26 .. ..e .. .. .. 72 80 96 Northern Mariana Islands 85 2.3c 186 .. .. ..e .. .. .. .. .. .. Oman 2,785 1.8 9 32 32,755 12,270 55,126 20,650 5.1 74 77 84 Palau 20 0.7 44 .. 175 8,650 .. .. ­1.6 66 72 .. Puerto Rico 3,954 0.4 446 21 .. ..e .. .. .. 74 83 .. Qatar 1,281 9.1 116 16 .. ..e .. .. .. 75 77 93 Samoa 182 0.6 64 40 504 2,780 789f 4,340f ­3.6 69 75 99 San Marino 31 1.3m 517 .. 1,430 46,770 .. .. 3.1 79 85 .. São Tomé and Principe 161 1.7 168 41 164 1,020 286 1,780 3.9 64 67 88 Selected World Development Indicators 2010 389 Table 6 Key indicators for other economies PPP Life Gross national gross national expectancy Population Population income (GNI) a income (GNI) b at birth Adult age Gross literacy density composition domestic rate Average people % Per Per product % ages annual per ages $ capita $ capita per capita Male Female 15 and Thousands % growth sq. km 0­14 millions dollars millions dollars % growth years years older 2008 2000­08 2008 2008 2008 2008 2008 2008 2007­08 2007 2007 2007 Seychelles 86 0.8 188 .. 889 10,290 1,707f 19,770f 1.3 69 78 .. Slovenia 2,039 0.3 101 14 48,973 24,010 54,875 26,910 2.5 74 82 100 Solomon Islands 507 2.5 18 39 598 1,180 1,309f 2,580f 4.9 63 64 .. St. Kitts and Nevis 49 1.3 189 .. 539 10,960 746f 15,170f 8.8 .. .. .. St. Lucia 170 1.1 279 27 940 5,530 1,561f 9,190f 1.1 73 76 .. St. Vincent and the Grenadines 109 0.1 280 27 561 5,140 957f 8,770f 0.9 69 74 .. Suriname 515 1.2 3 29 2,570 4,990 3,674f 7,130f 6.0 65 73 90 Swaziland 1,168 1.0 68 40 2,945 2,520 5,852 5,010 1.1 46 45 .. Timor-Leste 1,098 3.7 74 45 2,706 2,460 5,150f 4,690f 9.6 60 62 .. Tonga 104 0.6 144 37 265 2,560 402f 3,880f 0.7 69 75 99 Trinidad and Tobago 1,338 0.4 261 21 22,123 16,540 32,033f 23,950f 3.0 68 72 99 Vanuatu 231 2.5 19 39 539 2,330 910f 3,940f 4.2 68 72 78 Virgin Islands (U.S.) 110 0.1 314 21 .. ..e .. .. .. 76 82 .. a. Calculated using the World Bank Atlas method. b. PPP is purchasing power parity; see technical notes. c. Data are for 2003­07. d. Estimated to be upper middle ($3,856­$11,905). e. Estimated to be high income ($11,906 or more). f. The estimate is based on regression; others are extrapolated from the latest International Comparison Program benchmark estimates. g. Includes Mayotte. h. Excludes Turkish Cypriot side. i. Less than 0.5. j. Estimated to be low income ($975 or less). k. Estimated to be lower middle income ($976­$3,855). l. Data are for 2002­07. m. Data are for 2004­07. 390 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 0­14 refers to the per- and older who can, with understanding, read and write a centage of the total population that is ages 0­14. (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 Definitions The proportion of children who are underweight is the most Survey year is the year in which the underlying data were common indicator of malnutrition. Being underweight, collected. even mildly, increases the risk of death and inhibits cogni- Population below national poverty line, National is the tive development in children. Moreover, it perpetuates the percentage of the population living below the national poverty problem from one generation to the next, as malnourished line. National estimates are based on population-weighted women are more likely to have low-birthweight babies. subgroup estimates from household surveys. (World Bank) (WHO) Population below $1.25 a day and population below $2 Primary completion rate is the percentage of students a day are the percentages of the population living on less completing the last year of primary school. It is calculated by than $1.25 a day and $2 a day at 2005 international prices. taking the total number of students in the last grade of pri- As a result of revisions in PPP exchange rates, poverty rates mary school, minus the number of repeaters in that grade, for individual countries cannot be compared with poverty divided by the total number of children of official gradua- rates reported in earlier editions. (World Bank) tion age. The primary completion rate reflects the primary Poverty gap is the mean shortfall from the poverty line cycle as defined by the International Standard Classification (counting the nonpoor as having zero shortfall), expressed of Education (ISCED), ranging from three or four years of as a percentage of the poverty line. This measure reflects the primary education (in a very small number of countries) to depth of poverty as well as its incidence. (World Bank) five or six years (in most countries) and seven (in a small number of countries). Because curricula and standards for Table 3. Millennium Development Goals: eradicating school completion vary across countries, a high rate of pri- poverty and improving lives mary completion does not necessarily mean high levels of Share of poorest quintile in national consumption or student learning. (UNESCO Institute for Statistics) income is the share of the poorest 20 percent of the popula- Ratio of girls to boys enrollments in primary and sec- tion in consumption or, in some cases, income. It is a distribu- ondary school is the ratio of the female gross enrollment tional measure. Countries with more unequal distributions rate in primary and secondary school to the male gross of consumption (or income) have a higher rate of poverty for enrollment rate. a given average income. Data are from nationally representa- Eliminating gender disparities in education would help tive household surveys. Because the underlying household to increase the status and capabilities of women. This indi- surveys differ in method and type of data collected, the dis- cator is an imperfect measure of the relative accessibility tribution data are not strictly comparable across countries. of schooling for girls. School enrollment data are reported The World Bank staff have made an effort to ensure that the to the UNESCO Institute for Statistics by national educa- data are as comparable as possible. Wherever possible, con- tion authorities. Primary education provides children with sumption has been used rather than income. (World Bank) basic reading, writing, and mathematics skills along with an Vulnerable employment is the sum of unpaid family elementary understanding of such subjects as history, geog- workers and own-account workers as a percentage of total raphy, natural science, social science, art, and music. Sec- employment. The proportion of unpaid family workers and ondary education completes the provision of basic education own-account workers in total employment is derived from that began at the primary level and aims at laying founda- information on status in employment. Each status group tions for lifelong learning and human development by offer- faces different economic risks, and unpaid family workers ing more subject- or skill-oriented instruction using more and own-account workers are the most vulnerable--and specialized teachers. (UNESCO Institute for Statistics) therefore the most likely to fall into poverty. They are the Under-five mortality rate is the probability per 1,000 that least likely to have formal work arrangements, are the least a newborn baby will die before reaching age five, if subject likely to have social protection and safety nets to guard to current age-specific mortality rates. The main sources of against economic shocks, and are often incapable of gener- mortality data are vital registration systems and direct or ating sufficient savings to offset these shocks. (International indirect estimates based on sample surveys or censuses. To Labour Organization) make under-five mortality estimates comparable across coun- Prevalence of child malnutrition is the percentage of tries and over time and to ensure consistency across estimates children under five whose weight for age is less than minus by different agencies, UNICEF and the World Bank developed two standard deviations from the median for the interna- and adopted a statistical method that uses all available infor- tional reference population ages 0­59 months. The table mation to reconcile differences. The method fits a regression presents data for the new child growth standards released line to the relationship between mortality rates and their by the World Health Organization (WHO) in 2006. Esti- reference dates using weighted least-squares. (Inter-agency mates of child malnutrition are from national survey data. Group for Child Mortality Estimation) 394 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 0 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 15­49 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) 1­5 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 10­45). (World Bank, OECD, United Nations) solid, liquid, and gas fuels and gas flaring divided by midyear Services value added correspond to ISIC divisions 50­99. 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 ­ pn­1)/pn­1. 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. A hydropower in, 45, 46m AAUs. See assigned amount units mitigation of greenhouse gases in, 1­2 accountability of government, 264, 333­34, 335b protected areas for biodiversity in, 152­53 acid rain, 81n11, 191, 206, 236 soil carbon in, 25b action now. See mitigation actions water shortages as result of climate change in, 76 "activity-based" approach to emission reductions, 25b weather forecasting in, 162 Adaptation Fund under Kyoto Protocol, 23, 107, 233, 247, 257, wildlife conservation programs in, 127 262­63, 266 agency for climate change, designation of, 20, 333b adaptative management, 14­18, 14f, 89­90 aggregators, role of, 25b, 171 capacity to adapt, 278, 280b agricultural extension agencies, 18, 25b, 100b, 104, 154, 171, characteristics of, 90b 304 community resilience and, 105 agricultural soil carbon. See soil carbon costs and financing, 257, 259­63, 260t, 261b, 264. See also agriculture, 133­37, 145­56. See also food resources; irrigation finance systems fund allocation, 277­78, 277b acceleration of productivity, 145­49, 150f private financing, 275­76 dead zones, proliferation caused by, 149, 150m public financing, 332 without sacrificing soil, water, and biodiversity, 149­51 ecosystem-based adaptation, 4, 7, 19, 70, 91, 128­29 adaptative management of, 14f, 16­18, 17b, 25b efficiency cost of adaptation funding, 266­69 biofuels. See biofuels in energy, 14­16, 14f, 80f, 189 biotech crops, 155, 155b fostering synergies between mitigation and adaptation, 95, 95b carbon sequestration and, 169­71 innovation and new technologies for, 18­26, 19b, 288, 289, 291. climate-resilient farming requirements, 151­52 See also innovation and new technologies "conservation agriculture," 154 knowledge institutions' role in, 306 crop choice, factors in, 135 in land and water use, 14f, 16­18, 17b, 25b crop insurance, 89­90, 102, 338 need for, 44, 60­61, 136­37, 154­56 crop varieties and diversification, 19b, 151­52, 152b, 155b private finance for, 275­76 decrease in productivity due to climate change, 4­5, 5m, 27n24, UNFCCC and, 246­48 40­41, 74, 76, 133, 145­46, 145m, 148, 159­60 world in 2050 and after, 88 ecoagriculture, 153, 153f advanced technologies. See innovation and new technologies ecosystems converted for, 150, 151f advisory services, 135 fertilizer use. See fertilizer aerosols. See greenhouse gases genetic modification of crops, 155b affordability of climate change reduction, 7­10, 191 inertia in farmer behavior, 11 Africa. See also specific countries and regions international cooperation in, 13­14 agricultural decrease in productivity due to climate change in, minimum tillage methods, 154­55, 170 5, 5m, 146, 150 mitigation of climate change, effect of, 146­47 aquaculture in, 158f promising practices in, 17b beef production in, 147 subsidies from wealthier countries, 134, 172 biofuel production in, 147 technological innovation in, 16­18, 17b, 150­51, 154­56, 166, dams in, 143 166­67f, 293 diseases in, 95, 97 trade in agricultural commodities, 159­61, 161m disproportionate consequences of climate change on, 77f, 168 tropical farmers and product/market diversification, 152b drought in, 105 water use and. See water resources floods in, 100, 100f women's empowerment in, 43b higher education enrollment in, 305b world in 2050 and after, 88 399 400 INDEX air pollution Bangladesh advanced technologies for reduction of, 208 disproportionate consequences of climate change on, 6b clean energy impact on, 192b early warning systems in, 105, 162 as climate change consequence, 79 engineering education in, 304 energy demand and, 79 protections against climate change effects, 7b, 302b pricing of, 208 social protection policies in, 13, 13b Alexandria, flooding risks and storm exposure, 93b Basel Convention, 253 alternative technologies. See innovation and new technologies Battelle Memorial Institute's Joint Global Change Research Amazon rain forest, 17b, 78, 88 Institute, 242b ancient history and environmental change, 37 beef production, 146, 147­48, 149f Ansari X-Prize, 299 bee pollination, 153 Antarctic. See polar regions behavior of individuals. See individual behavior aquaculture, 157­58, 158f Benin, mobile phone use to disseminate information in, 291 Arab countries. See Middle East and North Africa Berlin Mandate (1995), 244 Aral Sea, 6b, 45 best practices, sharing of, 12 Arctic warming. See polar regions biochar, 17b, 155, 156b Argentina biodiesel, 148b, 308 export controls in, 46, 160 biodiversity privatization of water services in, 98 activities to protect and maintain, 125­27 Asia. See also specific countries and regions changes in biodiversity hotspots and elsewhere, 124, 126m agricultural innovation in, 17b, 151 climate change impact on, 74, 76 aquaculture in, 158, 158f community-based conservation, 127 biofuel production in, 147 competition from biofuels, 147 car use in, 194 conservation reserves, 126­27, 175n113 cereal production in, 150 Convention on International Trade in Endangered Species, 253 crop yield decline in, 146 economic models and, 49 fires, emissions from, 146 food production needs and, 17 food pricing in, 168 genetic modification of crops and, 155b impact of climate change in, 77f marine, 127 water shortages as result of climate change in, 76 planning and management, 127, 134 assigned amount units (AAUs), 24, 270, 278 protected areas for, 152­54, 153f Aswan Dam (Egypt), 143 women's participation and, 43b auctioning, 24, 270, 278 biofuels Australia Brazil as leading producer of, 254, 308 cities encouraging energy efficiency in, 21b corn-based production, costs of, 45, 47f climate education in schools in, 329b energy efficiency improvements in, 16 emissions reduction in, 192b expanding production of, 147, 160, 167­68, 174n70 greenhouse gases in, 2 integration of, 222 impact of climate change in, 77f second-generation, 147, 204, 205b, 289 tradable water rights in, 141­42, 142b tariffs on, 308 water pricing in, 141 biomass, 146, 191, 193f, 200b, 205b, 208, 217, 223n25 automobiles biotech crops, 155, 155b consumer preferences, 212b Bolivia, ecosystem protection in, 128b emission reductions by switch vehicles, 323f Bolsa Escola­Bolsa Familia (Brazil), 60, 63n137 high-fuel mileage, 299 Boston's climate-change strategy, 90 ownership and usage rates, 194, 196f Brazil plug-in hybrids and electric vehicles, 209b, 211, 222, 292 agency for climate change in, 20 awareness of climate change, 19­20, 73­76, 322­24, 323f, 324f biofuels in, 45, 254, 308 Bolsa Escola­Bolsa Familia, 60, 63n137 B CDM revenues to, 262t, 265 Bali Action Plan (UNFCCC) drought in, 42­43 accountability framework, 264 emissions reduction in, 192b contents of, 233, 234b energy-efficiency investment in, 292 on cost of delaying mitigation, 55 energy-efficiency laws in, 213 "measurable, reportable, and verifiable" (MRV), 242, 244­45 floods in, 100 support of developing countries from developed countries, 244 greenhouse gas emissions from land-use change in, 194 treatment of developed vs. developing countries by, 22, 203, 244 hurricane in, 12, 100 Index 401 indigenous people and forest management in, 106­7 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, 51­52, 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, 236­37, 238b CGIAR. See Consultative Group on International Agricultural business environment Research enabling innovation, 307­10 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, 23­24, 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, 44­45, 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, 253­54, 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, 169­71, 170f, 172b, 271­72, 294, stimulus packages and green spending in, 59, 59f 306­7 transportation by e-bikes in, 307, 307f carbon sequestration, 169­71, 172b, 177n231, 274b, 290b transportation collapse due to January 2008 storm in, 45, 45f carbon sinks, 71b, 78 water management and monitoring in, 165­66 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, 91­95, 93b, 104 "climate insurance," 8b, 9, 27n33, 101­2 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, 19­20, 44, 88, 95b, 190, 206, Kyoto Protocol and, 21b, 210b 207f, 207t, 292 migration to, 92, 110b climate-smart government, 331­32, 332f population growth in, 40, 91, 194 climate-smart technologies, 16, 95, 292­93, 298. See also response to climate change, 20, 21b, 91­95, 93b, 96b, 96m innovation and new technologies; low-carbon water consumption in, 141 technologies world in 2050 and after, 88 climate system, workings of, 70­73 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, 23­24, 25b, 245­46, coastal zones at risk, 91­95, 91m, 93b, 112n30, 158, 302b 254 co-benefits activity-based, 272­73 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, 11­14, 161. See also international cooperation changes to, 272­73 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, 261­62, stimulus packages and green spending in, 60 262t, 281n6 Common Agricultural Policy (EU), 172 shortcomings of, 233, 257, 265­66, 272 communicable diseases, 39, 41, 95­98, 97m. See also specific inefficient contribution to sustainable development, 265 diseases limited scope, 257, 265­66, 301 communicating about climate change, 323b, 327­28, 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, 266­67, 267t, 278 competition and new technologies, 291­92, 299 trend-changing market mechanism, 273 conditionality and position of developing countries, 239­40 clean technology and energy, 21­22, 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, 126­27 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, 322­30, 322f, 323f. See also climate change. See also temperature individual behavior awareness of, 19­20, 73­76, 322­24, 323f, 324f, 326f carbon labeling, 253­54, 328 communicating about, 323b, 327­28, 328b, 340 education initiatives, 208, 214t, 216­17 crossing thresholds of irreversible catastrophe, 78­79 financial incentives, 213­14, 224n78 economics of, 7­10, 8b contingent financing, 104 effect on development and poverty alleviation, 1, 7­10, 26n5, 37 controlled-release nitrogen, 17b global threat of, 4­7, 75­76, 76f, 78­79 Convention on International Trade in Endangered Species, 253 green federalism and, 336­37b Convention on the Law of the Non-Navigational Uses of major factors affecting since Industrial Revolution, 72­73, 73f International Watercourses (UN), 158­59 need for immediate action, 3, 4, 10­11. See also mitigation actions cooking with clean fuels, 48, 191, 273, 311, 312b rate of change, 1, 11f, 40, 70, 71, 73­76 Copenhagen, encouraging energy efficiency in, 21b science of, 70­81 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, 48­53, 49b, 329 agriculture in, 17, 146, 172 alternative decision-making frameworks for, 54­55 assistance for climate change in, 2­3, 22, 257­85. 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 297­301 for emissions control promotion, 38, 55­56, 203­4, 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, 23­24, 171, 261 support for mitigation efforts of, 244, 245­46 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, 253­54 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, 17­18, 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, 55­56, 203­4 child death rates, 39, 95, 98 emission sources in, 194, 195f climate change responsible for, 95, 98f energy demand in, 51, 191, 193­94, 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, 47­48 premature deaths from greenhouse gases, 212 energy transformation in, 190, 195, 203­4, 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, 60­61, 90 hydropower in, 45 alternative frameworks for, 54­55 innovation and new technologies in, 21, 45, 51, 220­21, 289, natural resources management, 134 292, 293, 303t, 310 reversible and flexible options, 89­90, 101 insurance availability in, 102, 103f on water availability, 163 integrating into global architecture, 240­45 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, 237­38, 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, 241­42 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, 48­49, 49b, 53b, 62n69 desalination, 18, 143­44, 174n40 diseases. See communicable diseases; specific diseases developed countries. See high-income countries dislocations of ecosystems, 4 developing countries diversification in crops, 19b, 151­52, 152b affordable energy for, 191 Doha Development Agenda (WTO), 162, 251, 254 404 INDEX domestic policy, 19­20, 288. See also local government response to protection of, 17 climate change resilience of, 74 drinking water, 139­40, 142­43. 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, 124­29, 124b, 125t increased frequency of, 73, 79, 137­38, 137­38m payment for, 127­28, 128b Malawi's weather-based risk management and, 103­4 education thermal and nuclear energy production and, 191 climate education in schools, 329b world in 2050 and after, 88 climate shocks and, 43­44, 340 climate-smart practices, teaching of, 95, 208 E consumer education on energy efficiency, 208, 214t, 216­17 early warning systems, 90, 92, 97­98, 99b, 104­5, 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, 304­6, 305b aquaculture in, 157 technology absorption and, 303, 304 disability-adjusted life years, loss of, 41 efficiency cost of adaptation funding, 266­69 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), 164­65 electricity. See energy ecoagricultural landscapes, 17, 19b, 25b El Niño Southern Oscillation (ENSO), 79, 162 economic growth, 1, 7, 7b, 26, 26n5, 37­61 El Salvador, women's empowerment in, 43b alternative frameworks for decision making and, 54­55 emergency preparedness, 96b, 100­101, 291 balancing with climate change policies, 44­48 emission rates. See also greenhouse gases; headings starting with empowerment of women and, 43b "carbon" energy policies and, 191 advocates of more gradual reduction, 8­9, 8b fiscal recovery packages including green initiatives, 26, 29n93, carbon labeling and, 253­54 58­59, 190b changing from high use, 192b, 193­95, 193f, 198, 198t green spending, 59­60 in cities, 210b green taxes and, 47­48 developing countries and, 1, 2f, 3f, 38, 39f inertia and, 52, 55­58 guardrails and mitigation goals, 54 international climate regime and, 233­40 high-income countries and, 2, 3f, 38, 39f, 192b lifetime earnings, effect of disaster shocks on, 44 increase (1997­2006), 233, 248 losses caused by natural disasters, 98­99 inertia's effect on, 10, 81. See also inertia, effects of normative choices on aggregation and values, 52­53 medium-term emission objectives, 239, 289, 335b reversal due climate change, 39­44 multitrack framework for international agreements on, 22 savings from energy efficiency, 209­17 negative emissions, 81, 196, 198, 205b, 223n21 sustainable development, 39­48 employment guarantee program (Bangladesh), 13b tradeoffs, evaluation of, 48­55 empowerment uncertainties, accounting for, 51­52, 89 of communities to self-protect, 105­11 economics of climate change, 7­10, 8b. See also finance; mitigation of women, 43b costs energy, 189­222. See also renewable energy; specific types ecosystems adaptative management of, 14­16, 14f, 80f, 189 agricultural use of, 150, 151f comparing costs, problems in, 217b carbon cycle and, 71b, 78 competing objectives of energy policies, 191­95 developing countries and, 5 doubling of consumption, 193­95, 193f economic models and, 49 efficiency, 190, 191, 208, 212­17 ecosystem-based adaptation, 4, 7, 19, 70, 91, 128­29 California programs, 15, 192b, 215b guardrail approach and, 54 consumer education, 208, 214t, 216­17 marine ecosystems, 78b, 156­57 development benefits of efficient and clean energy, 192b population growth and, 40 financial incentives, 208, 213­14, 214t, 218­19 Index 405 financing mechanisms, 208, 214t, 216, 216b European Union institutional reform, 208, 214­16, 214t Common Agricultural Policy, 172 market and nonmarket barriers and failures, 211, 212b, 213b emissions reduction in, 192b public procurement, 216 Emissions Trading Scheme, 274, 339b regulations, 208, 213, 214t, 294­95 energy demand reductions in, 202b, 238b savings from, 209­17 fuel prices, compared to U.S., 14­15, 28n61, 212 in urban areas, 95b "New Approach" to harmonization, 297 environment and, 191­95. See also emission rates; greenhouse evacuation planning, 90, 92 gases; headings starting with "carbon" "excusable ignorance," 53b feed-in laws, 218, 219b exports. See trade global energy models to stay at 2º warmer world, 200­201b, extension agencies supporting farmers, 18, 25b, 100b, 104, 154, 223n28 171, 304 global reduction in demand, 200­201b innovation and new technologies, 16, 208­9, 220­21. See also F innovation and new technologies; renewable energy Fankhauser, S., 266b integration of policies, 222 Farm Inputs Promotion program (Kenya), 156 natural gas, 219­20 farms and farmers. See agriculture nuclear power, 219­20 feed-in tariff, 15, 214t, 218, 219b, 221b pricing, 191, 211­12, 223n9 fertilizer, 17b, 135, 146, 149, 156, 168 increases in, 168 finance, 22­26, 257­85. See also developing countries, subheading: safety nets to protect poor from high energy prices, 108 assistance for climate change in U.S. vs. European fuel prices, 14­15, 28n61, 212 Adaptation Fund. See Adaptation Fund under Kyoto Protocol security as goal of energy policies, 191, 223n8 administrative simplicity and cost, 269 subsidies, 14­15, 28n64, 47­48, 211­12 alignment issues and, 264 types used (1850­2006), 193, 193f allocation formulas, 277­78, 277b energy service companies (ESCOs), 214, 216 auctioning, 24, 270, 278 Energy Star program, 295 bilateral and multilateral climate funds, 263t engineering, need for education in, 304, 304f CDM. See Clean Development Mechanism epidemics. See communicable diseases conditionality and, 239­40 Equilibrium Fund, 43b distributional impacts, 269 equity existing instruments of climate finance, 258t, 261­62, 281n5 environment and, 235­36, 257 fiscal neutrality, 269, 331 in global dealings, 12, 21, 22, 24, 28n47, 53b fragmentation of climate finance, 263­65, 263t intergenerational equity, 53b future financing needs and sources of funds, 278­81 in multitrack approaches, 242b gap in, 259­63, 260t, 263f normative choices on aggregation and values, 52 for innovation and new technologies, 292­93, 292f public acceptance of reform and, 339­40 harmonization issues and, 264 ESCOs. See energy service companies incentives. See incentives ethanol. See biofuels inefficiencies in finance instruments, 263­67. See also Clean ethics, 52­53, 53b, 155b Development Mechanism (CDM) Ethiopia infrastructure finance from private sector, 24, 276 Productive Safety Net in, 108 innovation and new technologies, 301­2, 304 rainfall reduction in, 42 lessons from aid finance, 22, 28n89 Europe. See also specific countries and regions leveraging private finance, 275­76, 306­7 biofuel production in, 45­46 market solutions and, 271­72 car use in, 194 mutual accountability and, 264 crop productivity in, 40 need for, 259­61, 260t energy prices in, 14­15, 28n61, 212 new sources for, 257­58, 263t, 269­70, 271t heat wave ownership issues and, 264 as cause of death in (2003), 40, 41m policy coherence, 269, 269b energy demand due to (2007), 191 from private vs. public sector, 261­62, 280 impact of climate change in, 77f public finance, 245, 310­11, 332 Long-Range Transboundary Air Pollution regime, 241 recession's effect on. See financial crisis protected areas for biodiversity in, 152, 153 reserve funds for catastrophes, 103 wind energy in, 287 results agenda for, 264 European Commission, 27n15 revolving funds, 216 European Environment Agency (EEA) report on subsidies to scaling up climate-change finance, 267­76 energy, 28n64 transparent, efficient, and equitable use of funds, 276­78 406 INDEX finance (continued) Fourth Assessment Report of the Intergovernmental Panel on utility demand-side management, funding of, 216 Climate Change (IPCC), 4, 70 "vulnerability fund," World Bank creation of, 58 France financial crisis, 3, 26n12, 58 energy-efficiency quotas in, 213 as excuse to delay action, 189­90, 190b, 288 in heat wave (2007), 191 recovery packages including green initiatives, 26, 29n93, 58­60, Passerelle research program, 301 59f, 190b, 291 residential building stock in, 203 financial incentives. See incentives functional foods, 175n92 fires, emissions from, 146 funding. See finance fisheries aquaculture and, 157­58, 158f G biodiversity and, 17 Ganges river, 176n174 climate change impact on, 19b, 127, 129 gas and oil. See energy food production demand and, 74, 156­58 GAVI Alliance, 299­300 international cooperation, 159 GEF. See Global Environment Facility management of, 106, 127 gender differences in climate-change experiences, 43b flexible options in decision making, 89­90, 101 General Electric, 308 flood insurance, 102 genetic modification of crops, 155b floods, 4, 7b, 12, 70. See also disaster risk management programs genomics, 19b, 98 advance warnings of, 162 geoengineering, 289, 290b in Africa, 100, 100f geographic information, use of, 99b, 100, 100b in Bangladesh, 13b Georgetown, Guyana, and flooding, 93 in Brazil, 100 geothermal energy, 204, 205b, 217 creating jobs to reduce risk of, 100­101, 101b Germany increased frequency of, 73 biofuel production in, 308 in low-lying areas, 19b feed-in laws in, 218, 219b risk information and maps on, 100, 100b green government procurement in, 311 risk management, 325b renewable energy in, 15 in South/Southeast Asia, 94, 94m Ghana, diseases in, 95 urban planning and, 92­93, 93b, 100 glaciers, disappearance of, 4, 6b, 37, 38m, 78, 79, 90, 93, 129n9, 137 world in 2050 and after, 88 global average temperature, 72­73, 73f Food and Agriculture Organization, 165, 274, 301 global climate services enterprise (GCS), 296b food-for-work program (Bangladesh), 13b global cooperation. See international cooperation food resources. See also agriculture; fisheries; hunger; land use Global Earth Observation System of Systems, 295, 296b adaptative management of, 14f, 16­18 Global Environment Facility (GEF), 21, 216b, 221b, 233, 248n2, 300 aquaculture and, 157­58, 158f innovation funding from, 302 biofuel production and, 45­46 Strategic Priority on Adaptation initiatives, 247 food crises (2008), 107, 160, 168 governmental response to climate change, 20, 24, 330­35, 332f. See food production shortfall, 146, 174n58 also international cooperation functional foods, 175n92 accountability, 333­34, 335b global reserve for, 161 climate-smart government, 331­32, 332f international cooperation in, 13­14, 158­62 finance. See finance pricing, 134, 166­73, 168f, 176n189 incentives for resource users, 173 procurement methods, 161 as insurer of last resort, 102, 113n93, 331 right to food, 53b interagency coordination, 333 stockpiling, 161 leadership role, 332­34, 340 water management and, 144­45 liquidity for, 103­5 foreign direct investment (FDI), 308 public-private partnerships for sharing climate risks, 102b, 103 Forest Carbon Partnership Facility (World Bank), 24, 274 weak governance, 265 forests grain. See cereal and grains carbon, 24, 25b. See also deforestation green federalism, 336­37b climate change and, 74 green government procurement, 311 commons management of, 106 Greenhouse Development Rights Framework, 238b greenhouse gas emissions from, 146, 273 greenhouse gases. See also carbon dioxide concentration; Kyoto timber industry in Canada, 40 Protocol water use and, 141 agricultural uses, reducing emissions from, 146­47, 155 fossil fuel, 2, 20, 71b, 146, 193, 200b, 335. See also coal beef production and, 147, 149f, 174n69 consumption energy efficiency and, 208 Index 407 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, 71­72 innovation and new technologies in, 220, 287, 293, 301, 303t, 308 increasing emissions (1970­2004), 71­72, 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, 241­42 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, 70­71, 72f women's empowerment in, 43b Greenland ice sheet, 50b, 70, 73, 74f, 78 Hong Kong, car use in, 194 Green Revolution, 150­51, 306b human rights, 53, 53b green spending, 59­60, 59f Hungary Energy Efficiency Guarantee Fund, 216b in government procurement, 311 hunger recovery packages including, 26, 29n93, 58­59 as development priority, 1 green taxes, 47­48, 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, 142­43, 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, 137­38 "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, 294­95, 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, 43­44 IDA. See International Development Association diseases. See communicable diseases; specific diseases IEA. See International Energy Agency system adaptation, 19b, 88, 95­98, 112n66 IFC. See International Finance Corporation vaccine program of GAVI Alliance and World Bank, 299­300 Ilo, Peru, and urban planning, 92 women's empowerment and, 43b IMAGE energy-climate model, 201b, 223­24n28 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, 306­7 thermal and nuclear energy production and, 191 for renewable energy, 218­19 "hedging actions," 54, 89 for resource users, 172­73 high-income countries India aid to developing countries, 13, 38, 257­85. 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, 40­41 carbon footprint in, 21, 44, 61n43 eChoupals and soybean crops, 164­65 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 India (continued) infrastructure, 10­11, 19b, 27n39 disaster response in, 291 delaying in hopes of lower costs, 51 emissions rates in, 21 food and agriculture management, 162, 168­69 emissions reduction in, 192b knowledge infrastructure, 304­6 energy demand reductions in, 202­3b, 238b private infrastructure, 24, 276 energy-efficiency investment in, 292 urban planning and, 92 energy-efficiency laws in, 213 Inland Empire Utilities Agency (California), 140b export controls in, 46, 160 innovation and new technologies, 287­312 innovation and new technologies in, 21, 220, 301, 308, 310 accessibility of, 289­93 institutional reform for climate change in, 333b for adaptation, 18­26, 19b, 288, 289, 291 social protection policies in, 13b agriculture and, 16­18, 17b, 150­51, 154­56, 166, 166­67f, 293 solar energy in, 254 budget gap for development and diffusion of, 292­93, 292f water management in, 17, 142­43, 165, 165f business environment enabling, 307­10 weather forecasting in, 162 carbon capture and storage. See carbon capture and storage weather-index insurance in, 101 (CSS) technology wind energy in, 287 for coastal adaptation, 302b Workfare in, 109b comparing costs, problems in, 217b Indian Tobacco Company (ITC), 164­65 competition and, 291­92 indigenous people and knowledge, 105, 106­7, 106f, 128, 128b, 137 complexity of, effect on policy, 295b, 295f individual behavior, 11, 20, 105, 106, 106f, 208, 322­30, 323f cost-sharing agreements, 289, 294t, 297­301 concern vs. understanding, 322­24, 323b, 324f developing countries and, 21, 51, 220­21, 289, 292, 293 encouraging behavioral change, 327­30 energy changes and, 16, 206, 208­9, 220­21 end-use technologies and, 289 financial and technological resources, 302­3 "proximity limit" and, 337 financing mechanisms, 301­2 social norms and, 329­30 gap in terms of significant mitigation and adaptation, 288 understanding vs. action, 324­26, 325b geoengineering, 290b Indonesia harmonization issues and, 294­95 cash transfer payments in, 108 health information and diagnostic tools, 98 environmental monitoring in, 304 inertia and, 11 forest carbon market in, 25b international agreements encouraging, 21­22, 293­303, 294t greenhouse gas emissions from land-use change in, 194 international organizations, 301 Ministry of Finance on climate change issues, 269b knowledge infrastructure and, 304­6, 305b palm oil cultivation in, 148b knowledge-sharing and coordination agreements, 294t, 295­97 weather forecasting in, 162 low-carbon emissions and, 2, 3f, 208­9 industrial emissions, 194, 211, 253, 291 market-pull, reward-based agreements, 298­300, 311 inertia, effects of monitoring, 296b on climate negotiations, 26 national policy priorities for, 303­11, 303t on climate system, 38, 50­51 private sector mobilization and, 298, 306­7 costs of delay, 52, 55­58 prizes as inducement, 299 financial crisis as excuse for, 189­90, 190b public finance for, 310­11 on future generations, 10­11, 11f, 53b, 81 research agreements, 297­98 on policy reform, 321 technology transfer, 254, 266b, 289, 294t, 301, 307­10 on technological development, 292 urban planning and, 92 infant mortality, 39. See also death water resources and, 16­18, 17b, 143­44, 165, 165f, 298 information "Innovation Cities" (Republic of Korea), 92 critical for world of 2050 and after, 88 Instituto de Pesquisa Planejamento Urbano de Curitiba (IPPUC), on energy efficiency, 212b 93b geographic information, use of, 99b, 100, 100b insurance, 12­13, 89­90, 101­3, 103f, 105b, 331. See also "climate health information, teaching of, 98 insurance" for individual behavior change, 327­28 crop insurance, 338 innovative monitoring of, 296b livestock insurance, 101, 102b international cooperation in sharing, 12, 294t, 295­97, 303 integrated approaches. See also multitrack climate framework remote sensing. See remote-sensing technologies adaptation into climate-smart development, 246­48 on resource management and food production, 134, 135, 136, climate considerations in development strategies, 291 162­66 developing-country actions into global architecture, 240­45 satellite imaging. See satellite imaging, use of energy efficiency, 222 on social norms, 330 land use, 152­54, 152b, 153f, 175n105 on water management, 17, 18, 139, 162­64, 164f integrated assessment model (FAIR), 8b Index 409 Integrated Assessment of Agricultural Knowledge, Science, and irrigation systems, 17b, 18, 135, 141, 144­45, 149 Technology for Development (IAASTD), 154, 168 Israel and venture capital, 301 intellectual property rights, 298, 309­10, 309f. See also patents ITER, 297­98, 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, 100­101, 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, 233­48. See also multitrack climate K framework Kazakhstan adaptation efforts, 246­47 effect of climate change in, 146 burden sharing and opportunistic early action, 236­37, export controls in, 160 238b Kenya environment and equity, 235­36 agricultural carbon finance in, 171, 172b financing, 239­40 Farm Inputs Promotion program in, 156 integrated multitrack climate framework, 241­42, 242b feed-in laws in, 218 market-based mechanisms, 245­46 soil carbon pilot project in, 25b predictable climate outcome and unpredictable development knowledge-sharing, 294t, 295­97, 303. See also information process, 237­39 Korea, Republic of public finance, 245 Energy Management Corporation, 214 tensions between climate and development, 233­40 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, 20­22, 158­62 (CDM) fisheries, 159 Adaptation Fund, 23, 107, 233, 247, 257 in food and water security, 13­14, 158­62 carbon leakage and, 253 importance of, 12, 20, 288­89 cities and, 21b, 210b in innovation and new technologies, 21­22, 288­89, 293­303 contents of, 234b, 251 knowledge-sharing and coordination agreements, 295­97 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, 16­18, 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, 105­6 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, 152­54, 153f, 175n112 410 INDEX Latin America and the Caribbean. See also specific countries Malawi and weather-based risk management, 103­4 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, 156­57. See also fisheries disproportionate consequences of climate change on, 6b, 77f market-based mechanisms, 245­46. See also Clean Development food pricing in, 168 Mechanism (CDM) green taxes in, 47 market-pull inducements, 298­300, 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), 244­45, 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, 147­48, 149f, 174n69, 175nn74­75 agency for climate change in, 20 local government response to climate change, 20, 21b, 330­35. See carbon mitigation strategy in, 240 also cities coffee production in, 152b climate-smart development at local level, 341­42 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, 106­7 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 Progresa­Oportunidades, 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, 237­38, 240, 272, microfinance institutions, 101 282n27 Middle East and North Africa. See also specific countries scaling up, 190, 208, 212, 217­18 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, 288­89, 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 migration Moldova Soil Conservation project, 128b resettlement, 110 Mongolia, livestock insurance in, 101, 102b in response to climate change, 88, 108­11, 110b, 111m monsoons, 79 settlement in vulnerable areas, 109, 111m Montreal Protocol, 81n10, 297, 302 of species, 124 Morocco urban migration, 92, 110b cereal imports in, 160b "migration hump," 110b irrigation of Oum Er-Rbia river basin in, 135 Millennium Ecosystem Assessment, 124, 124b, 125t water management in, 142b, 144, 145, 163 MiniCAM energy-climate model, 201b, 223n28 mortality. See death mitigation actions, 10­18, 190­91 MoSSaiC, 327b acting now and, 3­4, 10­11, 10f, 48, 52, 58­61, 199­204 mountain pine beetle epidemic, 40 on technical and policy fronts, 204­9 Mount Pinatubo eruption (1991), 290b adaptation management and, 14­18, 14f, 88. See also adaptative Mozambique management emergency preparedness in, 100 biodiversity, in support of, 124­25 flood risk management in, 325b collective action and, 12, 20, 21 MRV. See "measurable, reportable, and verifiable" defined, 1 multilateral environmental agreements (MEAs), 253 for developing countries, 9, 9t, 12, 244, 245­46 Multilateral Fund for the Implementation of the Montreal economic growth and, 44, 45­47 Protocol, 22, 302 fiscal recovery packages including green initiatives, 26, 29n93, multitrack climate framework, 22, 241­42, 242b 58­60, 59f policy-based track, 241, 242­45 fostering synergies between mitigation and adaptation, 95, 95b target track, 241 inertia, effects of, 10­11, 11f, 26, 38, 50­51, 189 mutual accountability, 264 innovation and new technologies. See innovation and new technologies N international cooperation in, 13­14 Nairobi Work Program, 247 long-term strategies, 60­61, 81, 90, 237­38, 240, 272, 282n27, Nakamura, Shuji, 298 337 National Adaptation Programs of Action (NAPAs), 233, 246, 247, menu or "tool box" of, 243 333, 334b multitrack approach. See multitrack climate framework National Environmental Awareness and Education Act of 2008 policy-based mitigation track, 241, 242­45 (Philippines), 329b risk management and, 12­13, 13b National Rural Employment Guarantee Act (India), 109b widening geographic scope, 90 National Water Act (South Africa), 141 mitigation costs, 9, 9t, 257 natural capital, 19b as barriers to mitigation, 211, 212b natural disasters. See also specific types of disasters benefits of efficient and clean energy, 192b disaster risk management programs, 20, 99b broader impacts of environmental losses, 49 entitlement view of public relief after, 338 climate finance and, 22­26, 101­3, 257. See also developing rapid response in times of, 13b countries, subheading: assistance for climate change in as teaching moments, 340 community action and, 106 vulnerability to, 40, 42, 98­101, 98f, 113n70 comparing costs, problems in, 217b natural gas, 208, 219­20 delay costs, 55­58, 57f, 199 natural resource management, 134­37. See also agriculture; equity in distribution of, 12, 28n49, 53b fisheries; forests factors likely to increase, 259­61, 259f, 260t negative emissions, 81, 196, 198, 205b, 223n21 financing mechanisms, 208, 214t, 216, 216b, 239­40, 261­62, Netherlands 281n5. See also finance protections against climate change effects, 7b flexible options in, 89­90, 101 satellite data, use of, 164 fund allocation, 276­78 neutrality of goals in energy use, 198, 199f, 199t, 204, 224n29 carbon-neutral policies and behaviors, 21b incentives for renewable energy, 218­19 fiscal, 269, 331 least-cost allocation and global mitigation, 28n47 technology-neutral requirements, 297 rebound effect, 211 new technologies. See innovation and new technologies savings from country announcements on date of instituting New Zealand, impact of climate change in, 77f mitigation policies, 26n11 Nicaragua scaling up and, 190 integrated land use in, 153 up front cash, need for, 211, 212b women's empowerment in, 43b mitigation delay. See inertia Niger, farming in, 106f mobile phone use to disseminate information, 291 Nigeria, tariffs on clean energy technology in, 308 412 INDEX Nile, 92 plug-in hybrids, 209b nitrogen, controlled-release, 17b polar regions, impact of climate change on, 70, 73, 77f, 78, 81n6, Nobel Peace prize (2007), 60 82n16, 105­6 nongovernmental organizations (NGOs), 107 policy-based track in multitrack approach, 241, 242­45 nonlinearities and indirect economic effects, 50b process for introducing policy actions, 243­44 Nordhaus, William, 8b, 27n32 policy makers and adaptive policies, 18, 19­20 "Nordhaus assumptions," 8b democracies and, 322, 337, 338f normative choices on aggregation and values, 52­53 domestic policy, 19­20, 288 North Africa. See Middle East and North Africa energy policy, 204­9, 214t North America. See also Canada; United States fiscal policy, 269, 269b biofuel production in, 147 green federalism and, 336­37b crop productivity in, 40, 149 institutional reform, 214­16 impact of climate change in, 77f migration and, 109­11 protected areas for biodiversity in, 153 readiness to address climate change, 234 North Atlantic Oscillation, 79 urban planning and, 92 North-South tensions, 234­35 politics of climate change, 337­41 nuclear power, 204, 208, 219­20, 289 "polluter pays" principle, 53b population growth, 40, 91, 194 O positive feedbacks in climate system, 49, 50b oceans. See also sea levels, rise in poverty. See also developing countries coastal cities at risk, 91­95, 91m change in global rate of, 1, 39 impact of climate change on, 4, 6b, 10, 70 climate change's effect on, 42, 42f, 46, 89, 105, 168 protected areas in, 17, 175n96 energy policies to increase access of poor, 191 uptake of carbon by, 6b, 71b, 78b, 156­57, 290b extreme poverty, defined, 26n1 OECD countries green taxes and, 47 farm subsidies from, 172 urban poor, 92 subsidies to biofuel producers in, 308 precipitation tariffs on clean energy technology in, 308 global changes in, 74, 75m, 138m oil and gas. See energy impact on poverty, 42 ozone depletion, 206, 236, 290b, 297, 302 increase in, 4, 73, 79, 81­82n14, 146 observable effect, 4, 37 P water resource management and, 17 Pacific Climate Information System, 296b weather forecasting of, 162 Pacific Institute, 139 precision agriculture techniques, 17b Pacific region. See East Asia and the Pacific pricing resources, 135, 166­73 PAGE model, used for Stern Review of Climate Change, 27n26 biofuels, 147 Pakistan carbon, 134, 169­71 diseases in, 95 energy, 168, 191, 211­12, 212b, 223n9 export controls in, 160 food, 150, 160, 168f, 176n189 palm oil, 148b innovation spurred by rising prices, 167­69 Papua New Guinea, palm oil cultivation in, 148b water, 141, 166­73 Paris Declaration on Aid Effectiveness, 23, 264 Prince of Wales International Business Leaders Forum, 341b participatory design and implementation, 18, 90, 105­7 Prince's Rainforest Project and the Coalition for Rainforest Passerelle research program (France), 301 Nations, 275 patents, 292, 293, 309­10, 309f, 313n19 private finance. See finance peatlands, 146 prizes as inducements for innovation, 299­300 Peru Productive Safety Net (Ethiopia), 108 discounting for farmers in, 328 Progresa­Oportunidades (Mexico), 60, 63n137 indigenous people and water management in, 137 Project Surya, 312b urban planning in, 92 property rights, 135 Pew Center on Global Climate Change, 242b protections against climate change effects, 7b, 12­13, 101­3 Philippines provisioning services, 124b, 125t climate education in schools in, 329b public buildings and energy efficiency, 59 marine ecosystem management in, 157 public opinion on climate change, 60 urban disaster risk management, 95 public-private partnerships for sharing climate risks, 102b, weather forecasting in, 162 103 physical capital, 19b public procurement of energy-efficient products, 216, 224n83 pilot programs in agriculture, 24, 25b public transport systems, 194­95, 208 Index 413 R private spending on, 292­93 rainfall. See precipitation research institutes, role of, 304­6 rain forests, 17b, 78, 88, 275 reserve for food, 161 rapid response in times of disaster, 13b reserve funds for catastrophes, 103 RD&D. See research, development, and deployment residual sinks, 71b rebound effect, 211 resilience recycled water, 18 building resilient communities, 105­7 Reduced Emissions from Deforestation and Degradation (REDD), cities and, 92 25b, 127­29, 128b, 129m, 148b disaster risk reduction and, 99b creating financial incentives for, 273­75 economic growth and, 7, 7b, 44 reflectiveness of earth's surface, changes in, 50b farming that is climate-resilient, 151­52 refrigerator efficiency standards, 213, 300b policy making and, 18 refugees, 110b. See also migration retrofits, 51 regional energy mix to limit warming to 2ºC, 202­3b Reva Electric Car Company, 292 regional government. See local government response to climate revenue recycling, 47, 331, 339 change reversible options in decision making, 89­90 regulating services, 124b, 125t revolving funds, 216 regulations RICE model, 27n26 energy efficiency, 208, 213, 214t, 294­95 rice productivity, 40­41, 146, 155 negative effect on innovation, 307 risk management, 12­13, 13b niche markets created by, 307 assessing risk, 99b renewable energy, 218­19 disaster risk management programs, 20, 43b, 99, 99b trade, 162 flood risk management, 325b reinsurance market, 13 information critical for world of 2050 and after, 88 relocation of carbon-intensive industries, 253 mitigating risk, 99b relocation programs, 7b, 108­11. See also migration risk-sharing by communities, 102b REMIND energy-climate model, 201b, 223n28 urban, 95 remittances, 58 rivers and river basins. See also floods; water resources remote-sensing technologies, 17b, 18, 145, 162­64, 164f, 305b cities on, 91­95, 91m renewable energy. See also specific types (e.g., hydropower, wind climate change effects on, 135, 136f energy) freshwater in, 13, 139, 139f California programs, 215b monitoring of runoff, 162, 163m competitive tendering, 219 transboundary, need to cooperate, 13­14, 158­59, 176n174 consumption (1850­2006), 215b Rizhao, China, encouraging energy efficiency in, 21b developing countries' lack of development of, 45 robust strategies, 18, 44, 54­55, 89, 137, 140b emission reductions from, 190, 204, 205b Russia feed-in laws, 15­16, 218, 219b effect of climate change on agriculture in, 146 financial incentives and regulations, 218­19 export controls in, 160 fuel price shock and, 191 job creation from, 192b S long-term purchase agreements, 15­16 safety margins in new investments, 89 patenting for, 292, 293 safety nets for most vulnerable, 107­8. See also social protection policy interventions for, 214t policies renewable portfolio standards, 218, 225n90, 294 satellite imaging, use of, 97, 100, 100b, 163, 164, 296b, 304 scaling up, 217­20 scaling up subsidies for, 208 of climate change finance, 267­68 tax credits, 219b of community-driven development, 107 tradable green and white certificates schemes, 281n5 of low-carbon technologies, 190, 208, 212, 217­20 Republic of Korea. See Korea, Republic of schools. See education research, development, and deployment (RD&D), 2. See also science of climate change, 70­81 innovation and new technologies sea levels, rise in in agriculture, 154, 293 aquaculture and, 157 bridging commercialization gap ("valley of death"), 300­301, observable effect, 4, 27n20, 40, 73 300f predictions of, 37, 70, 76, 78 government budgets for, 292, 292f, 293f temperature lag and eventual effect, 10 inertia and, 11, 288 world in 2050 and after, 88 international research agreements, 297­98 second-generation biofuels, 16, 147 natural resources management, 135, 164 "sector no-lose targets," 24 414 INDEX Senegal Stern, Nicholas, 8b migrants from, 111m "Stern assumptions," 8b mobile phone use to disseminate information in, 291 Stern Review of Climate Change, 27n26 Seres, S., 266b Stern Review of Economics of Climate Change, 48 SERVIR, 296b stimulus packages and green spending, 26, 29n93, 58­60, 59f, 190b Shanghai stockpiling and access to food, 161 heat-wave preparedness in, 96b storms, intensity of. See also disaster risk management programs migration to, 92, 112n32 aquaculture and, 157 "shaping actions," 54 observable effect, 4, 73 shelter, right to, 53b predictions of, 5, 74, 78, 79 "shovel-ready" projects, 13b, 59 weather modification and, 290b "signposts," 54 world in 2050 and after, 88 slope stabilization, 129 stoves. See cooking with clean fuels Small Business Innovation Research Program, 301 streamflow reduction activity, 141 small countries' vulnerability, 103, 104m Sub-Saharan Africa. See also specific countries small islands, impact of climate change on, 77f aquaculture in, 158 smart grids and meters, 205b, 217­18, 305 cooking with clean fuels in, 191 social capacity for determining severity of climatic impacts, 278, 279b crop yield decline in, 146 social learning, 106f, 107 disability-adjusted life years, loss of, 41 social norms, 329­30 disproportionate consequences of climate change on, 6b, 40, social protection policies, 13, 13b, 89, 107­8 278 socioeconomic changes, 60­61, 89 fertilizer use in, 156 soil carbon, 17b, 24, 25b, 135, 169­71, 274b food pricing in, 168 solar power, 16, 16f, 21b, 27n39, 45, 205b, 217­18, 220b, 221b, 254, hydropower in, 45, 46m 289 meningitis epidemics in, 41 South Africa recession and, 58 carbon mitigation strategy in, 240 sulfur emissions. See greenhouse gases Clean Production Demonstration project, 311 Super-Efficient Refrigerator Program, 300b emissions reduction in, 192b supply-side energy efficiency, 208 feed-in laws in, 218 sustainable development in light of climate change, 38, 39­48, 235. higher education and R&D collaboration in, 305b See also economic growth protected areas for biodiversity in, 152 agricultural practices, 148, 171, 175n79 tradable water rights in, 141 CDM benefits to, 266b water allocations in, 141, 164f, 173n14 insufficient contribution to, 265 South/Southeast Asia. See also specific countries marine ecosystems, 157 agricultural decrease in productivity due to climate change in, transformation to sustainable energy, 195­209 5, 5m, 27n24, 40 sustainable development policies and measures (SD-PAMs), 243 cooking with clean fuels in, 191 Suzlon (wind turbine manufacturer), 287 disability-adjusted life years, loss of, 41 Sweden diseases in, 95 green government procurement in, 311 disproportionate consequences of climate change on, 6b, 168 tax rebate in, 330 flooding in, 94, 94m Switzerland and greenhouse gases, 2 water resources in, 93­94 Sydney, Australia, encouraging energy efficiency in, 21b weather forecasting in, 162 South-South technology transfer, 254 T Soviet development plan, 44­45 Taiwan and venture capital, 301 soybeans, 165 taxation Spain border tax adjustments, 253, 255 desalination in, 174n40 carbon tax, 47, 170f, 190, 224n71, 252b, 268b, 269, 270, 278 feed-in laws in, 218 CDM tax levy, 266­67, 267t, 278 heat waves, preparation for, 96b on certified emission reductions, 23, 24 renewable energy in, 15 earmarking of revenues, 329, 339 species conservation and extinction, 4, 17, 124­29. See also fuel taxes, 212, 213 biodiversity green taxes, 47­48, 330 stakeholder role. See participatory design and implementation on international transport emissions, 270, 278 state role, 330­35 rebates, 330 stationarity, 18 renewable energy tax credits, 219b Stellenbosch University, 305b technological innovation. See innovation and new technologies Index 415 Technology Development Foundation (Turkey), 311 tropical cyclones. See storms, intensity of technology transfer, 254, 266b, 289, 294t, 301, 307­10 Tunis telemedicine, 19b antidesertification program in, 43b temperature flooding risks, 93b global average, 72­73, 73f Tunisia and water management, 143b holding change to 2ºC warming, 3, 8, 10, 10f, 27n15, 70, 79­81 Turkey effect of failure of, 76­78 innovation funding to, 302 energy change needed for, 14­16, 15f, 80f, 189, 196, 199­204 Technology Development Foundation, 311 gap to cover costs of, 22, 23f global change needed for, 200­201b, 204f, 206f, 223n22 U innovation and new technology for, 220, 289 Uganda regional change needed for, 202­3b 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, 51­52, 89, 102, 261b environmental monitoring in, 304 UN Climate Change Conference (2008), 245 threshold effects, 49­51, 50b, 62n75 UN Common Fund for Commodities, 152b timber industry, 40, 152b UNFCCC. See United Nations Framework Convention on Climate tipping points, 49­51, 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, 141­42, 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, 159­61, 161m United Nations carbon labeling, effect of, 253­54 Convention on the Law of the Non-Navigational Uses of climate change and, 251­55 International Watercourses, 158­59 liberalization for climate-friendly goods, 254 Hyogo Framework of Action, 99 mitigation policies and, 46­47 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, 8­9, 8b, (UNFCCC), 2, 21b, 233. See also Bali Action Plan; Clean 48­55, 191, 200­201b Development Mechanism (CDM) Trade-Related Aspects of Intellectual Property Rights (TRIPS), 310 on adaptation costs and funding needs, 259 trade sanctions on environmental grounds, 251­52 adaptation efforts under, 246­48 "tragedy of the commons," 56 Article 2, 26n3, 70 transition costs to lower carbon emissions, 7 carbon market and, 171 transparency, 276­78, 340­41 "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, 194­95, 208 REDD scheme, 127­28 weatherproofing of, 161­62 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, 45­46, 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 United States (continued) flood early warning systems, 162 energy prices in, 14­15, 28n61 heat-health warning systems, 95, 96b fuel prices, compared to EU, 14­15, 28n61, 212 waste management green spending as part of stimulus package in, 59, 59f aquaculture and, 158 Kyoto Protocol, nonparticipation in, 12, 21b in urban areas, 93, 93b, 143b Mayors' Climate Protection agreement in, 21b water-borne diseases, 98 recession in, 58 water harvesting, 144 renewable energy tax credits in, 219b water resources, 137­45. See also oceans; rivers tradable water rights in, 141 adaptative management of, 14f, 16­18, 17b, 140­42 unemployment in, 58 bulk water, 141 utilities and energy conservation in, 20 cities built inland, demand for, 92 wind energy in, 287 climate change's effect on, 137­38, 137m universities. See education drainage systems project, 101b University of Alabama at Birmingham, 302b efficient management of, 133 UN-REDD, 274 food production and, 144­45 urban planning. See cities hydrological cycle, 136f, 137­38 U.S. Climate Action Partnership, 341b information on water management, 17, 18, 139­40, 162­64, U.S. Environmental Protection Agency, 299, 301, 329b 164f U.S. Meteorological and Hydrologic Service Centers, 296 innovation and nonconventional technologies for, 16­18, 17b, utilities and energy conservation, 15, 20, 212b, 213­14, 215b, 218, 143­44, 165, 165f, 298 329 international cooperation in sharing, 13­14, 158­59 monitoring and forecasting of, 162, 163m, 164­66, 165f V pricing, 141, 166­73 vaccine program of GAVI Alliance and World Bank, 299­300 privatization and disease control, 98 values systems, 52­53 remote sensing technologies and, 17b, 18, 145, 162­64, 164f, van Vuuren, D. P., 8b 305b vector-borne diseases, 95, 97 right to water, 53b vehicles. See automobiles; transportation scarcity of, 5, 6b, 7b, 140 venture capitalists, 300­301, 300f storage, 142­43 Vietnam subsidies from wealthier countries, 172 benchmarking in, 335 temperature increases, effect on, 76 community self-reliance in, 105 tradable water rights, 135, 141­42, 142b disproportionate consequences of climate change on, 6b Watson, C., 266b export controls in, 160 weather-based risk management, 103­4 mass procurement in, 216 weather forecasting systems, 145, 162 virtual carbon tariffs, 252b weatherizing homes, 59 voluntary standards and programs, 297, 341b weather modification, 290b vulnerability, 87­111 weatherproofing of transportation, 161­62 adaptation management, 40, 42, 89­90. See also adaptative weeds, 152, 154 management West Africa, droughts in, 78 climate vulnerability wetlands capacity to adapt vs., 278, 280b climate change impact on, 6b, 78 social capacity vs., 278, 279b restoration, 60 communicable diseases, 95­98. See also communicable diseases as storm damage buffer, 19b, 88, 129 empowerment of communities to self-protect, 105­11 water resources and, 143b government initiatives for risk management, 103­5 world of 2050 and after, 88, 91 to natural disasters, 40, 42, 98­101, 98f Whirlpool, 300b need for finance related to, 277 wind energy, 21b, 204, 205b, 217­18, 217b, 219b, 254, 287, 287f, safety nets for most vulnerable, 107­8 288m, 289, 308, 309f of small countries, 103, 104m women urban vulnerability, 91­95, 91m disproportionate consequences of climate change on, 105 "vulnerability fund," World Bank creation of, 58 empowerment of, 43b world in 2050 and after, 87­88, 111, 112n4 Workfare programs, 108, 109b vulnerable-group feeding program (Bangladesh), 13b World Bank on adaptation costs and funding needs, 9, 259, 261b W BioCarbon Fund, 128b Wales and heat-wave preparedness, 96b energy efficiency financing, 216b warnings Forest Carbon Partnership Facility, 24 early warning systems, 90, 92, 97­98, 99b, 104­5 forest investment proposal, 275 Index 417 as intermediary for Malawi's weather-based risk management, Y 104 Yemen, Republic of, tradable water rights in, 142b prize competitions for clean technologies, 300 on relocation of carbon-intensive industries, 253 Z on trade liberalization for climate-friendly goods, 254 Zambia vaccine program, 299­300 agricultural policies protecting biodiversity in, 153 "vulnerability fund," creation of, 58 mobile phone use to disseminate information in, 291 World Health Organization, 41, 301 zero-tillage, 17b, 154, 170 World Mayors Council on Climate Change, 21b Zimbabwe World Meteorological Organization, 81n9, 162, 296b climate shocks' effect on health and education in, 44 World Resource Institute's CAIT emission indicator database, weather forecasting in, 162 62n102 women's empowerment in, 43b World Trade Organization, 22, 162, 241, 251, 253, 254, 310 zoning for conservation, 175n113 World Water Development Report (UN), 139 X X-Prize Foundation, 299 E CO -AU D I T Environmental Benefits Statement The World Bank is committed to preserving endangered forests and natural resources. The Office of the Publisher follows the recommended standards for paper usage set by the Green Press Initiative, a nonprofit program supporting publishers in using fiber that is not from endangered forests. In the printing of the World Development Report 2010: Development and Climate Change, we took the following measures to reduce our carbon footprint: · We used paper containing 100 percent recycled fiber made from post-consumer waste; each pound of post- consumer recycled fiber that replaces a ton of virgin fiber prevents the release of 2,108 pounds of greenhouse gas emissions and lessens the burden on landfills. · We used paper that is chlorine-free and acid-free. · We printed the World Development Report 2010 with vegetable-based inks that are made from renewable sources and that are easier to remove in the recycling process. For more information, visit www.greenpressinitiative.org. Saved: · 845 trees · 268 million BTUs of total energy · 80,388 lbs. of CO2 equivalent of greenhouse gases · 387,166 gallons of wastewater · 23,506 lbs. of solid waste 100% Recycled Today's enormous development challenges are complicated by the reality of climate change--the two are inextricably linked and together demand immediate attention. Climate change threatens all countries, but particularly developing ones. Understanding what climate change means for development policy is the central aim of the World Development Report 2010. 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