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|Climate change -- from market failure to political failure?|
|Saturday, 20 December 2008 00:26|
"Easter Island in the Pacific Ocean is one of the most remote locations on Earth. The gigantic stone statues located in the Rono Raraku volcanic crater are all that remain of what was a complex civilisation. That civilisation disappeared because of the over-exploitation of environmental resources. Competition between rival clans led to rapid deforestation, soil erosion and the destruction of bird populations, undermining the food and agricultural systems that sustained human life. The warning signs of impending destruction were picked up too late to avert collapse."
If this quote from the UNDP's latest Human Development Report do not send shivers up your spine, I don't know what would. As the international community dithers about in the fight against climate change, we are increasingly exposing the world's population to such a destiny -- perhaps not today, but in a couple of generations time.
The world's climate is part of the "global commons", those ecological assets that belong to the entire planet, but no one country in particular (global fish stocks are another example). Carbon emissions from any one country affect the whole world's climate. This is a perfect example of a market failure, which can only be solved effectively by international co-operation between governments.
Sure, the world's climate has always changed due to natural factors. But what is happening now is that man-made factors are now heating up the world's climate at a faster and faster rate. This build-up of carbon emissions began with the industrial revolution. In fact, it is the accumulation of carbon emissions that counts, not the daily flow into the air. This means that while China has now become the world's biggest carbon emitter, its carbon debt to the world is relatively minor, because it is a new emitter. Western countries have the world's biggest carbon debt.
This global warming is exposing us all to more droughts, intense storms, floods, environmental stress and rising sea levels. While the effects are uncertain, it could also lead to the melting of ice-sheets on Greenland and the West Antartic, which would place many countries under water. It could also lead to changes in the course of the Gulf Stream that would bring about drastic climatic changes.
So what do we need to do?
First, we need to cut back massively on carbon emissions ("mitigation" is the words that the experts use). With the expiry of the current commitment period of the Kyoto Protocol in 2012, the international community has an opportunity to put in place a framework to achieve this goal. But the recent talks in Poznam (Poland) do not give much cause for hope.
International agreements need to be backed by actions at the national or regional (like the EU) levels. In particular, it means putting a price of carbon and carbon equivalent gases that reflects their true social cost (through a carbon tax or a cap and trade scheme). In addition, governments also have a critical role to play in setting regulatory standards and in supporting low-carbon research, development and deployment.
If the world acts decisively and now it will be just possible to keep 21st century global temperature increases within a 2 degree threshold above pre-industrial levels. Beyond this point, large scale human development setbacks and irreversible ecological catastrophes would increase sharply. But even this would require rich countries cutting carbon emissions by at least 80 per cent by 2050 relative to 1990 levels (with cuts of 30 per cent by 2020). Emissions from developing countries would peak around 2020, with cuts of 20 per cent by 2050. Such actions between now and 2030 would only cost us annually 1.6 per cent.
Rich countries are pushing China and India to undertake mitigation efforts -- but this is a bit "rich", given that they did not cause the problem in the first place. They will need to be enticed with generous access to climate-friendly technologies. Without serious action, average global temperatures could increase by 5 degrees with disastrous consequences.
Second, we need to adapt to the climate change which is already locked into the system. Climate change is already starting to affect some of the poorest and most vulnerable communities in the world -- the 2 1/2 billion people who live on under $2 a day. High levels of poverty and low levels of human development limit the capacity of poor households to manage climate risks.Those who have largely caused the climate change problem, that is, the rich countries, will not be those who suffer most.
Rich countries already recognise the need to adapt. Many are investing heavily in climate defence infrastructures. The UK is spending $1.2 billion annually on flood defenses. In the Netherlands, people are investing in homes that can float on water. The Swiss alpine industry is investing in artificial snow-making machines.
Developing countries face far more severe adaptation challenges which have to be met by governments operating under severe financing constraints, and by poor people themselves. Under the UNFCCC, western governments are obliged to support adaptation capacity development. In reality, the international response on adaptation is way behind what is required. Financing committed to multilateral financing mechanisms like the Least Developed Country Fund and the Special Climate Change Fund is simply paltry. At the same time, 1/3 of current development assistance is concentrated in areas facing climate change risk. And climate change is diverting aid into disaster relief. The UNDP estimates that fresh aid of at least $44billion will be required annually for climate proofing developing investments.
The 20th century was characterised by several major political failures which led to world wars, a failed peace and a great depression. If urgent action is not taken by the world's developed countries to fight climate change, this would already be at least the world's second major political failure of the 21st century.
The world's developed countries have both the necessary financial resources and technological capabilities to fight climate change. It is now just a question of political will to agree to, and above all implement, a successor to the Kyoto Protocol.
Human Development Report 2007/2008. Fighting climate change: Human solidarity in a divided world. United Nations Development Programme (UNDP).