Climate Resilient Economic Growth

blog.May

Climate change creates a new context for policy-making in developing countries. The economic costs of climate change can put their economic growth prospects at risk and endanger the achievement of their development objectives. At the same time, development can inadvertently increase vulnerability to climate change. Building “climate resilience” into development policies can help to reduce the costs of climate change and sustain economic growth and social well-being over time. Climate-resilient development includes climate change in the baseline for development planning.

The cross-sectoral nature of climate impacts calls for a co-ordinated approach by the public sector, civil society and development partners across levels of governance. Climate-resilient development needs to go beyond individual programmes and projects and consider systemic aspects and linkages between economic development, climate change and resilience. This need has been acknowledged in international discussions that have recently shifted from project- and programme-based approaches for adaptation to promoting national, strategic responses to the effects of climate change. This includes the call for Least Developed Countries to develop National Adaptation Plans (NAPs) in the framework of the United Nations Framework Convention on Climate Change (UNFCCC).

There is a strong link between socio-economic development and resilience to the effects of climate and climate change. Extreme climate events can reduce economic growth(McDermott et al., 2013; UNISDR, 2013). This slowdown, which can affect a country for several years, is in marked contrast with developed countries, where disasters have the potential to act as an economic stimulus (Cavallo and Noy, 2010; Loayza et al., 2009). Developing countries also bear the heaviest human burden. Between 1970 and 2008, 95% of deaths due to natural disasters occurred in developing countries(IPCC, 2012). This vulnerability is due to a combination of factors, including a lack of coping capacity, low levels of disaster preparedness and high dependence on the agricultural sector for development and livelihoods.

Development itself is one of the most effective means to increase the capacity to cope with disasters. Higher disposable income, better education and healthcare, and improved transport infrastructure are some of the characteristics of development progress that also strengthen resilience. But this is not automatic. Development choices can lead to a concentration of economic activities and assets along rivers and coastlines; places which are vulnerable to flooding, storm surges and sea-level rise. There is also evidence that certain characteristics of middle-income countries, such as a high reliance on physical infrastructure for GDP creation and a high interconnectedness between economic sectors, can increase their vulnerability to extreme events (Benson and Clay, 2004; Ghesquiere and Mahul, 2010; Okuyama, 2009; Cummins and Mahul, 2009).

Climate change adds a new dimension to this relationship between development and resilience. Development as usual – and even development that strengthens resilience against current variability – might not be a sufficient strategy to prepare for future climate challenges. Gradual changes in climate can reduce labour productivity and give rise to additional costs for climate-proofing infrastructure and productive activities. This can even lead to shifts in countries’ comparative advantages. Disaster risk is likely to increase, as certain phenomena such as temperature extremes, heavy precipitation and extreme coastal high water levels become more frequent (IPCC, 2012). The parallel developments of economic and population growth and climate change can have significant consequences.

To get benefitted from the growth model of economic growth with the climate resilient development, countries need to adopt the below recommendations:

Sustain leadership and high-level political commitment: climate resilience efforts need to be driven by strong and visible leadership. This will help to establish and maintain high-level political support across the government.

Formalise national development visions and defining key climate resilience objectives: The formulation of a national vision for climate-resilient development helps raise awareness of the benefits and opportunities of enhanced resilience, thereby building momentum for institutional and policy change.

Create institutional mechanisms that encourage cross-sectoral co-ordination and high-level political commitment:

The institutional system needs to be explicitly designed to facilitate and encourage co-ordination across ministries.

Secure dedicated financing for resilience investments: Financing for resilient activities needs to be leveraged and it should support coherence in investments for climate change resilience and economic growth projects. Alignment with the national budget should help to ensure that domestic resources complement international financing.

Keshav C Das

May 28, 2016

 

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