Development Roast Giving international development a proper roasting
By: Lykke E. Andersen, 13 November 2013
Climate change negotiations have entered peak season again with the COP 19 just starting in Warsaw. What is it that they say: 19th time is a charm?
This year, like previous years, key questions related to climate finance have been discussed extensively in many different settings with many different experts and stakeholders all year. Last month’s PEGNet conference in Copenhagen was one such venue. As the session chair of the above titled roundtable, I fully realize the depressing repetitiveness of yet another climate finance discussion, but I still think the main points are important and original enough to share.
We had invited three complementary experts (Ian Christoplos, DIIS, Denmark; Jochen Harnisch, KfW Development Bank, Germany; and Michel Köhler, Perspectives Climate Change, Germany/Switzerland) to comment on the following three questions:
- How much climate finance is needed and what is it needed for?
- Who is going to pay and who is going to receive these funds?
- What are the most effective modalities of transferring climate finance to the recipients?
Based on the answers from the panelists and the resulting discussion with the audience, we produced the accompanying infographic (see below). However, it is worth elaborating a bit on it.
As to the first question, the panelists agreed that the global financing needs were probably between 100 and 1000 million dollars per year for many, many years. If we are very clever about it, 100 million dollars per year may be sufficient, but if we are just renaming current expenditure and trying to comply with some arbitrary expenditure targets without maximizing impacts, even a billion dollars per year may not make much of a difference. Thus, quality and correct incentives is more important than quantity. In the short run we probably need to invest most of the money in adaptation for the most vulnerable populations, but in order to avoid disastrous climate change in the long run, we also need to invest in effective mitigation actions.
The second question is the most controversial. Every single country on Earth is trying to dream up and defend a reasonable formula by which they will either pay as little as possible or receive as much as possible. In my opinion, however, there is really only one reasonable argument: Every person on Earth should have the same rights to emit greenhouse gasses, irrespective of their recent emissions (meaning that emissions reductions pledges are completely irrelevant); irrespective of their forefathers emissions (there are internationally recognized human rights that prohibit retrospective punishment for what you or your forefathers did before it was considered wrong); and irrespective of the rather arbitrary classification as Annex I or non-Annex 1 country in the Kyoto protocol.
As Hans Rosling has repeatedly been trying to tell the World, there is no longer an obvious difference between developed and developing countries (confusingly called Annex I and non-Annex 1 countries in climate negotiations). Only 1 of the 6 main greenhouse gas emitters in the World (together accounting for more than half of all emissions) is a “developed country,” so whatever Annex 1 countries do or do not do, is basically irrelevant, if we do not provide adequate incentives for the rest of the World population.
The only fair proposition is that countries that emit more than their fair “allowance” should have to pay a penalty and countries that emit less should receive a bonus. This fair calculation should be based on total net emissions, which admittedly is difficult to calculate, but no more difficult than many other calculations that are routinely calculated in every countries (such as GDP).
As to the third question on effective modalities for transferring funds, simple rules and strong financial incentives are crucial. We have to move on from flashy, but non-binding, pledges and conferences. Personally, I think that an international mechanism should be very simple and deal only with international transfers of penalties and bonuses, while sovereign countries should decide for themselves how they want to raise/spend the money established by the international mechanism. This would secure alignment with national development priorities. However, such a position reflects a faith in sovereign governments and a belief in the rights of these governments that was not necessarily shared by everybody at this development conference.
Dr. Lykke E. Andersen is the Director of the Center for Economic and Environmental Modeling and Analysis (CEEMA) at the Institute of Advanced Development Studies (INESAD), La Paz, Bolivia.
