As negotiators come together in Durban, South Africa, to discuss the fate of international climate policy, the balance between poverty reduction and emissions reduction is sure to be one of the most contentious issues. Economic growth in developing countries is likely to mean growing per capita emissions, though the increase can be limited by investment in low-carbon technologies. Climate policies will require diverting some spending away from other priorities, though policy can be designed so this burden does not fall on low-income countries. The twin goals of preventing dangerous climate change and fostering development don’t have to be incompatible. If economic development is swept under the table, however, they surely will be.
Proposed climate policies are usually described in terms of reductions from the “business-as-usual” emissions that would be expected in the absence of any new policy. The size of projected business-as-usual emissions depends first and foremost on how fast each national economy will grow – the faster the expected growth, the higher the “no-policy” emissions. If we are optimistic about future growth, then business-as-usual emissions are high, and very steep emission reductions will be necessary to avoid dangerous climate change. If, on the other hand, we are pessimistic and expect widespread poverty to persist into the 22nd century, then business-as-usual emissions are lower, and required emissions reductions are far more moderate.
In the worst case, consider what happens if we take a pessimistic view of growth and adopt climate policies that achieve the moderate emission reductions required under that scenario, but developing countries’ economies –and emissions – grow more rapidly than we expect.
The net result will be an ineffective climate policy and dangerous climate changes. If economic development succeeds, a short-sighted climate policy will fail.
In a new report released by the Stockholm Environment Institute, I review economic assumptions used in climate modeling, and the effects that these assumptions have on the projected emissions reductions necessary to achieve climate policy goals and a “development without carbon” future.
Today’s climate-economic models have a fairly pessimistic view of economic development: by the end of this century, the ratio of income per capita in richest countries to that in the poorest countries is expected to rise to 27-to-1, up from 20-to-1 today. Speeding up poor countries’ economic growth enough to bring that ratio down to 2-to-1 would double emissions, according to the most commonly used business-as-usual projections. Climate-economics models do not predict zero growth in developing countries’ income, but many do expect what growth there is to be heavily concentrated in just two countries. The average annual income per capita growth rate over the next century is commonly modeled as 3.3 percent for China and India, and 1.8 percent for the rest of the developing world.
Over the past 20 years, India’s income per capita more than doubled from about $1,000 to $2,300, for an average growth rate of 3.4 percent per year. In the next 80 years, India’s income per capita is expected to grow to almost $46,000. Contrast this to the expectations for economic development in Haiti (which are very similar to those for all 45 of the lowest income countries). Haiti’s average income is about $1,000 today, and is expected to grow over the next 100 years to just $7,200 per person. In some of the very poorest countries, incomes rise to only $1,100 per person by the end of the century. At best, these projections do not take the need for development seriously. At worst, they are just a way to give high-income countries a free pass to continue emitting more than their fair share of greenhouse gases.
Climate-economics models should incorporate much higher growth projections for low-income countries, and we should make it one of the top global priorities to make sure these projections come true. Under a higher-growth scenario, global business-as-usual emissions would be far higher than under the conventional pessimistic assumptions, and climate policies would need to be that much more ambitious.
How can we square higher growth with lower emissions? We must make a global commitment to the development of low-emissions technologies, such as solar, wind and ecologically sound hydroelectric energy. High-income countries should commit to policies that will make these technologies available in developing countries. In other words, countries that have followed an emissions-intensive development path need to help other countries find an alternative path. (A companion report examines the viability of hydropower as a “development without carbon” option for Latin America and the Caribbean.)
With good planning, both development and climate protection can succeed; with poor planning, one or both may fail.
Liz Stanton is a senior economist in the Stockholm Environment Institute – U.S. Center.
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