Bridging the green investment gap in Latin America: what role for national development finance institutions?

By Maria Netto, Lead Capital Markets and Financial Institutions Specialist, Inter-American Development Bank, and Naeeda Crishna Morgado, Policy Analyst – Green Growth and Investment, OECD              

Green-investmentThe developing world urgently needs more and better infrastructure. Affordable and accessible water supply systems, electricity grids, power plants and transport networks are critical to reducing poverty and ensuring economic growth. The way new infrastructure is built over the next 10 years will determine if we meet the Sustainable Development Goal (SDGs) and the Paris Agreement objectives. Considering the long lifespan of most infrastructure projects, the decisions developing countries make about how they build infrastructure are critical: we can either lock-in carbon intensive and polluting forms of infrastructure, or ‘leap frog’ towards more sustainable pathways.

Many countries in Latin America are making this shift: thirty-two of them have committed to cut their emissions and improve the climate resilience of their economies, in infrastructure and other sectors, through Nationally Determined Contributions (NDCs). The cost is estimated at a staggering USD 80 billion per year over the next decade, roughly three times what these countries currently spend on climate-related activities. What is more, this is in addition to a wide investment gap for delivering development projects and infrastructure overall – the World Bank estimates that  countries in Latin America spend the least on infrastructure among developing regions in the world.
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Climate Action and Trade Governance: Prospects for Tourism and Travel in Small Island Developing States

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By Keith Nurse, Senior Fellow, Sir Arthur Lewis Institute of Social and Economic Studies; World Trade Organization Chair, University of the West Indies.

To learn more about countries’ strategies for economic transformation, learn about the 9th Plenary Meeting of the OECD Initiative for Global Value Chains, Production Transformation and Development hosted by the Economic and Social Commission for Asia and the Pacific (ESCAP) in Bangkok, Thailand on November 2017.

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Damage caused to the island of St. Maarten following hurricane Irma. Photo: Shutterstock

2017 will go down as a landmark year given the huge impact of hurricanes on the economic, social and ecological environments in the wider Caribbean. The decimation of several island territories, such as Dominica, Anguilla, Barbuda, St. Maarten, Turks and Caicos, US and British Virgin Islands, and Puerto Rico have taken hundreds of lives and destroyed livelihoods in key sectors like tourism. Take the case of Dominica that had a direct hit from category 5 hurricane Maria on September 18, 2017.1 It is estimated that 35% of the reefs at dive sites in Dominica were damaged, and a month later only 43% of accommodation properties are operational. Hurricane Maria went on to hit Puerto Rico that is now facing a humanitarian crisis.2

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We must co-create the future we want to see

By Emmanuel Faber, CEO of Danone 


Emmanuel Faber participated in the
2017 International Economic Forum on Latin America and the Caribbean


Danone
Photo credit: Lionel Charrier/Livelihoods Funds

In 1972, Danone founder Antoine Riboud made a speech to French industry leaders in which he declared that “corporate responsibility doesn’t end at the factory gate or the company door” and called on them to place “industry at the service of people.” Today his words seem self-evident; at the time they were revolutionary.

Now more than ever, we know that we can only thrive as a business when people and planet thrive. It’s simple: If we don’t protect the environment, we won’t be able to secure resources to make our products. If we don’t empower people and support decent living conditions, our supplier and consumer bases will shrink. We cannot escape this interdependence. So, at Danone, we embrace it. This means that, wherever we operate, we work to foster inclusive and sustainable development through co-creation — that is, working with coalitions of actors on the ground to develop hybrid solutions to concrete problems.

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Green Industrialisation and Entrepreneurship in Africa

By Milan Brahmbhatt, Senior Fellow, New Climate Economy (NCE) and World Resources Institute1


Explore this topic further with the upcoming launch of the
2017 African Economic Outlook: Entrepreneurship and Industrialisation in Africa.
Stay tuned for details


Solar salesman in Gulu Uganda Photo credit James Anderson
Solar salesman in Gulu, Uganda. Photo credit: James Anderson

Policy makers across Africa have embraced industrialisation and economic transformation as keys to accelerate inclusive growth. They also increasingly see the need for economic transformation to deliver green growth – growth that does not endanger Africa’s natural environment in ways that reduce the welfare of present and future generations. Economic transformation and green growth depend on doing new things: making risky investments in new, unfamiliar sectors or products or adopting new, unfamiliar methods, processes, technologies, inputs or business models. All this depends crucially on the activity of entrepreneurs, who drive change through their innovation and risk-taking. Fostering entrepreneurship, including green entrepreneurship, is thus a key policy aim for African countries.

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Human migration, environment and climate change

By Daria Mokhnacheva, Thematic Specialist at the Migration, Environment and Climate Change Division, International Organization for Migration (IOM), with contributions by Dina Ionesco, Head of the Migration, Environment and Climate Change Division (IOM) and François Gemenne, Executive Director of the Politics of the Earth Programme at Sciences Po, and Senior Research Associate at the University of Liège – Hugo Observatory

 

the-atlas-of-environmental-migrationEnvironmental migration is a fact. Most countries experience some form of migration associated with environmental and climate change, or forced immobility for those populations that end up trapped. Sudden-onset disasters as well as slow-onset environmental change taking place around the world, whether natural or manmade, profoundly affect migration drivers and migration patterns, even though the relationship between concrete environmental factors and migratory response is seldom direct and linear. Indeed, environmental migration or immobility results from the interplay of intricate economic, political, social and environmental dynamics, where the environmental component is sometimes hard to identify but is nonetheless critical.

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Bringing the Blue Skies Back to Beijing: How the Private Sector Can Green Growth in China

‌‌By Kate Eklin and Myriam Gregoire-Zawilski of the OECD Development Centre’s Emerging Markets Network (EMnet)

Last week, officials in Beijing declared an air pollution “red alert” for the first time since the monitoring system was implemented in 2013.[1] Pollution levels put life in the city on hold: factories shuttered, schools closed, traffic was restricted, fireworks were banned.

Between this latest “airpoclypse” and the just-concluded COP 21, everyone is talking about China and its part in the climate agenda. Why? China is the largest greenhouse gas emitter. While China is certainly part of the climate change problem, it is a big part of the solution. Indeed, China is also the world’s largest investor in renewable energy. And public and private investment will be critical for China to transition to a greener and cleaner economy. Continue reading

Climate change: Effective mitigation and adaptation efforts could reduce food insecurity

In this guest contribution to the SWAC blog, Kirsty Lewis of the UK Met Office Hadley Centre explores the relationship between climate change and food insecurity in developing and least developed countries. The research projections paint both stark and cautiously optimistic pictures. Failure to adapt to and mitigate climate change will drastically increase food insecurity, however; successful adaptation and mitigation efforts could actually reduce vulnerability. What do the results of this research mean for West Africa? What are the region’s priorities for decreasing vulnerability to food insecurity in the face of climate change?

While it is well-understood that climate change will mean increasing frequency and intensity of extreme weather events around the world, and that we are already seeing this trend in our observations of climate, what this trend will mean in detail is harder to evaluate. Increasing floods, droughts and storms pose a threat to the stability of food production, and therefore food security, in global terms, but to respond to this threat we need evidence on the scale and geography of the threat, as well as the effectiveness of mitigation and adaptation action to tackle it.

Climate and food insecurity index

Scientists from the UK Met Office Hadley Centre have been working closely with the World Food Programme over the last five years on the challenge of incorporating our climate science knowledge with food security expertise. Together we have developed an index of vulnerability of countries to food insecurity, as a result of flood and drought events, for developing and least-developed countries. The approach we took considered the IPCC1 definition of vulnerability as a combination of exposure, sensitivity and adaptive capacity. For each of these terms we included measures of food system function that correlated with undernourishment. For the exposure component, for example, this was a measure of the number of floods and droughts that occurred over agricultural production regions and populated areas, within each country. The sensitivity component included measures of how resilient agricultural production is to adverse weather events. This included metrics such as the percentage of rain-fed agriculture. Finally the adaptive capacity component included measures of economic resilience, such as the percentage of the population below the poverty line, or structural resilience, such as the percentage of paved roads. In this way the index included, not just the impact of weather on production, but also on access to food through markets.

The index values were normalised, and so are a relative, rather than absolute, measure of vulnerability to food insecurity. The results of this index in the present day climate are shown in the figure below.

Food insecurity and climate change vulnerability index: Present day climate

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Source: UK Met Office Hadley Centre

The highest levels of vulnerability are in sub-Saharan Africa; there are medium levels across much of Asia, and lower levels in South and Central America. This pattern of vulnerability corresponds to global levels of undernourishment, as the index was designed to do. However, the index was also designed so that the exposure component could include not just observed drought and flood events, but also climate model projections based on RCP scenarios.2

Adaptation scenarios

In addition we developed adaptation scenarios, which effectively alter the remaining two components of the index: sensitivity and adaptive capacity. We defined a ‘high adaptation’ scenario where both the sensitivity of agricultural production and the economic resilience were improved by around 10-15% in the 2050s, and a further 10-15% in the 2080s. In this scenario the change was not applied equally to all countries, allowing the most vulnerable countries to improve more rapidly than the least vulnerable. A second ‘low adaptation’ scenario was also created, with improvements of around 5-10% per time period to the non-climate aspects of the index.

While using the climate model projections under the RCP scenarios was a straightforward choice, selecting adaptation scenarios was a lot more difficult. The chosen high and low adaptation scenarios are representative of plausible levels of adaption, but of course these are not a forecast of future behaviour.

The resulting index projections under the different climate change and adaptation scenarios provide some interesting and informative insights into both the geography of climate change impacts on food security and the relative importance of adaptation and mitigation to address these impacts.

Mitigation, no adaptation scenario

If we assume no adaptation action is taken, i.e. we just consider the impact of climate change, we see that vulnerability to food insecurity increases by the 2050s globally, regardless of which mitigation scenario is followed.

For example, under a scenario of rapid and sustained reductions in greenhouse gas emissions, known as RCP 2.6, (which is also consistent with a global average temperature rise of around 2°C) the level of increase of vulnerability to food insecurity is less than for the scenario of considerable future increasing emissions, known as RCP 8.5 (which is consistent with an end of the century global average temperature rise of 4°C or more). Nevertheless, both scenarios result in deteriorating food security conditions. This is because ‘inertia in the climate system’ (a delayed response of warming from previous emissions) means that we are committed to some level of climate change in the next few decades. Beyond the 2050s the two scenarios diverge. Under the RCP2.6 scenario, the rate of climate change levels off, and vulnerability to food insecurity stabilises. It is still worse than the present day, but no worse than the 2050s.

No mitigation, no adaptation scenario

Under the RCP8.5 scenario however, the levels of vulnerability to food insecurity increase considerably. This scenario of no action on either mitigation or adaptation is the worst case future, and the consequences for food insecurity are severe.

However, a scenario where no adaptation takes place is unlikely to be realistic, so we can compare these outcomes with an alternative ‘high adaptation’ scenario. In this case we see that adaptation makes a difference in reducing vulnerability to food insecurity at all timescales and with or without mitigation.

No mitigation, adaptation scenario

For example, under the RCP8.5 climate change scenario, adaptation almost keeps pace with climate change out to the 2050s, meaning that vulnerability to food insecurity remains at levels comparable, although a little worse, than the present day. After the 2050s though, the rate of climate change increases and outpaces adaptation efforts. In this scenario the 2080s are not as bad as they would be without adaption, but still worse than the present day.

Mitigation, adaptation scenario

There is one scenario where the future vulnerability to food insecurity is lower than the present day. This is the scenario where there are rapid and sustained reductions in greenhouse gas emissions (RCP2.6), and high levels of adaptation. In this scenario adaptation keeps pace with climate change to the 2050s, and beyond this timeframe, as the climate stabilises, continued adaptation leads to reductions in vulnerability and an improving food security outlook.

Key implications

The messages from this research are clear. If we take no action to tackle climate change, the consequences for food insecurity in developing and least developed countries are severe. However, by both adapting and mitigating we can tackle climate change in a way that has positive consequences for future food insecurity.

The aim of the research that we conducted was to put information and evidence about the impacts of climate change and the effects of mitigation and adaptation efforts into the public domain. We created an interactive website to show these results, and so you can see for yourself how climate change and vulnerability to food insecurity interact.

Kirsty Lewis is Climate Security Science Manager with the Met Office Hadley Centre.

1 Intergovernmental Panel on Climate Change. Definition of ‘key vulnerability’: https://www.ipcc.ch/publications_and_data/ar4/wg2/en/ch19s19-1-2.html. 

2 Representative Concentration Pathways are used for climate modelling and research. They describe four possible climate futures, all of which are considered possible depending on how much greenhouse gases are emitted in the years to come, https://en.wikipedia.org/wiki/Representative_Concentration_Pathways.