Poor Countries Caught in a Climate Change Trap

September 26, 2019 – If you live in a Developing World country, particularly one in Equatorial Africa, Central and South America, and in South Asia, then the squeeze is on when it comes to implementing mitigation and adaptation strategies for combating climate change. Why is that?

Before I answer that question it is important to understand how climate change is impacting these parts of the world presently, and what is expected in the near future. Countries straddling the Equator from the Tropic of Cancer to Capricorn, are feeling global warming today.

Yesterday I read about the city of Harare in Zimbabwe running out of water because of a prolonged drought and the drying up of underground water sources. Much of East Africa has been experiencing drought as weather patterns change because of anthropogenic climate change.

Brazil’s rainforests aren’t just being burned by profit-seeking farmers who want to plant soybeans and sugar cane. They are also being hit by episodic droughts that are recurring with increased frequency causing the Amazon to be more susceptible to wildfires.

In Central America, the migration of people from El Salvador, Honduras, and Guatemala through Mexico to the United States border can be linked to drought conditions that have made the growing of coffee and other cash crops almost impossible.

It is not an untruth to state that the nations that are least responsible for anthropogenic climate change are the ones most vulnerable to its consequences. In tropical areas when temperatures rise the consequences to agriculture, economics and politics will be extreme. There is an upcoming tipping point that is on the event horizon that will lead to significant hardship for equatorial citizens.

In a recent article in The Economist, it states that “By 2030 poor countries will need to spend $140 to 300 billion each year on adaptive measures….if they want to avoid the harm caused by climate change.” That estimate is based on a scenario where the mean global temperature rises 2 Celsius (3.6 Fahrenheit) by 2100.

What exacerbates the situation even further notes The Economist is that these countries will face higher interest rates than Developed World countries to finance adaptation and mitigation projects. That means the poorer countries of the world will in an effort to fight the consequences of anthropogenic climate change brought on by mostly richer countries, be made even poorer. This will impact companies operating in these countries as well as individuals and governments. And for agriculture in these countries with largely undiversified economies, the cost of borrowing will likely kill many small farm holders. Moody’s has listed 37 countries it believes are most vulnerable holding already $2.8 trillion in sovereign debt, nearly 4% of the world’s total.

In 2015, the Paris Climate Agreement saw advanced economies formally agree to put $100 billion per year by 2020 into a Green Climate Fund. The Fund was to be continually replenished and as of April 30, 2019, had received pledges from 48 jurisdictions (countries, regions, and cities). The amount pledged, however, four years after Paris hasn’t even equaled 10% of the money promised by these advanced economies. There have been a few successes.

For example, in the latest announcement in June of this year, the government of Senegal in West Africa received $8.2 million to deal with increasing soil salination caused by climate change. This is but one of a number of projects that have seen $2 billion invested in projects focused on climate mitigation and adaptation. But $2 billion is a far cry from $100 billion.

In The Economist article it talked about a new group, the V20 representing 20 vulnerable countries at the outset, and now grown to 48, that account for less than 5% of worldwide GDP but are seen as most likely to succumb to the worst that climate change will do. Included in this group are the Pacific and Indian Ocean island-nations including Kiribati, Marshall Islands, Fiji, Seychelles, Mauritius, Maldives and others who will be impacted by rising sea levels, increasingly extreme cyclonic storms, and saltwater intrusion into aquifers. These countries are attempting to pool insurance risk to improve affordability. Other initiatives include blended financing to decrease interest rates which in poorer countries tend to be much higher because of the greater default risk.

The Green Climate Fund recently announced it had set aside $500 million for V20 nation climate-change projects. The World Bank and Asian Development Bank have also announced programs. But the amounts dedicated to climate change are a far cry from what was proclaimed in Paris in 2015.

In this week’s United Nations’ climate summit a number of climate finance initiatives were described including:

• The Asset Owner Alliance, a group that includes pension funds and insurers, responsible for more than US$2 trillion in investments, who committed to transitioning to carbon-neutral investment portfolios by 2050. The members agree to engage with companies immediately in investing to ensure they decarbonize their business models.
• The International Development Finance Club (IDFC), a group of 24 national and regional development banks of which the majority are active in emerging and developing countries who have a target of investing $1 trillion by 2025, with at least $100 million for climate change adaptation, and $10 million for a new Climate Facility to increase capacity to support its members on climate finance.

In addition, a number of climate action plans were announced including:

• The Global Campaign for Nature to conserve 30% of the Earth’s lands and oceans by 2030
• A Central American initiative to establish and manage 10 million hectares of “sustainable productive landscapes that are resilient to climate change” by 2030 yielding a 40% reduction in emissions based on a 2010 baseline.
• A sustainable Ocean Economy initiative involving 14 countries covering 30% of the world’s coastlines, 20% of the fishery, and 20% of global shipping to build ocean and coastline resilience and sustainability through the creation of marine protected areas.
• A Central African Forest Initiative covering Gabon, Cameroon, Central African Republic, Republic of Congo, Democratic Republic of Congo, and Equatorial Guinea aimed at maintaining forest cover and providing a livelihood for 60 million who are dependent on the forest’s viability.
• A commitment by the World Business Council for Sustainable Development to protect and nurture biodiversity, to help scale up regenerative agricultural practices, and to support the protection and restoration of forest and other ecosystems.
• A Zero Carbon Buildings initiative to make all new construction 100% net-zero carbon by 2030, and the retrofitting of existing buildings to net-zero carbon by 2050.

For the nations of the V20 the summit announced:

• The mobilization of $1 trillion in clean energy investments in 20 of the least-developed countries by 2025.
• A collective commitment by small island developing countries to achieve net-zero emissions by 2050 contingent on assistance from the global community of nations including a move to 100% renewable energy by 2030.

Does all of this go far enough to keep the Earth’s atmosphere from warming 1.5 or even 2.0 Celsius by the end of the century? Highly unlikely. But keeping the pedal to the metal and the commitment of Developed World nations to ensure that their carbon sins do not continue to wreak havoc in poor countries, we may still see the worst that climate change could do avoided.