Development in a Changing Climate

World Development Report 2010

Marianne Fay

Co-Director

February 2009

Storyline

The facts: Worsening news on CC since the IPCC CC – a significant and immediate challenge CC having a disproportionate impact on developing

countries

The hypothesis: A precautionary approach is justified It is affordable, though that requires global action Global action is in everybody’s interest

The challenges: A “fair” deal to enable global action Adaptation required under the most optimistic scenario No silver bullet on mitigation

The facts – Worsening news since the IPCC

The facts – An immediate challenge:

A tragedy-of-the-commons with time lags…

• Inertia:• in the climate system•in the capital stock and the built environment

• in technology• in behaviors and institutions

• + uncertainty•Thresholds and tipping points

• = need for precaution

The facts – Climate change will have a disproportionate impact on developing countries

Developing countries inherently more vulnerable

Not entirely due to lower incomes Some numbers:

2oC warming => 1% world income loss, 4% in Africa, 5% in India

The hypothesis: A precautionary approach is justified and affordable

Likely committed to 2oC

All agree BAU unacceptable

Cost difference between “economic optimum” and precaution is affordable 0.3% of annual income for 2oC

<0.1% for 2.5oC (+ cost/benefit ratio)

… an insurance premium

The hypothesis: Affordability – unfortunately- requires global action

Sources: emissions data are from CDIAC (2007) and EIA (2006); population data from WDI (2008); mitigation opportunities for 2020 - average over range (McKinsey 2009; own calculations based on data reported in IPCC 2009).

The hypothesis: Global action is in everybody’s interest

The tab is large: $8 to $25 trillion Delay to 2020 by developing countries

more than double the costs Deadweight loss $20 to 50 trillion… room

to bargain … and anticipation creates savings for all

The challenge: it’s an unfair world

The challenge: A “fair” deal to enable global action

Advantageous is not enough High income countries must:

Reduce their emissions Facilitate adaptation and mitigation in

developing ocuntries Massively invest in climate innovation

Need to ensure developing world not locked into uneven distribution

But…what do high income countries need?

The challenge: Adaptation required under the most optimistic scenario

2oC minimum Climate-smart development

Robust, rather than optimal decision making

Fix all that needs to be fixed… Massive improvement in management

of land and water Decouple growth and energy Social protection!

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1850 1900 1950 2000 2050 2100

EJ/

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FutureHistory

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year

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FutureHistory

Present CO 2

Concentration

~380 ppm

 

Present CO 2

Concentration

~380 ppm

 

Preindustrial CO 2

Concentration

~280 ppm

2100 CO 2

Concentration

~550 ppm

 

2100 CO 2

Concentration

~740 ppm

 

Oil Oil + CCSNatural Gas Natural Gas + CCSCoal Coal + CCSBiomass Energy Nuclear EnergyNon-Biomass Renewable Energy End-use Energy

History and Reference Case Stabilization of CO2 at 550ppm

Biomass

Fo

ssil fue

l

The Challenges:No silver bullet on mitigation

Nuclear EnergyRenewablesEnd-use Energy

Take-away messages

Climate change is an immediate and significant problem

A precautionary approach is justified and affordable

All stand to gain from global cooperation High income countries need to do a whole

lot more Climate-smart development will be

needed Change starts at home

“With our helpful hands we can do many useful things”

Soo Min Shin, 8 years old, Thailand