6 January 2014

Africa: Is There Enough Public Money to Address Climate Change? of Course There Is. Guest Blog From Rob Van Den Berg at GEF


Here is a guest Blog by Rob D. van den Berg, Director, Independent Evaluation Office of the Global Environment Facility, a long time collaborator.

Climate Change negotiations keep promising huge amounts of money to support developing countries to solve their climate change related problems, and then falling far short of what is needed. The UNFCCC meeting in Warsaw in November again demonstrated this.

The US climate change envoy, Todd Stern, told an audience at a Chatham House discussion in October that an increase in overall levels of public funding from developed countries is unlikely "to come anytime soon.

The fiscal reality of the United States and other developed countries is not going to allow it." He refers not only to the financial crisis but also to obligations to aging populations, health care and other entitlements that are increasingly difficult to fund. However, Todd Stern does not mention some other public policies that are actually contributing to climate change.

In an evaluation for the Global Environment Facility we discovered that global public funding for climate change support to developing countries currently stands at about $10 billion annually. Assessments of the support needed consistently point to an amount that is at least ten times higher: $100 billion at the minimum.

There is wide-spread agreement on these assessments and in the climate change negotiations the amount of $100 billion has been accepted as the goal to go for.

However, governments from developed countries claim that they cannot raise this amount of money and that the private sector will need to contribute. They thus agree in principle with Stern's argument that public money is simply not available in sufficient quantities.

They are wrong. Public money is more than sufficiently available. At least ten times more public money than needed can be redirected towards supporting developing countries on climate change. Authoritative research from the World Bank and IMF shows that more than $1,000 billion is going to subsidies that are contributing to climate change.

Fossil fuels are subsidized throughout the world, thus increasing greenhouse gas emissions and making it more difficult for renewable energy technologies to take over markets.

Not all of these funds are from developed countries, but the US fossil fuel subsidies alone amount to $24 billion annually, and redirecting it would provide a nice push in the direction of the $100 billion needed.

Climate change has been termed the biggest market failure ever, by another Stern: Nicholas, of the UK. He referred to the fact that market prices for energy cannot incorporate the costs associated with higher global temperatures, rising sea levels and other climate related changes which greenhouse gas emissions will lead to over several decades.

Our climate is a global public good that needs public action to counteract the failing of the energy market. However, we see two kinds of public action at the moment: $10 billion annually for supporting developing countries in preventing climate change and at least $1,000 billion annually for promoting climate change through fossil fuel subsidies.

Although almost all economists agree that fossil fuel subsidies should be stopped, they continue due to perceived political risks and economic lobbying.

One argument has been debunked often and enough: that fossil fuel subsidies are needed for the poor. They in fact mostly benefit companies and the middle class. In fact the poor will be amongst the first to suffer from climate change.

The issue of inconsistent public action is one that plagues not only climate change, but also many other sustainable development issues. Take overfishing of the oceans.

While there is general agreement that overfishing is now threatening the survival of many marine species, subsidies for fisheries far outspend public action to prevent overfishing.

The challenge for public funding and public action is to not only take care of aging populations and our health and education systems, but also to ensure that there is a sustainable future without poverty throughout the world. Our governments have more than enough public funds to tackle these issues.

The goal of $100 billion annually for climate change support to developing countries can be realized from public funds without contributions from the private sector, just by redirecting money in public budgets. And substantial savings in public budgets can be achieved at the same time! It means we need to reinstate the "common good" in political discussions and break down the silos in which subsidies continue to undermine our future.


Todd Stern at Chatham House, October 22, 2013 at http://www.state.gov/e/oes/rls/remarks/2013/215720.htm

Nicholas Stern on market failure: see http://en.wikipedia.org/wiki/Nicholas_Stern

GEF evaluation: Fifth Overall Performance Study of the GEF: http://www.thegef.org/gef/OPS5

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