The 21st Century climate challenge

Investments in social protection and widerhuman development strategies are needed tostrengthen the capacity of vulnerable peopleto cope with risk. Our ballpark estimate isthat at least US$40 billion will be needed by2015 to strengthen national strategies for povertyreduction in the face of climate changerisks. To put this figure in context, it representsaround 0.5 percent of projected 2015 GDP forlow income and lower middle income countries.Provision for disaster and post-disasterrecovery will also have to be strengthened asdroughts, floods, storms and landslides posegreater threats. Provision of an additionalUS$2 billion a year is implied by our estimates.Adaptation financing requirements shouldbe seen as ‘new and additional’ commitments.That is, they should supplement rather thandivert existing aid commitments. Northerngovernments have pledged to double aid by2010, though the record on delivery is mixed.Any shortfall in delivery will compromiseprogress towards the MDGs and compoundproblems in climate change adaptation.The headline figure for new and additionaladaptation financing appears large—but has tobe placed in context. The total of around US$86billion by 2015 may be required to prevent aiddiversion. It would represent around 0.2 percentof developed country GDP, or aroundone-tenth of what they currently allocate tomilitary expenditure. Measured in terms ofreturns for human security, adaptation financingis a highly cost-effective investment. Thereare a range of innovative financing mechanismsthat could be explored to mobilize resources.These include carbon taxation, levies administeredunder cap-and-trade programmes anddedicated levies on air transport and vehicles.International support for adaptation hasto go beyond financing. Current internationalefforts suffer not just from chronic underfinancing,but also a lack of coordinationand coherence. The patchwork of multilateralmechanisms is delivering small amountsof finance with very high transaction costs,most of it through individual projects. Whileproject-based support has an important roleto play, the locus for adaptation planning hasto be shifted towards national programmesand budgets.The integration of adaptation planning intowider poverty reduction strategies is a priority.Successful adaptation policies cannot be graftedon to systems that are failing to address underlyingcauses of poverty, vulnerability and widerdisparities based on wealth, gender and location.Dialogue over Poverty Reduction Strategy Papers(PRSPs) provides a possible framework for integratingadaptation in poverty reduction planning.Revision of PRSPs through nationally-ownedprocesses to identify financing requirements andpolicy options for adaptation could provide a focalpoint for international cooperation.Conclusion and summary ofrecommendationsClimate change confronts humanity with starkchoices. We can avoid 21 st Century reversals inhuman development and catastrophic risks forfuture generations, but only by choosing to actwith a sense of urgency. That sense of urgencyis currently missing. Governments may usethe rhetoric of a ‘global security crisis’ whendescribing the climate change problem, buttheir actions—and inactions—on energy policyreform tell a different story. The starting pointfor action and political leadership is recognitionon the part of governments that they areconfronted by what may be the gravest threatever to have faced humanity.Facing up to that threat will createchallenges at many levels. Perhaps most fundamentallyof all, it challenges the way that wethink about progress. There could be no clearerdemonstration than climate that economicwealth creation is not the same thing as humanprogress. Under the current energy policies, risingeconomic prosperity will go hand-in-handwith mounting threats to human developmenttoday and the well-being of future generations.But carbon-intensive economic growthis symptomatic of a deeper problem. One ofthe hardest lessons taught by climate change isthat the economic model which drives growth,and the profligate consumption in rich nationsthat goes with it, is ecologically unsustainable.There could be no greater challenge to ourThere could be no clearerdemonstration than climatethat economic wealthcreation is not the samething as human progressHUMAN DEVELOPMENT REPORT 2007/2008 15