The 21st Century climate challenge

2Climate shocks: risk and vulnerability in an unequal worldTable 2.2 Drought in Malawi—how the poor copehaving a negligible impact on profitability forthe richest quartile. Faced with high risk, poorfarmers tended to over-insure: productiondecisions led to average profits that were lowerthan they could have been in an insured riskenvironment. 27 In Tanzania, village-level researchfound poor farmers specializing in the productionof drought-resistant crops—like sorghumand cassava—which provide more food securitybut a lower financial return. The crop portfolio ofthe wealthiest quintiles yielded 25 percent morethan that of the poorest quintile. 28This is part of a far wider pattern of de factorisk insurance that, interacting with other factors,increases inequality and locks poor householdsinto low-return systems of production. 29 Asclimate change gathers pace, agriculturalproduction in many developing countries willbecome riskier and less profitable (see sectionon Agriculture and food security below). Withthree-quarters of the world’s poor dependent onagriculture, this has important implications forglobal poverty reduction efforts.It is not just the world’s poor that will haveto adjust to new climate patterns. Agriculturalproducers in rich countries will also have to dealwith the consequences, however, the risks are lesssevere, and they are heavily mitigated throughBehaviours adopted to cope with drought, 1999 (% of people) Blantyre Town (%) Rural Zomba (%)Dietary adjustments• Substituted meat for vegetables 73 93• Ate smaller portions to make meals last longer 47 91• Reduced number of meals per day 46 91• Ate different foods, such as cassava instead of maize 41 89Expenditure reduction• Bought less fi rewood or paraffi n 63 83• Bought less fertilizer 38 33Cash generation for food• Depleted savings 35 0• Borrowed money 36 7• Searched for casual labour (ganyu) for cash and food 19 59• Sold livestock and poultry 17 15• Sold household items and clothes 11 6• Sent children to look for money 10 0Source: Devereux 1999.large-scale subsidies—around US$225 billion inOECD countries in 2005—and public supportfor private insurance. 30 In the United States,Federal Government insurance payments forcrop damage averaged US$4 billion a year from2002 to 2005. The combination of subsidiesand insurance enables producers in developedcountries to undertake higher-risk investmentsto obtain higher returns than would occurunder market conditions. 31The human costs of ‘coping’The inability of poor households to cope withclimate shocks is reflected in the immediatehuman impacts, and in increasing poverty.Droughts provide a potent example.When rains fail the ripple effects are transmittedacross many areas. Losses in productioncan create food shortages, push up prices,undermine employment, and depress agriculturalwages. The impacts are reflected in copingstrategies that range from reduced nutrition tothe sale of assets (table 2.2). In Malawi, the 2002drought left nearly 5 million people in need ofemergency food aid. Long before the aid arrived,households had been forced to resort to extremesurvival measures, including such activities astheft and prostitution. 32 The acute vulnerabilitiesthat can be triggered by climate shocks incountries at low levels of human developmentwere powerfully demonstrated in the 2005 foodsecurity crisis in Niger (box 2.4).Droughts are often reported as short term,single events. That practice obscures someimportant impacts in countries where multipleor sequential droughts create repeated shocksover several years. Research in Ethiopia illustratesthe point. The country has experiencedat least five major national droughts since 1980,along with literally dozens of local droughts.Cycles of drought create poverty traps formany households, constantly thwarting effortsto build up assets and increase income. Surveydata show that between 1999 and 2004 morethan half of all households in the countryexperienced at least one major drought shock. 33These shocks are a major cause of transientpoverty: had households been able to smoothconsumption, then poverty in 2004 would84 HUMAN DEVELOPMENT REPORT 2007/2008