Price of Keeping Climate Crisis at Bay for Developing Countries is Over $2 Trillion/Year

Emerging and developing nations are having major problems paying the price the climate crisis has imposed on them. Above is just a snapshot of the wholesale destruction in Bangladesh left behind when Cyclone Sitrang slashed ashore on October 25, 2022. The storm left at least 24 dead, 10,000 homes destroyed, and one million without power. Photo: Indrika Ratwatte, via Twitter

The report, prepared at the direction of the chairpersons of the UN COP26 event held a year ago in Glasgow, Scotland, and the UN COP27 event currently ongoing in Sharm El-Sheikh, Egypt, along with the UN Climate Change High-Level Champions group, provides a tough look at what decades of climate inaction is going to cost the world.

It is, the authors begin, “a critical moment” in the climate crisis. Noting that the climate crisis is accelerating in its impacts, they warn us all that “to delay is dangerous”.

What is needed is the “transform[ation of] our economies, with a focus on “adaptation, resilience, and natural capital” as the founding bedrock for that transformation. They point to promising new technologies which are becoming less costly every year, including renewable energy rollouts in solar, wind, and tidal power plus enhanced utilization of geothermal and bioenergy, advanced power storage systems and batteries.

Not included in that technologies list but equally important are full-turnkey wastewater reclamation systems which extract biosolids for energy and potential food sources, low-water agricultural techniques such as hydroponics and aquaponics, and the minimization of carbon in construction.

The report also calls more specifically to reverse the extensive damage humans have inflicted on biodiversity on the planet, including being a major cause for the drop in wildlife populations by two-thirds from 1970 to 2018; on rapid poisoning of the oceans via acidification caused by high CO2 levels in the atmosphere; widespread deforestation, generally carried out mostly to support mining and agricultural interests at a high cost to the ecosystems there and the Indigenous peoples who depend on the forests; and continuing pollution of the world’s waterways.

Other issues not covered in this report but also very much part of the costs nations will be absorbing are assessing the impact of sea level rise and associated mandatory climate migration that comes because of that; increasingly more severe cyclones, hurricanes, heavy rainfall, and “atmospheric river” extreme weather events: and the expanding impacts of widespread drought on nearly all continents.

The report also does not consider the expense of educating the populations of the countries which must undergo this transformation, and the need for an even more radical change in the way people eat, live, work, and move about in the world.

According to the analysis, emerging markets and developing countries not including China will need to spend $1 trillion per year starting in 2025 and $2.4 trillion starting in 2030 on the issues noted. That corresponds to an increase from 2019’s spending which amounted to 2.2% of those countries’ GDP to 4.1% of GDP in 2025 and 6.5% of GDP.

Emerging and developing countries currently spend a net $500 billion a year on climate change adaptation and mitigation, the report says.

To address the sweeping changes which must happen in these countries simply for them to survive will require and equally sweeping set of changes in the way money is raised, allocated, and spent in those nations. Half the monies required will need to come from within the countries, the authors conclude, after looking at the resources those countries will have available in years to come. The other half will need to come from developed nations and cross-border financing sources such as the world’s multilateral development banks (MDBs); those include older sources such as the World Bank and the International Monetary Fund (IMF), as well as emerging-market MDBs such as the Beijing-based Asia Infrastructure Investment Bank (AIIB) and the African Development Bank.

Within these countries themselves, the authors say governments of developing countries will need to double their current outlay of grants and low-interest loans from $30 billion annually now to $60 billion a year beginning in 2025.

These monies will need to be provided through a combination of outright grants and debt/loan agreements for the developing nations. That brings with it increasing difficulties as emerging nations find their economies damaged by the climate crisis they are intending to deal with. That damage will include mass destruction of croplands in countries relying on agrarian economies, decreased tourism in nations which are now hotter and affected by extreme weather, and sea level rise which will require rebuilding not just places to live but also entirely new ways of growing food, such as in Bangladesh and coastal India, which current projections suggest will be substantially under water by mid-century.

As these nations suffer more hardship in these ways from the climate crisis, they will also be unable to pay off the debt and interest combinations charged to them for access to the funds. They will have less liquidity than in the past to pay those debts, and in many find themselves locked into a cycle of defaulting on debt payments followed by losing even more of the collateral they used to have just to keep debt payments in line.

And even that difficult situation assumes a complete makeover of the means by which money is provided to those countries in the future, both from public and private capital.

The developing and emerging nations also need to be compensated for losses they have already incurred as a result of global heating. That is theoretically the right moral thing to do, since these countries have been disproportionately affected by the mass emissions of greenhouse gases emitted mostly by wealthier nations such as China, the United States, Europe, and India. But that isn't likely to happen.

As the emerging and developing nations are growing, they are also prone to using old technologies such as coal-fired power generation, with high greenhouse gas emissions outputs, in order to sustain their rapid growth rates. This is especially so in countries such as Brazil, India, Indonesia, Vietnam, and South Africa, all of which are experiencing explosive growth at a high cost to the environment.

All the above is why, as Vera Songwe, one of the leads in preparing the new report put it in a press release, the world needs to focus on “unlocking substantial climate finance”. Further, even if and when such readily available low-cost financing sources are present, there must be, she said, “the right instruments and good policies [must be available] to accelerate and scale up impact” of the investments.

“The world needs a breakthrough and a new roadmap on climate finance that can mobilize the $1 trillion in external finance that will be needed by 2030 for emerging markets and developing countries (EMDC) other than China,” the report concludes.

Will the world step up to these funding needs? They could but all evidence suggests that they will not.

“The failure to deliver the climate finance commitment of $100 billion per year by 2020 made by developed countries at successive COPs has eroded trust,” the authors explain.

They say the $100 billion per year target might be met by next year, but even that is because MDBs have stepped up more than expected. Those funds were  originally supposed to come from bilateral public finance, but as the report points out the contributions from those areas have not increased much at all since 2016.

The financial bottom line the report presents is a difficult one to swallow. A climate disaster “bill” is coming due of staggering proportions for the world. It is also one developing and emerging nations will pay one way or another, by adapting to and mitigating for the crises already incurred and still awaiting them ahead, or by being economically and socially destroyed as the pace of global heating speeds up.

“Finance for Climate Action: Scaling Up for Climate and Development”, the report of the UN’s self-proclaimed “Independent High-Level of Expert Group on Climate Finance” is available for download here.

Publishers Commentary

Even if the funds were somehow available, ensuring that the those funds are invested properly instead of siphoned off by ruling oligarchs or spent on ineffective vote-buying projects or poorly conceived projects will require radical changes to nation's political structures, governance and society.

For example, the U.S. government kind of understands that the climate crisis is one of the factors that is pushing migrants to risk their lives to enter the U.S. illegally. To address the issue, the Biden-Harris regime announced that it would fund projects in Mexico and Central America to create jobs for locals so they wouldn't feel the need to migrate. In Mexico, one of those projects funded by American taxpayers was a Sembrando Vida tree planting project which involved destroying essential forests so that they could be planted with a mono-culture cash-crop tree plantation. Needless to say, migration has only increased exponentially under the Biden-Harris regime, along with runaway catastrophic climate change.

Panama recognizes the threat of climate change and the need to restore forests. So it is harnessing wealthy migrants to invest in so-called reforestation projects in exchange for residence visas, but those projects aren't really reforestation projects but cash-crop tree plantations and do nothing to restore the bio-diversity that once existed. Once the trees are large enough they are cut down and the nutrients taken away, leaving the land worse off than before. 

Any climate projects under cognitively challenged and corrupt governments are likely to do more harm than good. Giving substantial amounts of money to governments to spend as they like will only drive nations deeper into debt and waste the resources needed for survival. 

In reality, surviving the climate crisis will require a new human culture that can develop a new climate-proof and truly sustainable civilization. That new culture must empower individuals to transform into Earth's caretakers. 

For more information on what climate survival looks like visit https://www.climatesurvivalsolutions.com