Climate Change and Developing Countries

Despite international efforts, poverty has become more prevalent in many countries over the past decade, making poverty reduction a key task for the development in the 21st century. By signing the Millennium Declaration, 189 countries have decided to halve extreme poverty in the world by 2015, and all countries involved with this document are committed to contributing to this goal. Climate change poses a serious threat to poor countries around the world, and it is not clear whether the economic growth model developed over the past decades is suitable for the global world. As stated in the Johannesburg Declaration on Sustainable Development, "the adverse effects of climate change are already evident, natural disasters are more frequent and more devastating and developing countries more vulnerable". Although climate change is a global phenomenon, its negative effects are more evident in fragile economies, as these countries are more vulnerable due to their high dependence on natural resources and the limited capacity to cope with climate change and extreme conditions. The poorest, with the least resources and opportunities for adapting, are the most vulnerable in these countries.

The greatest challenge to adapt to climate change is in developing countries (e.g. Tol et al. 2004; Mendelsohn et al. 2006) for the following three reasons:

• • The first reason is geography. Many developing countries are located in tropical and subtropical regions and therefore are already in hotter climate conditions where it is more difficult to develop certain economic activities. Further increase in temperature will lead to even less optimal conditions (Mendelsohn and Schlesinger 1999). Certainly, climate change is more than just temperature, and many of the effects of climate change are expected to be related to potential changes in access to clean water. In this framework, developing countries, which are generally located in geographical areas with low to moderate rainfall, once again face the greatest threats.
• • The second reason is often referred to as sensitivity. A relatively high proportion of developing countries' production comes from sectors which are particularly vulnerable to climatic conditions, mainly agriculture. In general, the concept of sensitivity can include the fact that many people in developing countries are already using marginal livelihoods.
• • The third reason is the lack of adaptive capacity. Developing countries often lack resources to adapt to climate change, including financial resources (both, savings and access to credit), good governance, infrastructure, and information.

Expected changes in the frequency, intensity, and duration of the extreme weather conditions (such as heatwaves, heavy rainfall, and droughts), as well

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as more gradual changes in the temperate climate, pose a particular threat to their livelihoods, leading to further increase in inequality between developing and developed worlds. This reaffirms that climate change is a serious threat to poverty eradication. However, current development strategies tend to overlook the risks of climate change.

The researchers recommend a method that combines both mitigation and adaptation. Current commitments to mitigate climate change by limiting greenhouse gas (GHG) emissions, even if not implemented, will stabilise atmospheric concentrations of these gases. Capacity to adapt must be strengthened to reduce the losses of climate change mitigation losses and rapidly consolidate climate change mitigation efforts.

Therefore, adaptation to climate change is an appropriate response to climate conditions, which reduce vulnerability, and is an integral and urgent part of overall poverty reduction strategies. Adaptation should not be seen as a stand-alone activity isolated from other environmental and socio-economic challenges that also affect the development opportunities of poor countries. A comprehensive approach is needed that would take into account the potential synergistic and antagonistic effects between local and global environmental changes, as well as socio-economic factors.

Adaptation to climate change is worth a broader exploration. The Intergovernmental Panel on Climate Change defined it as "any adjustment in natural or human systems in response to actual or expected climatic stimuli or their effects which moderates harm or exploits beneficial opportunities" (Smit 2016). It is important to distinguish between the concepts of "flow" and "stock". Flow adaptation includes adjustments that result in both costs and benefits over a single period of time (such as changes in variable agricultural costs, crop varieties and fertilisers, and changes in indoor heating and cooling). On the contrary, stock adaptation is a form of investment where the costs are paid off and the benefits are gained over several periods of time in the future, for example, dams protecting coastal populations from rising water, or dams that reserve water to protect areas from drought. However, stock adaptation may also include other, indirect forms, such as investing in healthcare infrastructure to cope with the burden of evolving diseases due to climate change or investing in agricultural development programmes to support farmers' adaptation to changing conditions due to climate change.

Two schools can be distinguished related to the best adaptation strategy in the developing world:

• The first one states that "development is the best form of adaptation": It is better to prioritise traditional development goals, i.e. invest in physical and human resources reserves and robust institutions to protect investments specifically designed to reduce vulnerability caused by climate change. The logical basis for this statement might be Thomas Schelling (1992), who reasoned that, in view of developing

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countries that are vulnerable to climate change, because of their high sensitivity and low adaptability, which are essentially minor problems for them, the best protection against climate change for these countries can only be their continuous development (Mendelsohn 2012). It is important to note that Schelling was thinking about whether adaptation rather than emission reduction was the best policy response to climate change. Nonetheless, his suggestion led to further work, directly arguing that development is the best form of adaptation (Mendelsohn 2012; Fankhauser and Burton 2011).

• The second school of thought claims that "development depends on adaptation": Climate change will pose a serious threat to the development process unless specific adaptation takes place. In this regard, successful defensive adjustment is a necessary prerequisite for building capital reserves and improving development-related prosperity. This concerns the political stance taken by various international development organisations.

There is a lot of literature on adaptation to the effects of climate change, but much of it is based on local research. Only a few studies have shown that adaptation is a macroeconomic issue. Their main objective was to quantify the cost of adaptation at the national and regional levels, supporting international political negotiations to reach an agreement on the adjustment of industrialised and developing countries to the changed payments. Fankhauser (2013) discerns this literature into "first generation" and "second generation".

First-generation studies were very simple. Their approach simply aimed to estimate the proportion of current climate-dependent investments and then multiply them by the corporate tax rate increase, which represents the total value of "climate-resilient" expenditures (Stern 2007; World Bank 2006). This method was static, and in particular, the increased coefficient had no foundation which would be based on empirical research.

Second generation studies were launched under the United Nations Framework Convention on Climate Change (UNFCCC) guidelines (2007), which detailed the costs of adaptation in key climate-sensitive sectors. It had a stronger empirical basis but remained static. Research published by the World Bank in 2010 estimates the costs of adaptation but critically limits the assumption that adaptation occurs until all climate damage is eliminated, which cannot be effective. Indeed, this is the main criticism of all these studies, which states that development is the best form of adaptation (Mendelsohn 2012).

Several recent studies have expanded the "integrated assessment models" of a linked climate economy system by including a control variable. Previously, these models did not consider adaptation since it was indirectly associated with damage to the climate, and therefore the planner could not change it. Adaptation-integrated assessment models incorporate a dynamic view of adaptation and quantify its benefits. The use of such models has

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confirmed that optimal adaptation leaves "residual" losses due to climate change and that optimal climate policy includes both adaptation and emission reduction.

Recent and projected aspects of regional climate change impacts (IPCC 2014a-g):

Africa

• • Africa might be the most vulnerable continent to climate change and change due to many existing political and social issues and low adaptive capacity. Existing problems include poverty, unsafe food, political conflicts, and the degradation of ecosystems.
• • It is estimated that by 2050 due to climate change, 350-600 million people will face a shortage of water.
• • The urban population is projected to triple in size (to 800 million people), which will lead to even greater urban poverty, obstruction, or even eradication of access to basic services in the cities.
• • In many African countries and regions, agriculture is expected to be severely affected by climate changes, which will jeopardise access to proper nutrition.
• • At the end of the 21st century, projected sea-level rise is likely to affect low-lying coastal areas with large populations, including Senegal, Liberia, and Mozambique.
• • Climate variability and pre-existing changes can have a negative impact on human health. In many African countries, climate change may increase existing health threats, such as malnutrition, malaria, and other diseases.

Asia

• • Asian glaciers are melting faster than ever according to historical records. Currently, some glaciers account for 20%. Melting glaciers increase the risk of floods and snow avalanches from destabilised slopes.
• • It is predicted that there will be limited access to freshwater due to climate change, especially in Central and Southeast Asia, and particularly in large river basins. The steadily growing population and increase in needs related to population growth could negatively affect more than 1 billion people by 2050.
• • Coastal areas, especially the densely populated deltas of the South and Southeast Asia, will be threatened by the increase in the number of sea floods (sometimes including river floods).
• • The effects of climate change on crop yields can vary greatly depending on region, crop type, and regional changes in temperature and precipitation. By the mid-21st century, for example, climate change in

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East and Southeast Asia can increase crop yields by up to 20% and in Central and South Asia by up to 30%.

• Deaths from diarrheal diseases are likely to increase in East, South, and Southeast Asia due to the expected changes in the hydrological cycle associated with climate change.

Australia and New Zealand

• • With global warming reaching 1°C, water security concerns in the southwest and southeastern Australia and in the northern and some eastern parts of New Zealand are expected to become major.
• • Changing biodiversity in some ecologically rich areas, including the Great Barrier Reef and the Wet Tropics of Queensland, by 2050.
• • Sea-level rise, more powerful storms, and coastal floods will continue to affect coastal areas. Coastal development and population growth in areas such as Cairns and South East Queensland (Australia), and Northland and Bay of Plenty (New Zealand) pose a threat to many people and infrastructure.
• • Increased numbers of droughts and fires are expected to reduce agricultural and forestry production in much of South Australia and northern and eastern parts of New Zealand.
• • Cascading and interacting economic, social, and daily life in rural areas can lead to long-term drought, which is affecting the survival of certain regions. The prolonged drought has been linked to increased suicide rates among male farmers in Australia.
• • Extreme storms can increase the likelihood of embankment, dams, drainage, and sewer systems failure. They can also increase the damage caused by storms and fires.
• • More frequent heatwaves can lead to an increased number of deaths and more electrical disturbance.

Europe

• • Europe is already documenting the widespread effects of climate change, including melting glaciers, sea-level rise, longer agricultural seasons, changes in biodiversity, and the effects on health due to heatwaves.
• • The impact of future climate change may adversely affect almost all European regions with a rigid social policy system (unfavourable social climate) and fluctuations in healthcare and infrastructure. Many sectors of the economy, such as agriculture and energy, may face difficulties.
• • In Southern Europe, higher temperatures and droughts can reduce water availability, hydropower potential, summer tourism, and crop productivity, which hinder economic activity in many regions of Europe.

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• • In Central and Eastern Europe, summer precipitation is expected to decrease, resulting in increased water scarcity. Forest productivity is expected to decline, whereas the incidence of peat fires is predicted to increase.
• • In Northern Europe, different impacts are anticipated due to climate change, including some benefits, such as reduced heating demand, increased crop yields, and increased forest growth. However, as climate change continues, the negative effects may outweigh the benefits. These would include more frequent winter floods, endangered ecosystems, and increasing soil instability.

Central and South America

• • By mid-century, increasing temperatures and decreasing soil moisture are predicted to cause irreversible changes in savannah and tropical forests in the Eastern Amazon.
• • In arid areas, climate change is likely to aggravate the situation, leading to salinisation of agricultural land (increase in salt content) and accelerating desertification (land degradation). In some areas, the productivity of livestock and some important crops, such as maize and coffee, is projected to decline, which will have negative consequences for food security.
• • It is expected that sea-level rise will increase the risk of floods, transfer of people, salinisation of drinking water resources, and coastal erosion in low-lying areas. This threatens fish stocks, recreation, and tourism.
• • Changes in precipitation and melting glaciers are projected to have a major impact on water availability for human consumption, agriculture, and energy production.
• • It is believed that climate change and change in land usage will increase the extinction of species.

North America

• • The warming climate in the western mountains will reduce the amount of snow, increase the number of winter floods, and reduce the amount of precipitation during the summer, which will cause the depletion of water resources.
• • Pests, diseases, and fires are expected to increasingly affect forests. The level of fire load in forests will increase.
• • It is predicted that at the beginning of the century, climate change will increase the productivity of rain-fed agriculture in the northern areas, on average, but by 2020, rising temperatures during the warm season will pose significant challenges for water use.

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• • The number, intensity, and duration of heatwaves over the century are projected to further change cities that are already exposed to heatwaves, which could have negative effects on health and increase tensions in energy systems. The population of the elderly is at the greatest risk.
• • Climate change is likely to increasingly affect coastal communities and habitats, exacerbating existing problems in terms of population, development and pollution, infrastructure, human health, and the ecosystem.

Polar Regions

• • Climate change is likely to reduce the thickness and scale of glaciers and ice sheets.
• • Changes in natural ecosystems are likely to have adverse effects on many organisms, including migratory birds, mammals, and bigger predators, as marine species change.
• • In the Arctic region, climate change is likely to reduce the extent of sea ice and permafrost, which can have unequal impacts on human settlements. Adverse effects may include damage to infrastructure and changes in winter activities, such as ice fishing and ice road transport. The positive effects may include more navigable routes in the northern seas.
• • Rising sea levels can exacerbate coastal erosion and disrupt natural and social systems.
• • Terrestrial and marine ecosystems and habitats are expected to be at risk from invasive species.

Small Islands

• • Small islands in the tropics or higher latitudes are highly vulnerable to extreme weather conditions, sea-level changes, rising air and surface temperatures, and changing rainfall.
• • Deterioration of coastal conditions, such as beach erosion and coral change, is likely to affect local resources, for example, fisheries, as well as the value for tourist destinations.
• • Sea-level rise is expected to increase the risk of floods, storm surges, erosion, and other coastal hazards. This impact would threaten vital infrastructure, settlements, and facilities that support the survival of island communities.

As it can be seen from the analysis, the biggest challenges are for those regions where most of the developing economies are located.

Climate change is a classic example of market failure, or in other words, market distortion. The costs of CO₂ emissions are covered by society as a

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whole, and those who burn fossil fuels benefit. To tackle a market mistake, for example, by applying a carbon tax, we need to know the social costs of these CO₂ emissions. In addition, when governments assess the costs and benefits of implementing policies or investments, they need a value for CO₂ emissions. If the social costs of carbon USAGE are high, the benefits of CO₂ emissions are high, and climate mitigation actions will be costly.

If the world operates as a great economic model, the "optimal" amount of climate change mitigation efforts is reached when the expenses of the additional costs related to further emissions reductions are balanced due to limiting further warming. Again, if we are not sure about the optimal level of mitigation, it does not mean that the correct answer is "zero".

The social cost of carbon (SCC) is a key concept in understanding and implementing climate change policy. This term refers to the economic costs emerging due to additional tonnes of carbon dioxide or its equivalent. The SCC has become a key tool in climate change policy, particularly in setting regulatory policies that cover greenhouse gas emissions (Nordhaus 2014). Estimates of social costs are necessarily complex because they cover the full impact of emissions over the carbon cycle and climate change, including the economic damage caused by climate change. There are currently a number of established integrated assessment models (IAMs) that are available to assess the entire pathway of cause and effect and can, therefore, calculate a consistently synchronised value for social carbon costs.

These integrated assessment models consist of four elements:

• • Firstly, there are socio-economic projections: How many people will there be in 2150? How fast will the economy grow in the next century? How much CO₂ will be emitted?
• • Secondly, there is the "climate module": How does climate change respond to CO₂ emissions? How fast does the sea level or temperature rise? What to do with rainfall, what will it become like, and what to do with extreme weather events?
• • The third element is the benefits and damages: How will climate change affect crop yields? What are the costs of living or adapting to changing sea levels? How do elevated temperatures affect productivity or energy use for heating and cooling? How can we assess non-market impacts, for example, loss of biological species and habitats?
• • Finally, the fourth element in discounting is used to estimate future benefits and costs in today's money. Future losses tend to dominate estimates of social costs, as CO₂ remains in the atmosphere for thousands of years and damage increases as temperature rises.

The DICE model (the Dynamic Integrated Climate-Economy model) is one of the main integrated assessment models used by researchers and governments to estimate social carbon costs (Nordhaus 2014).

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Figure 5.4 presents a chart showing world regions which currently suffer the most from the effects of climate change.

Figure 5.5 provides a chart showing what caused climate change historically.

Historically, with the rapid growth of national economies, increasing environmental pollution could not have been avoided, as growing industrial scale has also increased greenhouse gas emissions.

Regions affected by climate change the most, %

FIGURE 5.4

Regions affected by climate change the most.

Source: National Research Council 2016.

Historical causative agents of climate change, %

FIGURE 5.5

Historical causative agents of climate change.

Source: CO₂ emissions excluding LUCF1850-2011, (CAIT v.2.0) National Research Council 2016.

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Figure 5.6 provides a diagram showing which countries are currently responsible for climate change and to what extent.

Currently, more than 1 billion people with two-thirds of women live in extreme poverty, i.e. less than one dollar per day. The vast majority of them are in developing economies.

While global communities were unable to prevent climate change and its effects, developed and developing countries could have worked together to mitigate climate change. Developed countries should provide financial subsidies to address the effects of climate change in developing countries, especially in areas that are directly related to survival (e.g., the agricultural sector). Developed countries can provide human resources to developing countries to train local communities and share best practices on how to combat the effects of climate change and how to adapt to the already existing effects of the process. Climatologists from developed countries can successfully join such activities by providing public education services to the population and policymakers of economically less developed countries. Another, no less important form of aid would be an investment in research, which should be carried out more rapidly now than ever in the regions most affected by climate change. The results of the research would help to correctly assess the current situation and predict prospective development plans, taking into account the effects of climate change and other possible changes. Research reports would be a key recommendation for all interested parties, including communities in developing countries, which need to develop the capacity to adapt to climate change. Only by focusing on joining efforts, material, financial, and human resources, a further perspective of the developing world could be foreseen.

Regions responsible for climate change at the moment, %

Other developing Asia

Latin America ^^a

Sub-Saharan Africa a

Middle East & North Africa ^^B

India M

China

Other high-income

Eurasia

Russia

Japan [=i

European Union

United States

0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00

FIGURE 5.6

Regions responsible for climate change at the moment.

Source: CO₂ emissions including LUCF 1850-2011, (CAIT v.2.0) National Research Council 2016.

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