Development in a Changing Climate World Development Report 2010 Marianne Fay Co-Director February 2009

Storyline  The facts: Worsening news on CC since the IPCC CC – a significant and immediate challenge CC having a disproportionate impact on developing countries  The hypothesis: A precautionary approach is justified It is affordable, though that requires global action Global action is in everybody’s interest  The challenges: A “fair” deal to enable global action Adaptation required under the most optimistic scenario No silver bullet on mitigation

The facts – Worsening news since the IPCC

The facts – An immediate challenge: A tragedy-of-the-commons with time lags… Inertia: in the climate system in the capital stock and the built environment in technology in behaviors and institutions + uncertainty Thresholds and tipping points = need for precaution

The facts – Climate change will have a disproportionate impact on developing countries  Developing countries inherently more vulnerable  Not entirely due to lower incomes  Some numbers: 2oC warming => 1% world income loss, 4% in Africa, 5% in India

The hypothesis: A precautionary approach is justified and affordable  Likely committed to 2oC  All agree BAU unacceptable  Cost difference between “economic optimum” and precaution is affordable 0.3% of annual income for 2oC <0.1% for 2.5oC (+ cost/benefit ratio)  … an insurance premium

The hypothesis: Affordability – unfortunately- requires global action Sources: emissions data are from CDIAC (2007) and EIA (2006); population data from WDI (2008); mitigation opportunities for average over range (McKinsey 2009; own calculations based on data reported in IPCC 2009).

The hypothesis: Global action is in everybody’s interest  The tab is large: $8 to $25 trillion  Delay to 2020 by developing countries more than double the costs  Deadweight loss $20 to 50 trillion… room to bargain  … and anticipation creates savings for all

The challenge: it’s an unfair world

The challenge: A “fair” deal to enable global action  Advantageous is not enough  High income countries must: Reduce their emissions Facilitate adaptation and mitigation in developing ocuntries Massively invest in climate innovation  Need to ensure developing world not locked into uneven distribution  But…what do high income countries need?

The challenge: Adaptation required under the most optimistic scenario  2oC minimum  Climate-smart development Robust, rather than optimal decision making Fix all that needs to be fixed… Massive improvement in management of land and water Decouple growth and energy Social protection!

Biomass Fossil fuel The Challenges: No silver bullet on mitigation Nuclear Energy Renewables End-use Energy

Take-away messages  Climate change is an immediate and significant problem  A precautionary approach is justified and affordable  All stand to gain from global cooperation  High income countries need to do a whole lot more  Climate-smart development will be needed  Change starts at home

“With our helpful hands we can do many useful things” Soo Min Shin, 8 years old, Thailand