Keep Climate Change from Impoverishing Millions

November 26, 2015

Stephane Hallegatte, Senior Economist, Climate Change Global Practice, the World Bank Group China Daily

The eyes of the world are now on Paris, where later this month heads of state and government will gather to open negotiations on a new global agreement on climate change. At this critical moment, one essential point must not be lost: climate change represents a clear, near-term threat to the world's efforts to end poverty.

A new World Bank Group report lays out the facts. Unless we take the right steps now, the impacts of climate change could push more than 100 million people into poverty over the next 15 years.

But as the report also shows, we have the power to prevent this. It will require making sure that poverty reduction and development take into account the changing climate while fighting climate change in a way that protects the poor.

Compared to those who are better off, poor people are both more exposed to the effects of climate change and less able to recover when hit by climate shocks. Making matters worse, people in poor countries also lack the support systems they need to cope with such shocks and bounce back. In low-income countries, poor people have little access to health insurance and pay more than 50 percent of their health costs out of pocket. Less than 10 percent are covered by social safety nets.

Climate shocks have long-lasting effects on human potential, and contribute to intergenerational poverty. For instance, in Mexico, once children from poor families are taken out of school, even if for a temporary shock such as a flood, they are 30 percent less likely to continue their education compared with other children.

But development policies, rightly planned and executed, can go a long way toward protecting people's incomes, assets and livelihoods, and making them more resilient. In many cases, this simply means using the tools already at hand. For example, after Typhoon Yolanda, the Philippines was able to use an existing conditional cash transfer system to quickly provide support to hard-hit households. Aid from emergency relief organizations was also channeled through the same program.

Such efforts should be coupled with targeted climate adaptation that improves the resilience of poor communities, such as the introduction of heat-resistant crops and disaster preparedness systems. We know that such measures can save many lives. When Cyclone Phailin made landfall near Gopalpur in India in 2013, it killed fewer than 100 people. A similar storm that hit the area in 1999, before early warning systems and evacuation plans were put in place, had caused 10,000 deaths.

Over the longer term, only rapid, sustained international action to reduce harmful greenhouse gas emissions will keep millions of people from being pushed back into poverty. And climate mitigation policies can be designed to help, rather than burden, the poor. For example, revenue generated by reforming fossil fuel subsidies could be plowed back into social safety nets. Data show if the resources currently used for energy subsidies in 20 countries were distributed instead as universal cash transfers, most people would benefit, and the poorest people - who consume almost no energy - would be the main beneficiaries.

For poorer countries, international support will be essential to support the measures needed. This is particularly true for investments in long-term sustainability, like urban transport systems and resilient energy infrastructure, which have high up-front costs but cannot wait.

The potential costs of not acting are huge. The new World Bank report estimates that based on poor people's vulnerability to natural disasters, losses of crops, hikes in food price, and increased incidence of disease, more than 100 million people could be pushed back over the poverty line by 2030 - most of them in South Asia and Sub-Saharan Africa.

For those gathering in Paris, the stakes are high. But they are even higher for the hundreds of millions of low-income people around the world who live in floodplains, along vulnerable coastlines, in fragile ecosystems, and on marginal agricultural land. We must continue to act, and act fast, to protect them.

The author is senior economist in the Climate Change Group of the World Bank Group.