Development in a Changing Climate

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

2. 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

3. The facts – Worsening news since the IPCC

4. 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

5. 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

6. 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

7. 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 2020 - average over range (McKinsey 2009; own calculations based on data reported in IPCC 2009).

8. 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

9. The challenge: it’s an unfair world

10. 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?

11. 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!

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

13. 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

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