Politics of Poverty

Four arguments for climate finance

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Asiya Abdulkadir is a farmer in Adi Abi, Ethiopia. Drought has taken a toll on many parts of the country leaving millions in need of humanitarian aid. (Photo: Coco McCabe / Oxfam America)

Making the case for funding climate adaptation and mitigation efforts one last time at Oxfam.

Personally, I’ve always been convinced of the case for climate finance, but I know many people, including many key decision-makers, still have their doubts. In the last several weeks, climate finance issues received an unprecedented amount of air time as the Trump Administration walked back from the United States’ climate change commitments, including our pledge to the Green Climate Fund.  I’ve spent the last four years working on international climate finance at Oxfam (and even longer on climate change issues), so as I wrap up this chapter in my career with Oxfam and get ready to take up a new position with a new organization it’s worth taking a few minutes to make the case for climate finance (one more time).

The justice case

People’s lives are on the line because of climate change. Right now climate change is deepening the Horn of Africa’s hunger crisis where 13 million people are going hungry and Somalia is on the brink of famine. Frequently it is people that have done the least to cause climate change that bear the brunt of its negative impacts. The richest 10 percent of people in the world are responsible for 50 percent of global emissions. We all feel the heat of climate change, but not as much as the poorest amongst us do. Thus, climate finance, to help address the negative effects of global warming, is of the right thing to do and we – developed countries, especially – must take responsibility for the harm our emissions cause.

The ambition case

To have a chance of limiting global warming by 2°C, let alone 1.5°C, a rapid transformation in our economies and societies is needed. Things like our energy, transportation, and food systems all need to change to limit emissions and avert dangerous warming within the next few decades. But the places with the most potential for addressing climate change, the countries that bear most of the responsibility to address it, and the places with the financial resources and capabilities don’t line up perfectly. Climate finance helps to spur greater action and ambition. It helps to change policies, demonstrate new ways of doing things, sends signals to the market that help shift the flow of private capital, and helps to bridge the gap between mitigation potential and resources needed to scale up climate actions.

The business case

Beyond wreaking havoc on the livelihoods of small-scale food producers and coastal communities, climate change is also affecting the bottom lines of major companies. For example, Unilever’s chief executive said they faced higher business costs of 300-400 million Euros in 2015 due to extreme weather. Investors are starting to demand climate-related financial risk disclosures of all companies, so that stakeholders have the information they need to assess and respond to climate risks. Climate finance can help reduce the risks of future shocks and enable quicker and more effective responses when they occur, thus lowering the cost of business for companies. Climate finance also enables policy reforms that can contribute to leveling the playing field for businesses that are committed to delivering on sustainability and capturing longer term perspectives where financial interests, align with the interests of people and the environment.

The efficacy case

Experience continues to show that preparedness pays off by saving money and lives. For every $1 invested in preparedness the return or savings is about $4, sometimes more. In the same way, acting early when something like drought hits costs 40 percent less than acting after its worst effects have already set in. If we want to build infrastructure that will last, it’s critical to understand how the climate will effect these investments in the future. For example, roads and bridges need to be able to withstand the rise in sea levels and other climate risks. It doesn’t make any sense to invest billions of dollars in infrastructure that won’t last or actually puts people at greater risk.

Getting to a 2°C path would also reduce adaptation costs in developing countries by almost $300 billion per year by 2050 and save them an additional $600 billion annually in economic losses from climate change. The same applies to developed countries. Using climate finance to ramp up mitigation ambition will help lower costs and losses in the future.

The bottom line on climate finance

Many of my colleagues have already debunked much of what President Trump has said on climate finance. But here are a few fun facts to part with:

  • The United States’ annual contribution to the GCF of $500 million is just 0.012 percent of the total US federal budget. If the US would have made the planned payment of $750 million it would have been 0.018 percent of the total federal budget.
  • The $500 million payment is just $1.53 per American per year. The $750 million payment is $2.30 per American per year. Americans spend $37.32 per person on coffee each year.
  • On a per capita basis, 10 other countries (Sweden, Luxembourg, Norway, Monaco, United Kingdom, France, Denmark, German, Switzerland and Japan) all pledged more to the GCF than the United States.
  • GCF isn’t the only climate finance provided by the United States. In total the US provided $2.6 billion in 2015 (0.06 percent of the total federal budget) to assist partner countries with their adaptation and mitigation efforts through foreign assistance programs. The EU, Japan, France and Germany all provide more finance in absolute terms than the US.

Acting on climate change now costs less than the damages we will all incur if we don’t. The biggest difference is essentially who reaps the benefits and who pays the costs of action (or inaction) on climate. For me the choice is very simple: I choose the long-term well-being of us all over the short-term profits of a few rich men. Keep up the fight.

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