Natural disasters. Crop failures. Waterborne diseases. Food price spikes. Poor people and poor countries are highly vulnerable to climate change-related shocks, which can erase decades of hard work and leave people with irreversible human and physical losses.
These shocks contribute to keeping people in poverty or to bringing non-poor people in poverty. The data shows that climate-related stresses and shocks are already an obstacle to poverty reduction and the eradication of extreme poverty — and the situation will only get worse. Over the long term, if we do not take action, climate change will make it impossible to achieve the global goal of ending extreme poverty.
This is not new news to those working in the development community. The new World Bank Group report “Shock Waves: Managing the Impacts of Climate Change on Poverty” presents new data and analysis on the impact of climate — and climate change — on poverty.
It also identifies solutions to manage the impacts of climate change on poverty. “Good development” — that is, development that is rapid, inclusive and climate-informed — can mitigate the worst impacts of climate change on poverty between now and 2030.
In low-income countries, almost 50 percent of all health expenditures are paid for out-of-pocket, and as a result health shocks are one of the leading reasons why people become poor. But health coverage can be expanded even in developing countries. For instance, in Rwanda, the government started investing in universal health coverage in 1994 and today nearly 80 percent of its population is insured.
Strong social safety nets help households cope with shocks. For instance, in Mexico, beneficiaries of Prospera, the national cash transfer program, are less likely to withdraw their children from school when hit by natural disasters. And such schemes are being rapidly adopted by countries at all income levels. When droughts in Ethiopia caused food shortages and famine in 2011, the country’s Productive Safety Net Program expanded its coverage from 6.5 million to 9.6 million people in two months and increased the duration of benefits from six to nine months per year, limiting the impact of the drought.
To be effective, this development should be combined with targeted actions that help communities adapt to climate change, like heat-tolerant crops and disaster preparedness. Early warning systems — combined with observation systems and evacuation preparedness — can save many lives at a low cost. In 1999 in Gopalpur, India, a large storm caused 10,000 deaths. When Cyclone Phailin made landfall in the same location in 2013, it killed fewer than 100 people, thanks to investments in early warning and preparedness.
And when we invest in climate change adaptation and disaster risk management, we contribute to poverty reduction. In 36 villages in Andhra Pradesh, surveys show that 14 percent of households exit poverty every years. But at the same time, 12 percent of the households fall in poverty every year and crop failures or droughts are involved in almost half of these cases. Protecting poor populations against these shocks — through climate-smart agriculture or social safety nets — would help them escape poverty for good.
But our ability to manage increasing climate change impacts is limited. To keep long-term impacts on poverty in check, global temperatures need to be stabilized at a safe level. Such an ambitious goal requires that all governments act now to implement emissions-reduction policies. These policies can be designed not to slow down poverty reduction.
Emissions-reduction can benefit poor people thanks to synergies between development and climate change mitigation. Globally, a low-carbon pathway could avoid half a million premature deaths annually in 2030, 1.3 million in 2050, and 2.2 million in 2100, compared to a business-as-usual scenario.
But countries will have to do more than implement win-win options, potentially creating trade-offs with poverty reduction. Fortunately governments can protect the poor. For example, data shows that reducing fossil fuel subsidies and redistributing the same resources equally throughout the population through cash transfers would benefit the poorest 60 percent of the population, and especially the poorest 20 percent. And because poor people consume little energy, they would be net beneficiaries of carbon or energy taxes that finance pro-poor expenditures.
The immediate implication of this report is that risk management and climate change adaptation investments and projects directly contribute to poverty reduction. And in parallel, poverty reduction and development contribute to reducing future climate change impacts, by making effective and green technologies more affordable. To transform these strategies into actual benefits for poor people, climate and development policies should be designed together, and governments and development institutions need to act now.
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Stéphane Hallegatte is a senior economist at the World Bank. His work includes climate change vulnerability and adaptation, green growth strategies, urban economics and environmental policies, and disaster risk management. He was lead author of IPCC reports, and co-led with Marianne Fay the World Bank report “Decarbonizing Development.” He was the lead author of “Shock Waves: Managing the Impacts of Climate Change on Poverty,” on which this post is based.
Mook Bangalore is a research assistant at the World Bank, examining the impact of climate change on poverty with a focus on natural disasters. He was a co-author of “Shock Waves: Managing the Impacts of Climate Change on Poverty,” on which this post is based.
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