March 04, 2020

Time for bold initiatives to tackle inequalities and climate change

On the 'European Green Deal', greening international development and tackling inequality

*** Originally published in OECD-Development Matters on 31 January 2020 ***

 

With the resounding failure of the UN COPs to mobilize a strong international response to climate change and inequality, concerned citizens around the world are rightly beginning to show frustration and even anger. And yet, at long last on the final year before the turn of the decade, a major high-income donor of international aid publicly proclaimed it would step up to the plate and propose radical change.

The new European Union (EU) Commission promised to bring to the floor a “European Green Deal” that will drastically transform the very foundations of the EU economy. The green deal has clear implications for fighting inequalities, as well as for development. The “EU can use its influence, expertise and financial resources to mobilize its neighbors and partners to join it on a sustainable path.” The EU announces a strong “green deal diplomacy” focused on supporting sustainable development globally, engaging countries to end fossil fuel subsidies, phasing out fossil-fuel based infrastructure, investing in climate finance and climate resilience, promoting green regulations, and creating an international carbon market to provide reform incentives.

The green deal will encapsulate the Commission’s decade-long strategic shift towards sustainable development and further enhance visibility, as well as past work with developing partners on sustainability. The EU already cooperates in development in the places that are the hardest hit by climate change, chiefly least developed countries (LDCs) in Africa and Small Island Developing States (SIDS) elsewhere. Moreover, the EU already has an alliance with the African Union on sustainable investment and jobs. Given this solid basis from which to start, the EU should ensure at least two things. First, green international development should become a more central and important plank in the EU green deal, as what the world is really looking for is a clear path towards a new kind of modernization. Second, the EU should further stress that non-progressive climate mitigation policies can hurt communities and set back the green agenda. Indeed, climate change in the EU can only be dealt with if it is dealt with everywhere. Tying the fight against climate change to inequality is a must. It is a well-known fact that developing countries that contributed the least to climate change will suffer the greater consequences. All types of pre-existing inequalities will be worsened by the climate crisis everywhere.

Let us review the numbers. Between 1990 and 2015, it was reported that extreme poverty worldwide fell from 1.9 billion to 836 million. Inequality between countries reportedly fell on average over the last few decades. We now know from new studies that this is far less than how much global inequality should have fallen in that time period. Despite rapid growth, India’s current GDP is 30% lower than it should be and Brazil’s GDP is 25% lower than it should be. The culprit? Global warming, climate change, climate crisis — however you want to call it — is reportedly at the heart of this. It threatens to reverse the gains made from the Millennium Development Goals and already has been increasing global economic inequality by approximately 25% over the last 50 years impacting annual economic growth, decreasing economic output in poorer and hotter countries and possibly increasing output in cooler already wealthy countries. At the poorest four deciles of the population-weighted country level per capita GDP distribution, GDP was reduced between 17-36% which yielded a ratio between top and bottom deciles that is 25% larger than in a world without the climate crisis. The equatorial, hotter areas of the world which are at the bottom of the list of emitters of GHGs not only suffer the effects of GHG emissions more acutely than the countries most responsible for emitting them, but development efforts are hampered by climate-driven productivity loss, health impacts, and impact on agriculture. Eight out of 10 countries most hit by extreme weather events between 1998 and 2017 were Low Income Countries (LICs) and Middle Income Countries (MICs) — a situation which will get worse as climate change increases the instances of extreme weather events worldwide. In fact, developing countries trapped in this cycle often rely on outside assistance merely to repair the substantial damage from the last natural disaster before being hit by the next one a few years later.

High Income Countries (HICs) should not sit comfortably however as inequality between countries is not the only kind of inequality climate change is exacerbating. All existing inequalities around the world — driven by class, sex, race, ethnicity, religion and more — are exacerbated by climate change. A UN report on climate change and social inequality from 2017 describes a world where the already disadvantaged are more greatly exposed to adverse climate effects and will have fewer means to cope and recover from the damage of these increasing effects. Developing countries will feel the exacerbation of internal inequalities more acutely. For instance, because Latin America has more stark inequality overall than Europe, those already disadvantaged in Latin America will feel the fallout of climate change effects more severely. However, this should not diminish the increased suffering felt by the disadvantaged everywhere. Women for example are already economically more unstable than their male counterparts as a result of both social expectations and gaps in social protection programs for child rearing, health services, and food programs (to name a few). Twenty-five case studies undertaken in Africa and Asia already demonstrate that climate change has worsened the existing inequalities between sexes.

How does the EU green deal address these issues? While the EU will propose a Just Transition Mechanism and a Just Transition Fund for re-skilling EU fossil fuel sector workers and regions dependent on the industries, the deal should be supplemented by the 2019 Commission Staff Working Document on addressing partner country inequalities. It not only demonstrates the EU’s detailed knowledge of these different types of inequality, it is specifically focused on integrating the fight against inequalities in development. A section in this document is dedicated to climate resilience and mitigation. However, if the EU green deal and the EU project of fighting inequalities through development can be combined, we may have the basis for exactly the type of development paradigm the OECD has called for: a development model with sustainability at its heart. An exportable green deal would remove the possibility of stranded assets in outmoded fossil fuel technology and infrastructure in favor of long-term positive outcomes for developing communities.

Much has been sacrificed on the altar of the fossil fuel model in terms of progress on battling poverty and inequalities. These sacrifices will get worse the longer the world dithers. The EU green deal can be exactly the kind of ambitious new model of modernization to jumpstart change — sustainable and all encompassing. But to differentiate it from the current models based exclusively on laissez-faire markets or authoritarian brute force, it needs the progressive edge that will make it truly effective (and accepted by the local communities it seeks to help). The EU should be recognized for being one of the first to step up and propose historic reform. But if we are talking about a model ready for exportation, then sustainable international development must be higher on everyone’s agenda. As the OECD well knows from its work on aligning aid with the Paris Accord, we cannot afford development investment and implementation that does not respect the SDGs. An exportable and progressive Green Deal — if the EU indeed has the same height of ambition as the US did with its New Deal — could be exactly the kind of paradigm shift the development world has been waiting for… and that OECD countries in general so desperately need.

 

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Originally published in OECD-Development Matters on 31 January 2020.

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Filippos Pierros is Minister-Counsellor, Vice-Chair of the Development Assistance Committee and the Development Centre Governing Board, EU Delegation to the OECD. The views expressed in this piece reflect strictly those of the author.

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