World Bank chief says global warming threatens the planet and the poorest

Date added: 3 April, 2013

World Bank President Jim Yong Kim has said climate change was a “fundamental threat” to global economic development as he called for a major new push to reduce extreme poverty over the next 17 years. At the same time, the impact of climate change disproportionately threatens the African and Asian nations that would find it hardest to cope. Finding ways to avoid or lessen potential climate effects, he said, are central to that effort. “If we do not act to curb climate change immediately, we will leave our children and grandchildren an unrecognizable planet,” Kim said. “It is the poor, those least responsible for climate change and least able to afford adaptation, who would suffer the most.” His comments are part of an emerging push by the World Bank and the International Monetary Fund to focus on climate change — something that IMF managing director Christine Lagarde has said puts global financial stability “clearly at stake.” Nicholas Stern says that both emissions of greenhouse gas and the effects of climate change were taking place faster than he forecast seven years ago.

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World Bank chief says global warming threatens the planet and the poorest

2.4.2013 (Washington Post)

By Howard Schneider

World Bank President Jim Yong Kim on Tuesday said climate change was a “fundamental threat” to global economic development as he called for a major new push to reduce extreme poverty over the next 17 years.

The bank is in the middle of an internal debate over how to reshape its role in a world where the major developing nations — the core “customers” for its loans and programs — have become increasingly middle class and where states caught in civil war pose an intractable development problem. At the same time, the impact of climate change disproportionately threatens the African and Asian nations that would find it hardest to cope.

Kim said the bank, a sprawling institution that lends to everything from power plants to local governance projects, would try to tailor its work to focus on the elimination of extreme poverty and on easing inequality in countries that are doing better economically.

Finding ways to avoid or lessen potential climate effects, he said, are central to that effort.

“If we do not act to curb climate change immediately, we will leave our children and grandchildren an unrecognizable planet,” Kim said. “It is the poor, those least responsible for climate change and least able to afford adaptation, who would suffer the most.”

His comments are part of an emerging push by the World Bank and the International Monetary Fund to focus on climate change — something that IMF managing director Christine Lagarde on Tuesday said puts global financial stability “clearly at stake.”

The IMF last week published a report arguing that fossil fuels are subsidized to the tune of $1.9 trillion annually by governments around the world and should be more heavily taxed.

On Tuesday, the IMF and the World Resources Institute hosted a speech by British economist Lord Nicholas Stern, author of a controversial climate report for the British government and an advocate of fast and deep carbon emissions cuts.“We have to go zero carbon more or less where we can” to meet the goal of limiting planetary warming to 2 degrees Celsius over the next 90 years, Stern said.

The joint effort by the IMF and World Bank to elevate thinking about the economics of climate change has accelerated under Kim and Lagarde, pushed by evidence that the effects of a warming planet are already being felt in agricultural yields in some nations and the severity of weather events around the globe.

Both organizations often tout the power of advocacy and research in shaping countries’ policies, but their more direct influence may relate to their power over loans and financing. In the bank’s case, that power has declined as the flow of private money has increased around the globe.Still, in his first year as bank president, Kim set a date by which he thinks the world could virtually eliminate extreme poverty: 2030. By then, he said, the number of people living on less than $1.25 per day could be cut from the current estimate of 1.3 billion to perhaps 200 million — a number World Bank officials say could then be addressed through solely local programs.“Now is the time to commit,” Kim said. With nations such as China and Brazil growing richer and expected to continue growing, “successes of the past decades and an increasingly favorable economic outlook combine to give developing countries a chance — for the first time ever — to end extreme poverty within a generation.”It is in the nature of the World Bank, perhaps the chief bully pulpit for economic development, that its president talks in far-reaching terms. In his valedictory news conference, longtime World Bank head James Wolfensohn also spoke of a generational effort “to fight poverty, to establish equality and assure peace.”But World Bank staffers argue that Kim’s statement differs by setting a specific goal — reducing poverty to a minimal or “frictional” level — and a timetable.

It also points to some of Kim’s emerging priorities — and some of the bank’s identified quandaries.

Major bank borrowers such as Mexico, Brazil and China have moved hundreds of millions of their citizens from poverty into the middle class, and while the bank has been involved over the years, that process has been driven by private capital and more-open trade relations with the developed world. Increasingly, bank officials feel they need to confront transnational problems — such as climate change — and face the fact that the world’s poorest may end up concentrated in a few places, particularly failed or conflict states where development is hardest and corruption is a risk to public funds.

In the world the bank is facing, “working in these countries is going to be one of our specialties,” Kim said.

http://www.washingtonpost.com/business/economy/world-bank-chief-says-global-warming-threatens-the-planet-and-the-poorest/2013/04/02/caa73842-9ba7-11e2-9a79-eb5280c81c63_story.html

Economist(Sir Nicholas Stern) warns of ‘radical’ climate change, millions at risk

2.4.2013 (Global Post)

The author of an influential 2006 study on climate change warned Tuesday that the world could be headed toward warming even more catastrophic than expected but he voiced hope for political action.

Nicholas Stern, the British former chief economist for the World Bank, said that both emissions of greenhouse gas and the effects of climate change were taking place faster than he forecast seven years ago.

Without changes to emission trends, the planet has roughly a 50 percent chance that temperatures will soar to five degrees Celsius (nine degrees Fahrenheit) above pre-industrial averages in a century, he said.

“We haven’t been above five degrees Centigrade on this planet for about 30 million years. So you can see that this is radical change way outside human experience,” Stern said in an address at the International Monetary Fund.

“When we were at three degrees Centigrade three million years ago, the sea levels were about 20 some meters (65 feet) above now. On sea level rise of just two meters, probably a couple of hundred million people would have to move,” he said.

Stern said that other effects would come more quickly including the expansion of deserts and the melting of Himalayan snows that supply rivers on which up to two billion people depend.

Even if nations fulfill pledges made in 2010 at a UN-led conference in Cancun, Mexico, the world would be on track to warming of four degrees (7.2 Fahrenheit), he said.

Stern’s 2006 study, considered a landmark in raising public attention on climate change, predicted that warming would shave at least five percent of gross domestic product per year.

Despite the slow progress in international negotiations, Stern saw signs for hope as a number of countries move to put a price on greenhouse gases.

“My own view is that 2013 is the best possible year to try to work and redouble our efforts to create the political will that hitherto has been much too weak,” Stern said.

Stern said that French President Francois Hollande was keen for nations to meet their goal of sealing an accord in 2015 in Paris.

Stern also voiced hope that German Chancellor Angela Merkel, long a prominent voice on climate change, would become more active after this year’s elections.

US President Barack Obama has vowed action on climate change after an earlier bid was thwarted by lawmakers of the rival Republican Party, many of whom reject the science behind climate change.

Emissions have risen sharply in recent years from emerging economies, particularly China.

http://www.globalpost.com/dispatch/news/afp/130402/economist-warns-radical-climate-change-millions-at-risk

Global economic heavyweights from the World Bank and the International Monetary Fund have told governments once again that urgently needed solutions to tackle climate change will also help alleviate the economic crisis. Yesterday, the figureheads from both institutional monoliths, Jim Yong Kim and Christine Lagarde, spoke out about the threat that climate change poses to financial security, economic recovery, and development. The former chief economist of the World Bank and climate guru Lord Stern also told governments that 2013 is the year to ramp up currently disappointing efforts to cut emissions and prepare societies for severe climate impacts as a means to ensure economic stability.

As communities around the world increasingly suffer from extreme weather, Australian officials have now confirmed that the climate down under has permanently changed for the worse. A new report from the Australian Government’s Climate Commission warns the emergency services to prepare for more bushfires, flooding, and drought. It emphasises the risks to human life and the economy as productive farming has been hit particularly hard. The Queensland floods in 2010-11 cost Australia an estimated $5.2 billion alone, illustrating the financial impact of extreme weather events and economic instability that are going to increase without government action on climate change.

It’s not only economic elites piling on the pressure, as new polling data shows there is a public mandate for risk averse political leaders to take action on climate change. New analysis from the UK and the US has revealed that the majority of people want to see their governments invest in climate change solutions alongside economic growth and treat both as priorities, recognising that a choice does not have to be made between the two. This aligns public opinion with expert advice from economic figureheads from the World Bank to the International Monetary Fund.

IMF: Governments need to end energy subsidies

By Howard Schneider,

27.3.2013 (Washington Post)

Government subsidies of gasoline, electricity and other energy sources amount to about $1.9 trillion a year and should be ended or offset with taxes used to battle climate change and pay for social programs, the International Monetary Fund said Wednesday in a major foray into the global warming debate.

From top energy users such as the United States and China to the poorest of the poor, the fund said countries should be more aggressive in developing energy tax and pricing policies that reflect the true cost of fossil fuel use, including such “externalities” as pollution and the steps needed to mitigate the effects of a warming climate.

For the United States, the IMF estimated that would require a $1.40 levy per gallon of gas and other fees totaling more than $1,400 per person each year — around $500 billion in total, or more than 3 percent of the country’s annual economic output.Not recognizing those costs, the IMF argues, has had profound consequences for energy markets and the world economy: encouraging overconsumption; leaving some nations short of funds to address health, education and other needs; and distorting investment decisions worldwide.“It is time for subsidies to end and carbon taxation to be put in place,” IMF First Deputy Managing Director David Lipton said in an interview Tuesday, before the release of a study researched or reviewed by about 30 staff members and vetted by the IMF’s executive board. “You don’t want overconsumption based on getting something for less than it costs and forcing someone else to pay.” The “someone else” in this case is either taxpayers left with the bill for direct government subsidy programs or those harmed by pollution, climate change and other side effects of energy use.Both the IMF and the World Bank, its sister agency, are intensifying their attention to climate change, an issue officials believe is one of the world’s key long-term economic challenges.The issue has become central to the emerging agenda of new World Bank President Jim Yong Kim, who now routinely presses national leaders in meetings for their climate change plans, and compares the effort needed with the U.S. race to the moon in the 1960s. The bank last year released a report forecasting what the world would look like if average temperatures rise 4 degrees in coming decades, instead of the 2-degree increase set as an international goal. The consequences, the bank said, would be catastrophic for some nations.‘A welcome development’While the IMF’s day-to-day business focuses on more nuts-and-bolts issues that affect the financial stability of its member nations, IMF officials said energy subsidies have become an immediate concern.“Climate change has long-term implications for economic development,” said Carlo Cottarelli, head of the IMF’s fiscal affairs department. “But in the short run, you see the impact on public finances. . . . It takes away resources that could be used to reduce deficits and public debt or increase public spending on more useful purposes.”

Although a new world climate treaty has proved elusive since the 2009 Copenhagen talks, increased analysis and resources from the IMF and World Bank could make a difference as nations set policies with climate effects in mind, and try to put together a $100 billion-a-year climate-fighting fund, said Andrew Light, head of international climate policy at the Center for American Progress.“Jumping on this [by the bank and IMF] could actually close the gap between what countries have said they are going to do and where we need them to be. . . . It is a welcome development,” Light said.

The IMF study reviewed energy policies in 176 countries. The conclusion, the IMF said, is that each year a massive annual transfer takes place that devotes some 2.7% of world economic output to keeping energy prices lower than they should be.In poorer nations, the subsidies usually involve direct efforts to keep gasoline cheap at the pump and electricity rates low. Globally, those types of direct subsidies cost about $480 billion and have overwhelmed public finances in nations such as Egypt and Pakistan. Throughout Africa, an IMF official noted, governments spend as much on energy subsidies as they do on health care, and prices are so misaligned that they have undercut investment in new power sources. Eliminating those subsidies, the IMF estimated, would reduce energy use and trim perhaps 2 percent from the world’s annual carbon dioxide emissions.In the developed world, the IMF says the subsidies are even larger but less overt, reflecting that government tax policies do not capture the costs of pollution and other externalities. Using economic models and other studies performed as part of the larger global warming debate, the IMF puts those indirect subsidies at $1.4 trillion — $25 for each ton of carbon dioxide produced — and suggests they be offset through an “efficient” tax that makes energy users pay the full cost of the product.Controversial stanceThe study will probably prove controversial, putting the IMF on record in favor of policies that would raise the cost of living for nearly everyone on the planet.The fund has often criticized the subsidies wired into the government budgets of many developing countries, arguing, as Lipton said, that they benefit the person with “three cars and four air conditioners” more than the poor. He said cash transfers to the needy would be cheaper than mispricing power for everyone, and government savings could be directed to health and education programs or deficit reduction.But the call for a broad recognition of the externalities of energy consumption injects the IMF directly into the climate change debate at a time when developed countries are fighting to keep their manufacturing firms competitive and reduce unemployment.The United States is enjoying an energy renaissance with the development of new drilling and other technologies, and the focus has been on how that might revive the country’s economic fortunes — not on how to calculate news taxes that ought to be applied. In developing countries, the trade-offs are more elemental: between inefficient electricity supplies or none at all, between social stability and the riots that sometimes accompany efforts to impose market prices.

The IMF study did not analyze all aspects of the energy industry — and explicitly excluded tax breaks for drilling or exploration. It also did not look at government support for the alternative energy industry, which the fund said had only a minor effect globally.

http://www.washingtonpost.com/business/economy/imf-citing-trillions-in-government-subsidies-calls-for-end-to-mispricing-of-energy/2013/03/27/09957d6e-96e1-11e2-814b-063623d80a60_story.html

World Bank chief says global warming threatens the planet and the poorest