Emission abatement versus development as strategies to reduce vulnerability to climate change: an application of FUND

Abstract

ABSTRACT. Poorer countries are generally believed to be more vulnerable to climate change than richer countries because poorer countries are more exposed and have less adaptive capacity. This suggests that, in principle, there are two ways of reducing vulnerability to climate change: economic growth and greenhouse gas emission reduction. Using a complex climate change impact model, in which development is an important determinant of vulnerability, the hypothesis is tested whether development aid is more effective in reducing impacts than is emission abatement. The hypothesis is barely rejected for Asia but strongly accepted for Latin America and, particularly, Africa. The explanation for the difference is that development (aid) reduces vulnerabilities in some sectors (infectious diseases, water resources, agriculture) but increases vulnerabilities in others (cardiovascular diseases, energy consumption). However, climate change impacts are much higher in Latin America and Africa than in Asia, so that money spent on emission reduction for the sake of avoiding impacts in developing countries is better spent on vulnerability reduction in those countries. His last big project in a long career, Jan Feenstra managed the Netherlands Climate Change

Addressing the Climate Change—Sustainable Development Nexus

“…From a policy perspective, there is also potential for a positive interaction. While developing countries tend to be more vulnerable to climate change -their economies often depend on agriculture, which is highly susceptible to weather conditions, and they lack the means to cope with variable and quickly changing weather conditions -raising the level of development may reduce this vulnerability (Eriksen and O"Brien, 2007;Tol, 2005). It is not surprising, then, that calls have been made to deal with both issues simultaneously and arrive at an integrated policy (Beg et al, 2003;Swart et al, 2003).…”

Schelling's Conjecture on Climate and Development: A Test

“…Impacts on agriculture, forestry, water use, energy use, the coastal zone, hurricanes, ecosystems, and health are all modelled separately -both in "physical" units and their monetary value (Tol 2002a;Tol 2002b). Moreover, FUND allows vulnerability to climate change impacts to be an explicit function of the level and rate of regional development (Tol 2005;Tol et al 2007). …”

“…By assumption, therefore, damages from climate change always increase with GDP, and proportionally so. Tol (1995) was the first to model vulnerability to climate change as an explicit function of development, breaking the ground for the analysis of the trade-off between development and climate policy (Tol and Dowlatabadi 2001;Tol 2005;Tol 2007;Tol et al 2007). Building on the work of Horowitz (2002), Hoel and Sterner (2007) suggest that the welfare impacts of climate change might be related in a more complicated way to consumption of other goods.…”

Development Aid and Climate Finance

“…There are examples where this is the case, such as the preservation of peat lands and mangrove forests, which simultaneously sequesters carbon and reduces impacts. However, in most cases mitigation and 5 adaptation seem to be substitutes (Tol, 2005;Ingham et al, 2005), which is the assumption we make in this paper.…”

“…Fankhauser and Pearce (2014) offer a conceptual discussion of sustainable development finance, while Haites (2013) provides an overview of climate finance issues. Tol (2005) argued early on that development aid can reduce vulnerability to climate change. However, there has been no systematic analysis up to now of how environmental finance and development aid interact, either from a donor perspective (e.g., in terms of overlapping or competing donor objectives) or from a recipients' point of view (e.g., in terms of the incentives that multiple funding streams provide).…”