Green Growth and Economic Development – Regional Perspectives on the Effects of Climate Change on the Global Economy
The effects of climate change pose a threat to the global economy that varies in scale and severity. As drought endangers agricultural production in the Sahel and rising sea levels put the financial centers of East Asia at risk of flooding, different countries have developed strategies to combat climate change while ensuring the economic well-being of their people. However, certain states have adapted towards green economies more effectively than others. States working with global and regional partners to achieve the United Nations Sustainable Development Goals are beginning the difficult task of targeting the root causes of climate change while building thriving economies from green growth.
As one of the regions most affected by climate change, the Sahel, a region encompassing the African states of Burkina Faso, Cameroon, Chad, The Gambia, Guinea, Mali, Mauritania, Niger, Nigeria, and Senegal, is home to a host of green innovative solutions that are simultaneously building resistance to the effects of rising temperatures while utilizing the region’s renewable resources for economic growth. The UN support plan for the Sahel, as shared in the organization’s Africa Renewal magazine, seeks to implement a strategy of sustainable development for the region. According to the support plan, regional risks include endemic poverty, inequality, limited access to basic services, a high rate of youth unemployment, and governance challenges, which would contribute to extremism, terrorism, and crime.
The support plan also emphasizes that these risk factors amplify one another, leading to significant challenges to meeting the Sustainable Development Goals such as advancing climate action by establishing and maintaining clean and affordable energy sources. The threat of climate change looms large over the Sahel with the threat of drought causing food insecurity, malnutrition, and internal migration. These risk factors, however, do not overshadow the economic potential and progress already undertaken in these countries. The past decade has already shown that the macroeconomic conditions of the Sahel have surpassed the continental average. The region is home to an abundance of natural resources, including some of the largest aquifers on the continent, putting the region in a position to combat scarcity while striving for sustainable growth.
To combat climate change, the UN support plan includes several priorities. Priority five –promoting access to renewable energy— seeks to “increase on-grid and off-grid solutions to ensure access to affordable, clean and reliable energy services that can sustain economic growth as well as basic services.” This involves promoting private investment in the region, developing small-scale enterprises, and increasing food productivity. Private investment is an untapped resource for the nations of the Sahel even with vast opportunities in terms of agriculture and renewable energy.
In Nigeria, where the effects of climate change are being compounded by the economic devastation brought upon by COVID-19, steps are already being taken to move towards the support plan. According to the World Resources Institute, Nigeria has implemented a $5.9 billion Economic Sustainability Plan that emphasizes the need to diversify the country’s economy away from oil, which currently makes up 80 percent of its exports and 50 percent of government revenue. The Nigerian oil sector faltered in 2020, reinforcing the country’s need to diversify its economy by investing in sustainable agriculture and renewable energy.
Often seen as the forefront of the fight against climate change, the European Union has taken the lead in green growth and combines the goals of net-zero carbon emissions with sustainable economic development. The European Green Deal set forth by the European Commission aims to transform the EU into a competitive green economy decoupled from resource use with no net emissions of greenhouse gases by 2050. Reaching the 2050 goal requires several policy changes in both the public and private sectors such as the decarbonization of the energy sector and the implementation of cleaner forms of transportation. The Commission predicts that a full transformation of the industrial sector will take approximately 25 years and require the full mobilization of constituent states’ energy industries, as well as the decarbonization of the steel, chemicals, and cement industries.
There are a few challenges present in achieving this goal, such as the economic hardship brought on by the COVID-19 pandemic and resistance from member countries. Critics of the European COVID-19 recovery act, also known as NextGeneration Europe, claim the 18.9 billion euros of funds allocated towards fighting climate change in the recovery deal is simply not enough. Reuters reports that nearly 550 billion euros could be invested in the Multiannual Financial Framework 2021-2027 to fight climate change – however, this amount would still fall well short of the 2.4 trillion euros needed to meet current EU climate goals. According to Politico, Poland, among other countries, has opted out of the deal completely, citing a dependence on fossil fuels like coal. Without full support from all member countries, it will be impossible for the EU to reach its 2050 goals. It is imperative that each member state prioritizes shifting away from carbon resources and instead work towards building green economies built on sustainable growth.
While the goals set by the European Green Deal provide a good foundation for sustainable development in Europe, it is unclear whether these policy changes point towards a shift in European voters’ priorities. In Germany, the Green Party has seen unprecedented support in recent polls following its choice to run Annalena Baerbock for chancellor, according to Reuters. A successful Green bid for the German chancellery could signal a dramatic shift in priority for green economic policy within Germany. As noted by Deutsche Welle, this is due to the party’s more ambitious climate proposals, including a 70 percent reduction in greenhouse gases by 2030 compared to the current government’s 50 percent, as well as a rapid rollout of renewable products like electric cars. While incumbent chancellor Angela Merkel’s CDU party and its sister CSU party will retain their parliamentary majority, the Greens’ performance in the September election could position it to form a coalition government with the CDU/CSU. Regardless, the sudden, albeit brief, surge in the polls for the Green party signals environmental policy as a priority among German voters, a trend that could spread in other EU countries.
While they do not contribute to carbon emissions as much as other regions, Latin American and Caribbean (LAC) countries must still combat the effects of climate change.
The main effects of climate change on the LAC region include drought and other extreme climate shifts that cause mass displacement. The World Bank explains that natural disasters push 150,000 to 2 million individuals on average into extreme poverty. The emergence of climate refugees has led to food and worker shortages in the region as people are forced to relocate from their homes. This situation has been exacerbated by COVID-19 and wealth inequality in these regions will continue to expand into 2030 unless action is taken.
The World Bank recommends that LAC region states undergo long-term economic development strategies that aim to reduce local emissions and protect against the effects of climate change. With technical support and investment, focusing on fields such as clean energy and green transport could spur green growth. Mitigation strategies in agriculture, forestry, and urban development could also work to alleviate the impact of climate disasters.
Among LAC nations, Chile is a regional leader in implementing sustainable development strategies into national policy. According to its Nationally Determined Contribution report, “by 2025, a national indicator for hydrological watersheds will be established to track water shortages and risk, helping to promote water security nationwide.” This is only one adaptation policy among Chile’s expansive climate strategy that targets all sectors of its industry and addresses other policy areas such as women’s equality. Directly incorporating the United Nations Sustainable Development Goals into its national policy has set the country up to respond to any incoming challenges and achieve green growth.
On the other side of the hemisphere, North American countries, especially the United States, have failed thus far in transitioning towards a green economy.
The effects of climate change on the North American continent are as varied as the geography and have disproportionately affected marginalized communities. According to the proceedings of the National Academy of Sciences, one consistent climate impact across North America, though disproportionately affecting the American Southwest, is aridification, roughly defined as an extreme form of dryness that has a tremendous effect on ecosystems. This means the continent will face further droughts, flash floods, and intense wildfires, as well as longer and drier summers.
Among North American states, the United States is by far the largest global emitter. Due to shale gas collection, the U.S. became energy independent for the first time since 1957. However, as the European Geosciences Union states, the emergence of shale has drastically increased global methane emissions. This has removed the incentive for the United States to begin a large-scale transition away from fossil fuels, and without a national strategy for dealing with climate change emissions, the U.S. is not likely to begin decreasing fossil fuel use and related emissions anytime soon.
The Biden administration promised to make climate change a priority, a promise that included rejoining the Paris Climate Agreement and committing to reducing greenhouse gas pollution by 50-52 percent from 2005 levels by 2030 according to a White House Press Briefing. However, the U.S. is unlikely to meet this target. According to PubMed Central, the United States is currently decreasing emissions at an average rate of 1 percent per year but needs to be reducing emissions at an average rate of 1.8 percent per year to avoid a 35 degree Fahrenheit rise in global temperatures by 2100. The Biden administration has started promoting jobs in green industries, but the administration will need to move faster if it wishes to meet its targets.
A drastic rise in global temperatures poses a distinct threat to East Asia, where the fishing industry and coastal cities are at risk due to climate change and rising ocean temperatures.
According to the Asian Development Bank, climate change will result in a much warmer and wetter East Asia. This directly impacts water resources in the region and could fuel future natural disasters due to increased annual precipitation, greater seasonal variation, and more extreme weather events increasing the severity and frequency of annual floods. This, in turn, impacts other areas such as agriculture and biodiversity, which will be severely harmed by climate change. More preemptive measures must be taken to protect against flooding, especially in high-risk regions.
The greatest impact of climate change in East Asia will be the rising sea level, which directly affects densely populated coastal cities in China and Japan. The Asia Development Bank report states, “Three cities in East Asia—Guangzhou and Shanghai in the PRC and Osaka/Kobe in Japan—are in the top 10 in the world in terms of current exposed population. In terms of value of assets exposed, three Japanese cities are in the top 10…” These centers of global trade will suffer immensely if sea levels rise due to a slowdown in shipping and potential impacts on city energy grids as a result of flooding.
Just as North America’s economy centers around the United States, so does East Asia’s economy around the People’s Republic of China which, like the United States, has not fully committed to reducing emissions. The Climate Action Tracker reports that China plans on peaking carbon dioxide emissions around 2030, and earlier if possible – if it is serious about combating climate change, China must commit to peaking carbon dioxide emissions closer to 2025. Its fourteenth five-year plan, which has set a carbon neutrality goal of 2060 and focuses on new energy technologies, has taken steps to address increase investment in a green economy.
While each region of the globe has dealt with the effects of climate change differently, a few facts are universally clear: climate change threatens to displace hundreds of thousands if not millions of people, and these effects are already being seen in vulnerable regions. Global powers such as the United States and China must increase their commitment to net-zero emissions and cooperate with other states to do so. Economic development and a commitment to reducing carbon emissions along with other sustainable practices are not mutually exclusive and many states have already shown the positive effects of prioritizing a green economy.