Adaptation, Fairness and Finance

We face an extremely difficult, complex challenge in responding adequately to mitigate and adapt to climate change. One particularly thorny aspect of this challenge is how best the West can fulfill their ethical obligation to help developing countries build capacity and fund the level of response required to successfully adapt to climate change. Adaptation refers to actions that communities/individuals/ governments can take to adjust their behaviour or their surroundings to reduce their vulnerability to climate change and mitigate impacts. Some quick research (e.g. NYT) and some common sense reveals staggering inequality in the capacity of developed vs. developing countries to respond to the impacts of climate change. In this context, capacity (pdf) refers to the ability of a country to respond successfully to climate variability and change, by adjusting their behaviour, resources, and technologies. The fact that those who are at most risk from climate change have contributed the least to the problem only adds to the difficulty of the challenge. In general, the rich have both caused the problem and are the best equipped to respond, while the most vulnerable are also poor, ill-equipped to respond, and reside in many of the places that are expected to be hit the worst by climate change.

The Cancun Agreement

The latest output from the international climate negotiations, the Cancun Agreement, includes a large segment on adaptation. In particularly, this segment focuses on programmes to increase developing country capacity and measures to transfer funds from developed to developing countries to fund adaptation responses. Interestingly, and perhaps indicating a shift in focus from mitigation to adaptation, adaptation comes before mitigation in the agreement. Major milestones from the agreement, in terms of adaptation, are summarized nicely here, here and here (pdf).

The Cancun Agreement definitely takes steps forward, but still remains very vague and process-focused, and includes no commitments from developed countries to new and additional funding, and no progress on how those funds might be raised. In addition, UNFCC bureaucrats and UNFCC stakeholders must still sort out the large task of determining the institutional arrangements and linkages, the composition of the adaptation committee, terms of reference, placement of regional centres, etc. I am skeptical that the Cancun Agreement has really provided a “pathway forward” towards a successful transfer of funds from the West to the global South (see Conservation International).

The Cancun Agreement embodies the tensions regarding how developing countries. For example, section 18:

“Requests developed country Parties to provide developing country Parties, taking into account the needs of those that are particularly vulnerable, with long-term, scaled-up, predictable, new and additional finance, technology, and capacity-building, consistent with relevant provisions, to implement urgent, short-, medium- and long-term adaptation actions, plans, programmes and projects at local, national, subregional and regional levels, in and across different economic and social sectors and ecosystems”

Within this paragraph, and others within the Cancun Agreement, it is clear what developing countries are worried about. First and foremost, they are worried about climate change impacts (among many other challenges they face), they are worried that developed countries will (I would say justifiably):

• simply re-package old funding commitments, especially aid money into adaptation funding, and
• implement adaptation measures and funding through opaque processes that developing countries do not have adequate control over.

This last concern is particularly reflected in the serious disappointment from developing countries that the World Bank was chosen to serve as interim trustee of the Green Climate Fund (see here and here). Despite some shared concerns, it is important to remember that there is quite a lot of heterogeneity amongst developing countries in terms of their goals and negotiating positions at the COP meetings, most evidently between the BRIC countries (Brazil, Russia, India, and China), and AOSIS (Alliance of Small Island States).

The Why and How of Financing Adaptation

Rich countries are grappling with how to help developing countries adapt to climate change for various reasons:

• self-interest and security: to avoid climate refugees, unrest and instability in developing countries
• ethics: it’s generally considered morally right to help those in need and it would also be appropriate if considering principles of ethics such as fairness, justice or polluter-pays, and
• because developing countries are negotiating in the international climate talks (UNFCCC) so that they will not accept proposals for how they should reduce their greenhouse gas emissions unless they get commitments for adaptation funding.

Those more cynical might just assume that rich nations are simply creating the illusion that they will fund adaptation to placate the global South while rich nations continue to pollute the atmosphere.

Where and what type of money should finance adaptation in developed countries is the subject of much debate (pdf). Given conservative estimates that the costs of adaptation in poor countries will be $75-100 billion per year (if average temperature increases are kept below 2oC), the question remains of where that money should come from and how it should be allocated – e.g. based on need or efficiency (see World Bank). Options for where the money comes from includes revenues from: a global aviation or global finance tax, carbon taxes and/or carbon permit auctions, and the redeployment of fossil fuel subsidies (see UN High-Level Advisory Group on Climate Change Financing). Opinions tend to differ on whether the funding should be from public or private sources, and whether it should be in the form of grants or loans (see Oxfam Briefing Note).

How to Get Rich Countries to Fund Adaptation

As someone who believes that rich nations have an ethical obligation to fund adaptation in developing countries, I wonder what role citizens of rich nations have in convincing their governments to commit funding, and how they might best do that. While some polling suggests that Canadians support increased foreign aid, given limited budgets, I am skeptical of how deep that commitment is, especially when cuts to other priority areas such as education and health care are being made. Some organizations, such as the Center for American Progress in the U.S. appeal to the security and economic interests of the U.S. (e.g. helping to close the competitiveness gap with China, and avoiding climate refugees). I wonder what will be more effective – appeals to self-interest or to “doing the right” thing? I suspect a targeted messaging campaign with different messages to different groups may be most effective. We know that individuals will send money to other countries deal with what are arguably the impacts of climate change (by donating to the Red Cross etc. after disasters), but sending money in advance to help countries prepare to prevent and respond more effectively doesn’t seem to have the same appeal.

At the end of the day, a large (idealistic) part of me wonders whether a revamped international agreement that included automatic transfer mechanisms, such as Contraction and Convergence would be a better pathway forward given that it would eliminate so much of the bureaucracy, petty backroom-dealing, and lengthy, laborious negotiations. Although, getting political negotiators to agree to Contraction and Convergence would probably require lengthy and laborious negotiations, not to mention a likely necessary shift in power dynamics among the U.S., China and India.

Counting Carbon

Since the beginning of the anthropocene epoch, humans have released around 545 billion tons of carbon to the atmosphere from terrestrial and living storage reservoirs in the form of carbon dioxide (CO2). Scientists have been concerned with linkages between CO2 and climate since at least 1896, but only since 1992 has an international effort attempted to check CO2 emissions and limit the severity of anthropogenic climate changes (United Nations Framework Convention on Climate Change, UNFCCC).

The objective of the UNFCCC is to achieve ‘stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.’ CO2 currently accounts for 77% of global greenhouse gas emissions and is the focus of most greenhouse gas emissions accounting and reduction schemes.

Reducing global CO2 emissions in an equitable, timely manner is dauntingly complex. For example, there is rich debate on market-based mechanisms included in the Kyoto Protocol to incentivize emission reductions. These plans have led to a range of projects to reduce emissions that have been greeted with both hope and skepticism. Before any type of reduction plan can be effective though, we need to quantify when, where, and how much CO2 is being emitted. The remainder of this post is focused on the current international CO2 emissions accounting framework, critiques of this system, and alternative approaches that have been developed.

Territorial Accounting

The current international UNFCCC treaty framework allocates emissions spatially according to their point of injection into the atmosphere. Here’s an outline of the accounting process:

1. Nations are grouped into Annex 1 countries and non-Annex 1 countries based primarily on the condition of national economic development.

2. Annex 1 national governments are responsible for compiling and reporting CO2 emission inventories for emissions that originate from within national borders. Non-annex 1 countries voluntarily report emissions.

3. Emissions inventories from energy, industrial processes, agriculture, and land-use/forestry changes are compiled based on methodological standards set by the IPCC.

4. Each nation’s emissions inventories are subject to review by an independent expert assessment.

This territorial accounting system based on political borders is inherently producer-based, i.e. responsibility for emissions depends on the emission location rather than the location of demand and consumption that drives emissions. This approach is advantageous because political borders are usually recognizable and responsibility for emissions within national borders is assigned to national governments. In a globalized economy though, CO2 emission chains from energy and material extraction, production, transportation, consumption, and disposal usually extend well beyond regional and national political boundaries. These cross-border, global connections mean the geo-political approach is not airtight; there are gaps for ‘carbon leakage,’ i.e. CO2 emissions that escape accounting.

One source of leakage is CO2 from transportation and trade that crosses international boundaries and is emitted in international oceans and airspace. Currently these emissions are put into a storage bunker that doesn’t count towards a nation’s emissions totals. This bunker is an unregulated CO2 reservoir that potentially represents a significant loophole if emissions are creatively dumped here. From year 2000 to 2008, total CO2 emissions growth reported by Annex-1 nations was 1.5%, but the storage bunker holdings grew by 24.1%.

Another source of leakage in the political-boundary-approach is due to carbon outsourcing. This occurs when production and imbedded CO2 emissions are shifted from Annex 1 countries to non-Annex 1 countries with different emissions accounting requirements. This may result in emissions reductions for the outsourcing nation but from a global climate scale perspective, CO2 emitted in one location is the same as CO2 emitted in another. On a global scale, shifting emission locations amounts to a shell game that does little to reduce total emissions.

Consumer-based approaches

Defining scale boundaries in complex, continuous systems or networks is always tricky business and boundary selection is a fundamental issue in many disciplines such as geography, biology, economics, and sociology. In terms of anthropogenic CO2 emissions, consumptive goods typically have a long, geographically diffuse chain of emissions that crosses many political borders. Where along this chain should responsibility for emissions lie? How much responsibility does the consumer of a product have for the emissions generated during that product’s lifetime?

To address these questions, alternative approaches to emissions accounting have been developed. At scales of individual products, life-cycle analysis is a method that attempts to account for all CO2 emissions embodied in the production, consumption, use, and destruction of a product. On global scales, national input-output models account for emissions embodied in global trade and consumption, though this global view comes at the expense of detail. These approaches offer a more holistic view of CO2 emissions and could be used to facilitate sharing of responsibility for emissions between producers and consumers.

When CO2 emissions are considered from these life-cycle and consumer-based perspectives, it becomes clear that individual consumers and national governments have limited power to control emissions beyond their own borders. Labeling products with a carbon footprint has been proposed as a way to empower consumers.

It also becomes clear that CO2 emissions are part of a much larger, continuous global social-economic-technologic-agricultural-environmental system. Isolating a particular component of the system can yield important findings, but nothing exists in a vacuum. Serious efforts to reduce emissions will involve deep, system-wide changes and complex decisions on whether to channel limited resources towards mitigation options or adaptation strategies are ahead.