CLIMATE CHANGE and DEVELOPING COUNTRIES: Chinese leadership emerges on crucial issue

China is caught in the crossfire on climate change. Blamed by some for accelerating carbon emissions, blamed by others for not helping to lead developing countries in the negotiations. In a credible and unlikely move, Yt Qingtai has indicated that China not only wants to implement some of the Bali roadmap's ideas, but also that China will also help other developing countries to improve their ability to adapt to climate change.

Source: ChinaView

BEIJING, Feb. 14 -- China's special representative to the UN climate change talks has urged the international community to substantive negotiations to secure a new global agreement on climate change.
Yu Qingtai said the Bali roadmap, adopted at the UN climate conference last December, is only a beginning.
Yu Qingtai said, "The international community must continue with the task of conducting substantive consultations and negotiations, to ensure a final agreement on post-2012 international cooperation on climate change within the next two years."
Yu Qingtai says a framework for future agreements must be based on the principles of the UN Framework Convention on Climate Change and the Kyoto Protocol... particularly the principle of shared responsibilities.
Yu Qingtai urged developed countries to further strengthen policies and measures aimed at emission reduction.
Yu Qingtai said, "The effectiveness of participation by developing countries will depend to a significant extent on whether developed countries will take substantive action on financial and technological assistance."
Yu Qingtai said China takes climate change very seriously and has made considerable efforts to respond to the challenge, with noticeable success. China will also help other developing countries to improve their ability to adapt to climate change.

CLIMATE CHANGE is a defining global social justice issue, says DFID Secretary of State

Source: The Guardian.
Britain is to increase its spending on research into the effects of climate change on developing countries tenfold to £100m over the next five years, the international development secretary, Douglas Alexander, said yesterday.
The move follows a warning in a United Nations development programme report that climate change would have catastrophic effects on poor countries and reverse decades of development gains.
Alexander said: "Climate change is a defining global social justice issue. If we fail to tackle climate change, we risk condemning the world's poorest people to poverty for generations to come."
The minister said the new money was on top of £75m the Department for International Development was spending on trying to help poor countries adapt to climate change. Last year Britain also announced an £800m fund to help developing countries adapt to clean energy.
It was crucial that poor countries leapfrogged the dirty kind of industrial development that rich countries went through in the past two hundred years and went straight for low-carbon economies.

Full article The Guardian.

CLIMATE CHANGE and THE POOR: Can the Poor be Insured Against Climate Change?

Microinsurance forwarded as an option to help the poor. Good article by a serious economist!

Source: Le Panoptique, by João Sarmento Cunha

Moving into the XXI century, images of lives devastated by floods in Asia, droughts in Africa and cyclones in Central America are becoming increasingly familiar, reminding us of how vulnerable people in developing countries are to climate change. Considering the hardships these people face every time a catastrophe dawns on them, could they not perhaps be insured against the perils of climate?
Recent headlines of devastation caused by Cyclone Sidr in Bangladesh, displacing over half a million people, or the massive floods in southern Mexico, leaving vast stretches of land completely submerged, are just the visible face of a growing problem affecting developing countries. According to a recent Oxfam report1, the number of weather related disasters has quadrupled over the past 20 years, with an average of 500 disasters taking place each year compared to 120 in the 1980s. Vulnerability to adverse weather events occurs for several reasons, among them the geographic location, poor infra-structure, economies highly dependent on agriculture, high incidence of poverty and limited means of coping with risk, including access to formal insurance. Climate change is expected to make matters worse, raising the likelihood of more extreme events like the ones mentioned above and posing real risks to development2. So, considering that many instruments already exist for risk-sharing and transfer, can these also be provided to the poor in rural areas of developing countries? Can the poor be insured against adverse weather events and climate change more broadly?
Risks, vulnerability and poverty
The rural poor own very few assets and income generation is largely dependent on labour put into agricultural activities. The main threats to livelihoods are therefore those pertaining to loss of life, critical illness, old age, lower agricultural productivity and loss of assets. To counter these risks, and considering that formal protection mechanisms such as social security and formal insurance are wholly absent, these people have developed sophisticated strategies to “insure” against negative surprises. Ex ante, they may diversify their sources of income and make more conservative decisions on farm technologies and techniques. Although less risky, these forms of income smoothing tend to yield low returns and contribute to the vicious circle of poverty.
They may also resort to risk coping strategies following a shock, such as drawing down their savings or through mutual assistance arrangements. The downside is that these strategies are often insufficient in dealing with shocks that affect whole regions (i.e. covariate shocks). This is especially true if the savings are held in cattle or grain, and thus perishable, and if the social networks are based on close relatives and neighbours which may be equally affected by the shock. There is also significant evidence that when severe economy-wide shocks occur, certain survival strategies are used that divert spending away from investments in education and health, with serious implications on the well-being of future generations3-4. Transitory events can therefore have permanent effects on household welfare5.
For more see here.

CLIMATE CHANGE AND UK CONSUMERS: animals remain turn-on for Brits, and climate a turn-off

Co-op accuses its rivals of lazy thinking again as it proves climate indifference is the norm, and the Brits fabled animal love is a dominant force. Is the Coop going to poach Jamie Oliver from battery-hen powered Sainsbury?

Source: "Shoppers care more about animals than climate" by The Guardian,
Animal welfare and fair trade are far bigger concerns to UK consumers than climate change, according to a huge new poll of UK shoppers.
Only 4% rate climate change as their top ethical priority, compared with 21% who think animal welfare is the most important issue and 14% who rate fair trade as their key concern.
The findings come from a survey conducted by the Co-op grocery business that has been used to draw up a "responsible retailing" policy, designed to reflect shoppers' concerns.
The Co-op claims the survey is the biggest poll of consumer ethics ever undertaken. The supermarket group analysed responses to a detailed, four-page questionnaire from more than 100,000 members and customers. It intends to use their responses to guide changes to the way it does business.
As a result of the survey the Co-op is halting the sale and use of eggs from caged hens with immediate effect. The 2,700-strong supermarket chain is also ensuring all its own-brand tea - including its 99 brand - becomes fair trade. The customer-owned grocery business, which made all of its coffee fair trade five years ago, intends to absorb the extra costs so that prices do not go up.
Three main categories emerged from the survey as the key areas of concern: ethical trading (27%), animal welfare (25%) and environmental impact (22%).
Shoppers' worries about the environment are focused on issues other than climate change. Twice as many are concerned about the amount of packaging on their food as think global warming is the most important issue.
As a result, the Co-op is changing the shape and weight of its 26 own-brand wine bottles to save 450m tonnes of glass a year. It has also increased its list of prohibited pesticides from 32 to 98.
Among those who believe ethical trading is the most important issue, 14% make fair trade their priority, with 8% supporting "general ethical trading" policies.
Some 4% pinpointed animal testing as the ethical issue they believe is the most important facing consumers - the same proportion as want more attention paid to climate change. Paul Monaghan, the Co-op's head of ethics, said the group believed that consumers' apparent indifference to climate change was likely to be the result of believing they have little influence to force change: "They may believe they are powerless on climate change. People can choose to buy Fairtrade or Freedom Food labels, but there is no carbon label yet. We think shoppers see climate change as an issue for corporations and governments."
Peter Marks, chief executive of the Co-operative Group, said the organisation would not scale back its support for the global drive to reduce greenhouse emissions despite its members' seeming ambivalence to the issue. He said they needed more information, adding: "Over the next decade we will work even harder to help customers understand the threat we face and the actions we can take."
The Co-op launched its vast consultation exercise last September. It aimed to discover which issues meant most to its customers and to make it clear that some seemingly sensible changes had negative repercussions that it would not support. The grocer pointed to the aeroplane stickers used on air-freighted exotic fruit and flowers by Marks & Spencer and Tesco and accused its rivals of "lazy thinking".
The Co-op said it would never introduce such stickers because they could have a detrimental effect on growers in less developed countries and the carbon produced by importing from African farmers can be a fraction of that produced by farmers in Europe because of the heating and lighting required.
The Co-op has long been at the forefront of the ethical debate. It was the first major retailer to champion fair trade, when it put Cafédirect coffee on its shelves in 1992, and introduced the UK's first fair trade bananas in 2000.
In recent years, however, supermarket groups have increasingly been seeking to underline their credentials as planet-friendly businesses. Marks & Spencer has set out a 100-point Plan A eco-strategy while Tesco has set out a "community plan" and has pledged to "become a leader in helping to create a low-carbon economy". Tesco is also leading an initiative to come up with a carbon-labelling scheme and last year announced £25m of funding for a new Sustainable Consumption Institute at Manchester University.
Monaghan said the Co-op was now "raising the bar" with its ethics policy

CLIIMATE CHANGE AND GLOBAL ECONOMIC EQUITY: Zoellick/ World Bank's take; CC is a core development and economic challenge

Developing nations hit hardest, least able to adapt. Zoellick report the World Bank will help by integrating climate change adaptation and mitigation into core development work, providing innovative and below-market rate financing, markets, technology and research. The TallEconomist salutes this approach, but asks if simply assuming climate change as a development risk is enough? I am keen to see the WB find innovative ways of leveraging the carbon credit that developing countires have - making their ecological space work for them. Can the WB give voice to these concerns at an international level? Can the WB be the developing nations' champion and not just its donor? Skeptically, I see nothing here that diverges from core World Bank work - I hope the reality of operationalising this programme in developing countries will yield the success the WB so sorely needs and doesnt backtrack on the promise the countries so heartily need.

Source: NYT Blogs, map: Distribution of Climate Change Risks, World Bank, October 2007, IDA and Climate Change: Making Climate Action Work for Development, mimeo.





Q. Citizens in developing countries are most vulnerable to the impacts of climate changes now in progress on a global scale. The changes in the weather patterns, from droughts to flooding, will affect the poorest in those countries. How is the World Bank dealing with the phenomenon of unprecedented climate change in its poverty reduction strategy, if at all?
Rita ChangHong Kong


A. Rita, you are correct. As you can see in the attached map, poor countries are much more likely to be affected by droughts, poor crop yields, floods, hurricanes and wind storms – likely consequences of climate change. Since 2000, poor countries have experienced three times more floods and twice as many wind storms than they did 20 years ago. And the poor people in these countries – people who live on less than $2 a day –are the most affected and least able to adjust. Climate change is not only an immense environmental threat; it is a core development and economic challenge.
This is why at the recent Bali conference on climate change, I outlined how the World Bank Group can support developing countries as they combine growth and development with protection of the environment.
How can the World Bank Group help?
• First, by integrating climate change adaptation and mitigation into core development work. Climate change policies cannot be the frosting on the cake of development. They must be baked into the recipe of growth and social development. We can help countries incorporate climate change and low-carbon plans into agriculture and land use policies, urban development strategies, water policies, transport plans and so forth.
• Second, we can help by providing innovative and below-market rate financing to promote investments both in low-carbon and adaptation projects. We already do this through the Global Environment Facility and Carbon Finance. We will do more thanks to donor governments contributing record sums to the latest replenishment of the International Development Association (IDA), the World Bank’s fund for the poorest countries. We will also work with donors to develop new funding innovations.
• Third, we will pioneer and advance new market and trading mechanisms, such as for carbon trading.
• Fourth, recognizing the vital importance of new technologies that can generate energy while limiting the impact on climate, we are working with partners on new financing and incentives schemes to facilitate technology deployment and transfer to developing countries. Some will involve alternative energy. But given the high use of coal in developing countries, it would help enormously if we could help develop and disseminate, for example, carbon sequestration technologies.
• Fifth, the sums involved are too large to handle with public funds, so we need to encourage policy changes to help create an enabling environment to tap resources from the private sector. IFC, the private sector arm of the World Bank Group, can help spur these investments.
• Sixth, we will work with developing countries to support policy research on climate change and development to help share information and tools for analyzing the impacts and developing cost-effective strategies. We are now working with six large countries on customized assessments of pathways to low-carbon growth.
• Finally, if we are able to advance these six activities, we should have the experience and knowledge to play a supportive role to the UN and the negotiating partners as they develop a new climate change agreement.
Let me give you a concrete example of how we are helping negotiators develop a post-Kyoto Protocol.
Deforestation and change in land use accounts for about 20 percent of global greenhouse gas emissions, and over a third of emissions from developing countries. In many developing countries, deforestation and forest degradation account for a majority of the carbon emissions. However, the Kyoto Protocol does not include a mechanism for rewarding reduced emissions from deforestation and degradation in developing countries: It rewards countries for planting trees, but does not encourage them to keep trees standing. So with the support of 10 donors, the World Bank has launched a Carbon Forest Partnership Facility. It will pilot incentives to communities for reducing emissions from deforestation while improving their livelihoods and safeguarding indigenous peoples. By highlighting this concept and showing a way to address it financially, the World Bank helped advance its inclusion in the framework that was agreed among negotiators at the Bali Conference.
I cannot end this entry without mentioning that the World Bank Group is carbon-neutral!

EQUITY and CREDIT CRUNCH: Will this impact on Travel Trends to developing countries in 2008?

Worries are abounding that one indirect victim of the US-generated credit crunch will be foreign travel, particularly that to developing nations. On one hand this is inevitable, but in a growing market the answer is nuanced. It is clear that the direct victims who are losing homes in the mid-west US were a very small percentage of developing country visitors. Yet for the actual tourists, mostly ABC1s and dreadlocked neo-backpackers ... will they not invest in that new buy-to-let flat in Lewisham or Bucharest and rather have a holiday? Will they choose Nairobi and Phnom Penh over London and LA? Likely is that thrifty people will think they can get a bargain in the developing world and will go for that and save for the expensive European destinations. Tall Economist puts his money squarely on eco-tourism in developing countries sustaining its steady pace of growth.

Source: Business Daily (Nairobi) by Wangui Maina
The credit crisis that has hit the US market, in turn affecting the global markets, is expected to have an impact on travel in 2008 according to a new report by Deloitte.
According to the report, 2008 Travel Industry Trends Report, the tightening in US credit lending is expected to impact on individuals spending on leisure.
"A slumping housing market and softening in consumer confidence is likely to impact travel in the near future," the report stated. In the past consumers have relied on cash-outs from refinanced mortgagees to support THL spending.
The ongoing crisis may make it impossible for some travellers to access finances to travel especially as houses are foreclosed due to faulted mortgages.
The report which looks at the Tourism, Hospitality and Leisure (THL) industry in the American market noted in addition to the credit crisis four other trends are expected to inform travel from this market in 2008.
This include changing customer tastes, globalisation, safety and security, and technology. Customers are increasingly looking for niche products when making decisions on their travellers.
The report notes that travellers look for specific destinations to suit some of their interests especially if it is a repeat journey to a particular destination.
Already Kenya has turned its marketing towards attracting this travellers by promoting various niche products like eco-tourism, bird watching and cultural tourism as a bid to grow the tourism sector.
The growing economies of China and Russia are expected to impact on travel trends in 2008 as travellers from these countries are expected to have more disposable income. Kenya has already turned its focus to China where it hopes to attract more tourists.
Travellers are also expected to visit these countries "especially with Moscow being classifies as one of the most expensive cities in the world," the report noted.
The 2008 Beijing Olympics are expected to be a positive gain for the East Asian country whose hotel rooms is predicted to grow by 76 per cent ahead of this international fete.
According to Deloitte's October 2007 Travel Survey 17 per cent of respondents said the new security measures that have been put in place in the past year will actually deter them from travelling by plane for leisure and 10 per cent said the measures would deter them from travelling by plane for business.
Since the terror attack in 2001 security measures have been tightened in the aviation sector making travelling an excruciating process.
Today airports boast long security lines with new security requirements being unveiled regularly. Mid this year IATA introduced new rules on hand luggage on planes that were adopted in most airlines, the new rules banned the carry any form of liquid aboard the plane.
The debate on climate change is also expected to affect customers travelling patterns, in the recent years there has been an increased awareness of ethical travel. To curb this schemes like carbon offsetting have been introduced to help offset the guilt of carbon emission. In addition this has raised the awareness of sustainable tourism which mainly promotes eco-tourism.
Regardless of all these trends the travel market is still expected to grow in 2008.

CLIMATE CHANGE, EQUITY and MARKETS: Stern warning

Nicolas Stern estimates the extra costs developing countries face as a result of climate change are likely to be upwards of $80bn per year and it is vital that extra resources are available for new initiatives.
Source: Royal Economics Society
Climate change is a result of the greatest market failure that the world has seen, Sir Nicholas Stern, whose review last year warned of the economic and social costs of climate change, said tonight.
Delivering the Royal Economic Society (RES) public lecture in Manchester, ahead of next week's world summit on climate change in Bali, Sir Nicholas said targets and trading must be at the heart of a global agreement to reduce greenhouse gas emissions.
"The problem of climate change involves a fundamental failure of markets: those who damage others by emitting greenhouse gases generally do not pay," said Sir Nicholas.
"Climate change is a result of the greatest market failure the world has seen. The evidence on the seriousness of the risks from inaction or delayed action is now overwhelming. We risk damages on a scale larger than the two world wars of the last century. The problem is global and the response must be a collaboration on a global scale."
He added that rich countries must lead the way in taking action. "That means adopting ambitious emissions reduction targets; encouraging effective market mechanisms; supporting programmes to combat deforestation; promoting rapid technological progress to mitigate the effects of climate change; and honouring their aid commitments to the developing world," he said.
Sir Nicholas used the RES lecture - entitled, Climate Change, Ethics and the Economics of the Global Deal - to set out a six-point global deal for tackling climate change.
The first involves rich countries reducing their greenhouse emissions by at least 80% - either directly or through trading schemes - in order that the overall 50% reduction in global emissions by 2050 is met.
Secondly he called for substantial trade between countries, including rich and poor countries, in greenhouse gas emissions.
The third point requires a major reform of the clean development mechanism, a Kyoto protocol mechanism that allows developing countries to sell emission reductions, but does not penalise them for emissions themselves, making it a "one-sided trade mechanism", said Sir Nicholas.
He also argued for an international programme to combat deforestation, which contributes 15-20% of greenhouse gas emissions.
"For $10-15bn (£4.8-7.2bn) per year, a programme could be constructed that could stop up to half the deforestation," he said.
There also needs to be urgent promotion of rapid technological advance for climate change mitigation, said Sir Nicholas.
Carbon capture and storage (CCS) for coal is particularly urgent since coal-fired electric power is currently the dominant technology round the world and emerging nations will be investing heavily in these technologies, he said.
"For $5bn a year, in terms of feed-in tariffs (which could be reduced as carbon prices rise), it should be possible to create 30 commercial scale coal-fired CCS stations within seven or eight years. Unless the rich world demonstrates, and quickly, that CCS works, developing countries cannot be expected to commit to this technology."
The final plank in Sir Nicholas's action plan is for rich countries to honour their commitments to 0.7% of GDP in aid by 2015. This would yield increases in flows of $150-200bn per year. The extra costs developing countries face as a result of climate change are likely to be upwards of $80bn per year and it is vital that extra resources are available for new initiatives.
Sir Nicholas argued that this global deal invokes effectiveness, efficiency and equity.
"The problem is deeply inequitable with the rich countries having caused the bulk of current stocks of greenhouse gases and the poor countries being hit earliest and hardest - which means that the rich countries must take the lead," he said.
"Within different countries, there will be different choices of instruments - such as taxes, trading and standards - and different technological mixes.
"In all countries, there is scope for energy efficiency, which both reduces emissions and saves money. But trading must be a central part of the story because it can provide the international incentives for participation, and promote efficiency and equity, while controlling quantities of emissions."
Sir Nicholas Stern said that his programme could be developed if rich countries take a lead in Bali on their targets, the promotion of trading mechanisms and funding for deforestation and technology.
He said: "Bali is an opportunity to draw the outline of the common understanding or framework, which will both guide action now, and build towards the deal."

Climate change and aviation equity: Cambodia's tourism provides economic incentives for aviation investment

PHNOM PENH: A joint venture between regional investors and the Cambodian government in a new airline shows the power of tourism in generating interest, incentives and investment in aviation in developing countries. Jobs, indirect benefits, land price changes and increased economic opportunities for Cambodia's citizenry and its business community are all expected. This raises the importance of getting the land rights issues sorted in the country. See this article on the economic benefits of air freight for developing countries.

Cambodia develops new national airline from Travpress

The Cambodian government has signed an agreement with Indonesian companies last Friday which will see the development of a Cambodian national airline called the National Flag Carrier. Petter Sondakh, the CEO for Rajawali Group, has stated that the company invested in Cambodia because of the tourism boom the country is currently experiencing.
"Today we signed the MOU to establish the National Flag Carrier with PT Rajawali Group and PT Ancora International company, which are joint ventures from Indonesia," Cambodian Deputy Prime Minister Sok An told reporters after signing the memorandum of understanding in Phnom Penh. "This is our pride and victory that we have had our own national airline."
The new carrier is expected to commence operations in six months, with Sok An revealing that the Cambodian government will hold a 51 percent stake in the airline and will receive 30 per cent of the profits.
The airline’s board chairman will be appointed by the Cambodian government and the General Manager and CEO will be selected by the investing companies, added Sok An. Its operations have been outlined by Petter Sondakh who has stated that the airline will fly both domestically and internationally, with its first international flights focusing on the country’s current strongest markets; China, Japan and South Korea.

CLIMATE CHANGE and EQUITY: America looks to learn from development-friendly UK

USA: Farmers in developing world hurt by 'eat local' philosophy in USA

Source: San Francisco Chronicle

Increasing awareness of climate change has transformed the way Americans think about organic food. While organic consumers used to focus on how food was produced, such as whether pesticides were used, they now are also concerned about how far food has traveled to arrive at their plate. The issue is that greater distances often equate to more energy use and greenhouse gas emissions.
The preference for eating local has been popularized, among others, by UC Berkeley journalism professor Michael Pollan in the "Omnivore's Dilemma" and by Barbara Kingsolver in "Animal, Vegetable, Miracle." This "eating local" philosophy has a huge following among those consumers who buy organic food. But what about the consequences of the local food craze for farmers in the developing world who have joined the organic and fair trade movements?
We're getting a glimpse of the future of this debate in the United Kingdom, where the tension between the local food and fair trade movements is acute. Just recently, the U.K. Soil Association, a nonprofit group that promotes sustainable and organic farming, called on the British government to restrict imports of organic produce brought in by air. In a concession to the fair trade movement, this group would allow for imports from countries actively seeking to promote organic and fair trade markets within their own borders. Despite this concession, British fair trade activists are worried.
Whether the British government would ever adopt such a ban is questionable, but labeling schemes and use of concepts such as "food miles" (the distance a product has traveled to reach the store) are likely to increase consumer awareness and influence purchasing habits.
The suggestion that developing countries should promote local markets for organic produce in order to wean themselves off of export markets is a false alternative. These markets often already exist in everything but name.
Many farmers in the poorest of African nations - where I do my research - already supply local markets with their grains and produce. While not formally recognized as such, these markets are virtually organic because most poor African farmers restrict pesticide use to traditional export crops such as cotton, cacao and coffee, while local foodstuffs are grown with few or no chemical inputs.
Traditional export-oriented agriculture is problematic in many ways, but the organic and fair trade movements are beginning to diversify opportunities for African farmers in this sector. Just as Mexico and South America supply large amounts of organic produce to California, European demand for organic and fair trade products from Africa is surging. These are not just niche markets where developing world farmers can potentially gain a higher return, but these channels also promote better working conditions and the reduced use of chemicals. If the local food movements in Europe and North America reduce their demand for organic and fair trade products from afar, the most likely consequence is that African farmers who have entered these niche markets will return to producing their export crops in the conventional, pesticide-intensive manner. While local food markets can provide some income for these farmers, they still are reliant on export opportunities for the bulk of their cash income.
Although our decisions as consumers have the power to influence how our food is produced, this approach is limited. What we really need are changes in the basic rules that govern the global marketplace.
If international bodies, such as the World Trade Organization, set and enforced rules about basic working conditions and environmental standards, then we would not be relegated to trying to promote organic farming and fair labor practices via labeling schemes and informed consumption. If African countries were allowed to protect nascent industries, then they might not be so reliant on agricultural exports.
But until these changes are made, it is a cruel joke to condemn developing-world farmers to commodity crop production and then remove the only hope they have for higher returns - organic and fair trade crops and products. While the local food craze is all well and good, we should not be so quick to denounce organic and fair trade foods that are imported from the developing world. By shunning these products, we do not encourage local markets to flourish in these countries, but we condemn these farmers to the ills of conventional production for the global market (the only other real alternative at this time). We should remain open to such products in the short term, but also work for broad scale changes in the rules of the global market place to ensure that even conventional agricultural production is safe and fairly compensated.

Climate change and equity: Biofuels 'crime against humanity'

Article on the BBC neatly sums up the recent comments by Jean Zigler on how biofuels have been seized on by NGOs, lobbyists and climate change apologists as a way forward - without considering the economic implications of such a position. One day, all NGOs will employ economists [height for once being unimportant], and they will listen to them ...

Some NGOs already have clever economists in their midst, but far too few! - here is Annie Dufey's work and a publication from ODI that lays out the links and hence the risks from meddling with core livelihood-supporting functions of the economies of developing countries.

Climate change requires flexible economies

We need to address the fundamental impact that climate change will have to our economies as well as to our environment. Identifying and filling so-called “missing markets” in developing countries becomes critical to ensuring that future climate-based shocks do not have an exponentially larger impact on future economic growth globally. Fortunately a suite of potential solutions exist, it is a case of relocating them from Canary Wharf to Bobo Dioulasso.

It is unequivocal that however shocks, risks or threats manifest, the benefits accrue disproportionately to the rich while the costs fall disproportionately to the poor. The poor in any society, particularly developing countries, tend to be those with a less buoyant ‘structure of opportunities’ facing them, and experience more “missing markets”. This is usually evident in poorer access to information, credit and other means of alternative production/ livelihoods.

Regardless of the underlying reason for climate change, it is a shock, risk and threat. Hence, we can expect it will impose costs disproportionately highly on the poorest people, and any benefits there might be will tend to accrue to the richer people.

But how should the developed world address these concerns? If we intend to secure sustainable development:

• Environmentally, we need to be clear about the causes of climate change and efficiently/ rationally address these.
• Socially and economically, we need to find ways to create a new pathway of development that insures the poorest from these shocks.

For the latter, building a stronger ‘structure of opportunities’ in rural areas of developing countries is a starting point and by:

• being creative with our development/ donor money and
• nudging the appropriate industries to provide services where the business case appears weak – credit, insurance, information flows

we stand a good chance of producing more flexible developing economies, more able to adapt to the scale of climate change shock.