UN climate change talks – who pays?

One of the most fundamental issues for Save the Children on climate change is around finance. Will developed countries provide new and additional funds to poor countries to cope with the impacts of climate change and, indeed, rework their economies for a low-carbon future?

At the UN talks on climate change taking place this week in Bonn, Germany, a number of presentations to the negotiating parties have shone light on this difficult subject.

First up, the World Bank has presented a new analysis of the costs of adaptation to climate change. The headline figure is that adapting to climate change will cost developing countries between $70 and $100 billion a year, every year between now and 2050.

This is a significant increase on their previous estimate of between $9-41billion a year — and the new figure is on the same scale as total aid flows to developing countries.

It is difficult to conceive of this scale of finance — particularly in today’s economic climate. But there is another way of looking at this. Climate change will make us pay — whether it’s paying up front for the cost of efforts to prevent damage, or paying later. Failing to spend this money will cost developing countries more in responding to climate impacts.

The fundamental question then is not should the world pay to tackle climate change — but who pays, and when.

Another presentation – on the economics of mitigation by the OECD (pdf) provides a worrying signal on this matter. Analysing the pledges to cut emissions made in Copenhagen, they estimate that they will cost Annex 1 countries (the group including all rich and industrialised countries) 0.5% of GDP on average to implement.

In contrast, other countries — including all developing countries — will have to spend 0.7 to 0.8% of their GDP to implement their current promises. So developed countries will, in real terms, be spending less as a proportion of their wealth on cutting emissions than developing countries.

However not all of the new information presented to parties to the negotiations was depressing. An advisory group of heads of state and finance experts set up by UN Secretary-General Ban Ki-Moon presented a report on its work. The group aims to identify new sources of finance that can credibly and practically provide at least  $100billion a year.

The group will finalise its work in October, but Lord Nicholas Stern — the UK economist and a key member of the group — reported that the work was going well and there were promising signs. Their work is certainly something to watch.