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From The World Bank Group Documents and Reports Archive
World Development Reports
World Development Report 2010
Development and Climate Change

Thirty years ago, half the developing world lived in extreme poverty—today, a quarter. Now, a much smaller share of children are malnourished and at risk of early death. And access to modern infrastructure is much more widespread. Critical to the progress: rapid economic growth driven by technological innovation and institutional reform, particularly in today’s middle-income countries, where per capita incomes have doubled. Yet the needs remain enormous, with the number of hungry people having passed the billion mark this year for the first time in history. With so many still in poverty and hunger, growth and poverty alleviation remain the overarching priority for developing countries.
Climate change only makes the challenge more complicated.
First, the impacts of a changing climate are already being felt, with more droughts, more floods, more strong storms, and more heat waves—taxing individuals, firms, and governments, drawing resources away from development.
Second, continuing climate change, at current rates, will pose increasingly severe challenges to development. By century’s end, it could lead to warming of 5°C or more compared with preindustrial times and to a vastly different world from today, with more extreme weather events, many fewer species, and whole island nations submerged. Even our best efforts are unlikely to stabilize temperatures at anything less than 2°C above preindustrial temperatures, warming that will require substantial adaptation.

World Development Report 2010: Development and Climate Change
Final files, October 22, 2009

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Table of Contents & front matter


The current financial crisis cannot be an excuse to put climate on the back burner. On average, a financial crisis lasts less than two years and results in a 3 percent loss in gross domestic product (GDP) that is later offset by more than 20 percent growth over eight years of recovery and prosperity. So for all the harm they cause, financial crises come and go. Not so with the growing threat imposed by a changing climate. Why?
Because time is not on our side. The impacts of greenhouse gases released into the atmosphere will be felt for decades, even millennia, making the return to a “safe” level very difficult. This inertia in the climate system severely limits the possibility of making up for modest efforts today with accelerated mitigation in the future. Delays also increase the costs because impacts worsen and cheap mitigation options disappear as economies become locked into high-carbon infrastructure and lifestyles—more inertia.
Immediate action is needed to keep warming as close as possible to 2°C. That amount of warming is not desirable, but it is likely to be the best we can do. There isn’t a consensus in the economic profession that this is the economic optimum. There is, however, a growing consensus in policy and scientific circles that aiming for 2°C warming is the responsible thing to do. This Report endorses such a position. From the perspective of development, warming much above 2°C is simply unacceptable. But stabilizing at 2°C will require major shifts in lifestyle, a veritable energy revolution, and a transformation in how we manage land and forests. And substantial adaptation would still be needed. Coping with climate change will require all the innovation and ingenuity that the human race is capable of.

1. Understanding the links between climate change and development

Societies have always depended on the climate but are only now coming to grips with the fact that the climate depends on their actions. The steep increase in greenhouse gases since the Industrial Revolution has transformed the relationship between people and the environment. In other words, not only does climate affect development but development affects the climate.
Left unmanaged, climate change will reverse development progress and compromise the well-being of current and future generations. It is certain that the earth will get warmer on average, at unprecedented speed. Impacts will be felt everywhere, but much of the damage will be in developing countries. Millions of people from Bangladesh to Florida will suffer as the sea level rises, inundating settlements and contaminating freshwater. Greater rainfall variability and more severe droughts in semiarid Africa will hinder efforts to enhance food security and combat malnourishment.5 The hastening disappearance of the Himalayan and Andean glaciers—which regulate river flow, generate hydropower, and supply clean water for over a billion of people on farms and in cities—will threaten rural livelihoods and major food markets (map 1.1).
That is why decisive, immediate action is needed. Even though the debate about the costs and benefits of climate change mitigation continues, the case is very strong for immediate action to avoid unmanageable increases in temperature. The unacceptability of irreversible and potentially catastrophic impacts and the uncertainty about how, and how soon, they could occur

Focus A: the science of climate change

The climate is changing—that is now indisputable. There is a scientific consensus that the world is becoming a warmer place principally attributable to human activities. In the words of the Intergovernmental Panel on Climate Change (IPCC) in its fourth assessment report: “Warming of the climate system is unequivocal.”1 For nearly 1 million years before the Industrial Revolution, the carbon dioxide (CO2) concentration in the atmosphere ranged between 170 and 280 parts per million (ppm). Levels are now far above that range—387 ppm—higher than the highest point in at least the past 800,000 years, and the rate of increase may be accelerating.2 Under high-emissions scenarios, concentrations by the end of the 21st century could exceed those experienced on the planet for tens of millions of years.

Part I

2. Reducing human vulnerability: helping people help themselves

Further climate change is unavoidable. It will stress people physically and economically, particularly in poor countries. Adapting requires robust decision making—planning over a long time horizon and considering a broad range of climate and socioeconomic scenarios. Countries can reduce physical and financial risks associated with variable and extreme weather. They can also protect the most vulnerable. Some established practices will have to be expanded—such as insurance and social protection—and others will have to be done differently—such as urban and infrastructure planning. These adaptation actions would have benefits even without climate change. Promising initiatives are emerging, but applying them on the necessary scale will require money, effort, ingenuity, and information.

Focus B: Biodiversity and ecosystem services in a changing climate

Earth supports a complex web of 3 million to 10 million species of plants and animals and an even greater number of microorganisms. For the first time a single species, humankind, is in a position to preserve or destroy the very functioning of that web.  In people’s daily lives only a few species appear to matter. A few dozen species provide most basic nutrition—20 percent of human calorie intake comes from rice, 20 percent comes from wheat; a few species of cattle, poultry, and pigs supply 70 percent of animal protein. Only among the 20 percent of animal protein from fish and shell fish is a diversity of dietary species found. Humans are estimated to appropriate a third of the Sun’s energy that is converted to plant material.
But human well-being depends on a multitude of species whose complex interactions within well-functioning ecosystems purify water, pollinate flowers, decompose wastes, maintain soil fertility, buffer water flows and weather extremes, and fulfill social and cultural needs, among many others (box FB.1). The Millennium Ecosystem Assessment concluded that of 24 ecosystem services examined, 15 are being degraded or used unsustainably (table FB.1). The main drivers of degradation are land-use conversion, most often to agriculture or aquaculture; excess nutrients; and climate change. Many consequences of degradation are focused in particular regions, with the poor disproportionately affected because they depend most directly on ecosystem services.

3. Managing land and water to feed nine billion people and protect natural systems

Climate change will make it harder to produce enough food for the world’s growing population, and will alter the timing, availability, and quality of water resources. To avoid encroaching into already-stressed ecosystems, societies will have to almost double the existing rate of agricultural productivity growth while minimizing the associated environmental damage. This requires dedicated efforts to deploy known but neglected practices, identify crop varieties able to withstand climate shocks, diversify rural livelihoods, improve management of forests, and invest in information systems. Countries will need to cooperate to manage shared water resources and fisheries and to improve food trade. Getting basic policies right matters, but new technologies and practices are also emerging. Financial incentives will help. Some countries are redirecting their agricultural subsidies to support environmental actions, and future credits for carbon stored in trees and soils could benefit emission reductions and conservation goals.

4. Energizing development without compromising the climate

Solving the climate change problem requires immediate action in all countries and a fundamental transformation of energy systems—significant improvement in energy efficiency, a dramatic shift toward renewable energy and possibly nuclear power, and widespread use of advanced technologies to capture and store carbon emissions. Developed countries must lead the way and drastically cut their own emissions by as much as 80 percent by 2050, bring new technologies to market, and help finance developing countries’ transition onto clean energy paths. But it is also in developing countries’ interests to act now to avoid locking into high-carbon infrastructure. Many changes—such as removing distortionary price signals and increasing energy efficiency—are good both for development and the environment.

Part II

5. Integrating development into a global climate regime

A global problem on the scale of climate change requires international coordination. Nevertheless, implementation depends on actions within countries. Therefore, an effective international climate regime must integrate development concerns, breaking free of the environment-versus-equity dichotomy. A multitrack framework for climate action, with different goals or policies for developed countries and developing countries, may be one way to move forward; this framework would need to consider the process for defining and measuring success. The international climate regime will also need to support the integration of adaptation into development.

Focus C: Trade and climate change

The interaction between the international trade and climate change regimes has potentially major implications for developing countries. While there are positive reasons for exploring synergies between the two regimes and for aligning policies that could stimulate production, trade, and investment in cleaner technology options, instead much focus has been on using trade measures as sanctions in the global climate negotiations.

6. Generating the funding needed for mitigation and adaptation

Developed countries must take the lead in combating climate change. But mitigation will be neither effective nor efficient without abatement efforts in developing countries. Those are two key messages of earlier chapters. But there is a critical third dimension to meeting the climate challenge: equity. An equitable approach to limiting global emissions of greenhouse gases has to recognize that developing countries have legitimate development needs, that their development may be jeopardized by climate change, and that they have contributed little, historically, to the problem.
Flows of climate finance, both fiscal transfers and market transactions, from developed to developing countries represent the principal way to reconcile equity with effectiveness and efficiency in dealing with the climate problem. Financial flows can help developing countries reduce their greenhouse gas emissions and adapt to the effects of climate change. In addition, there will be financing needs related to developing and diffusing new technologies. Mitigation, adaptation, and the deployment of technologies have to happen in a way that allows developing countries to continue their growth and reduce poverty. This is why additional financial flows to developing countries are so crucial.
The funding required for mitigation, adaptation, and technology is massive. In developing countries mitigation could cost $140 to $175 billion a year over the next 20 years (with associated financing needs of $265 to $565 billion); over the period 2010 to 2050 adaptation investments could average $30 to $100 billion a year (in round numbers). These figures can be compared with current development assistance of roughly $100 billion a year. Yet efforts to raise funding for mitigation and adaptation have been woefully inadequate, standing at less than 5 percent of projected needs.

7. Accelerating innovation and technology diffusion

Windmills peppered European landscapes to provide energy for agricultural activities long before the discovery of electricity. Thanks to the forces of innovation and technology diffusion, wind is now powering the first stages of what could become a veritable energy revolution. Between 1996 and 2008 the global installed wind capacity increased twentyfold to stand at more than 120 gigawatts, displacing an estimated 158 million tons of carbon dioxide (CO2) a year while creating some 400,000 jobs (figure 7.1).1 Much of this growth is attributable to government incentives and to publicly and privately funded research, driving down the cost of wind technology and driving up efficiency.
And although most installed capacity is in Europe and the United States, the pattern is shifting. In 2008 India and China each installed more wind capacity than any other country except the United States, and together they host nearly 20 percent of the world’s capacity. An Indian company, Suzlon, is one of the world’s leading wind turbine manufacturers, employing 13,000 people across Asia. So the global takeoff of wind technology is setting an early precedent for climate-smart development. And complementary advances, such as global geospatial wind resource information, are making siting decisions easier (map 7.1).

8. Overcoming behavioral and institutional inertia

Achieving results in tackling the climate challenge requires going beyond the international mobilization of finance and technology, by addressing the psychological, organizational, and political barriers to climate action. These barriers stem from the way people perceive and think about the climate problem, the way bureaucracies work, and the interests shaping government action. Policy change requires shifting political incentives and even organizational responsibilities. And it requires the active marketing of climate policies, tapping into social norms and behaviors, in order to translate the public’s concern into understanding and understanding into action—starting at home.


Selected Development Indicators                               Charts and Graphics


Background Papers
World Development Report 2010: Development and Climate Change
Figueres, Christiana, Charlotte Streck. "Enhanced financial mechanisms for post 2012 mitigation." Policy Research Working Paper, WPS 5008.

Foa, Roberto. "Social and governance dimensions of climate change: implications for policy." Policy Research Working Paper, WPS 4939.

Irwin, Timothy. "Implications for climate-change policy of research on cooperation in social dilemmas." Policy Research Working Paper, WPS 5006.

Liverani, Andrea. "Climate change and individual behavior: considerations for policy." Policy Research Working Paper, WPS 5058.

MacCracken, Mike. "Beyond Mitigation: Potential options for counter-balancing the climatic and environmental consequences of the rising concentrations of greenhouse gases." Policy Research Working Paper, WPS 4938.

Meadowcroft, James. "Climate change governance." Policy Research Working Paper, WPS 4941.

Norgaard, Kari Marie. "Cognitive and behavioral challenges in responding to climate change." Policy Research Working Paper, WPS 4940.

Ostrom, Elinor. A polycentric approach for coping with climate change.
Policy Research Working Paper, WPS 5095.

This paper proposes an alternative approach to addressing the complex problems of climate change caused by greenhouse gas emissions. The author, who won the 2009 Nobel Prize in Economic Sciences, argues that single policies adopted only at a global scale are unlikely to generate sufficient trust among citizens and firms so that collective action can take place in a comprehensive and transparent manner that will effectively reduce global warming. Furthermore, simply recommending a single governmental unit to solve global collective action problems is inherently weak because of free-rider problems. For example, the Carbon Development Mechanism (CDM) can be ‘gamed’ in ways that hike up prices of natural resources and in some cases can lead to further natural resource exploitation.
Some flaws are also noticeable in the Reducing Emissions from Deforestation and Forest Degradation in Developing Countries (REDD) program. Both the CDM and REDD are vulnerable to the free-rider problem. As an alternative, the paper proposes a polycentric approach at various levels with active oversight of local, regional, and national stakeholders. Efforts to reduce global greenhouse gas emissions are a classic collective action problem that is best addressed at multiple scales and levels. Given the slowness and conflict involved in achieving a global solution to climate change, recognizing the potential for building a more effective way of reducing green house gas emissions at multiple levels is an important step forward.
A polycentric approach has the main advantage of encouraging experimental efforts at multiple levels, leading to the development of methods for assessing the benefits and costs of particular strategies adopted in one type of ecosystem and compared to results obtained in other ecosystems. Building a strong commitment to find ways of reducing individual emissions is an important element for coping with this problem, and having others also take responsibility can be more effectively undertaken in small- to medium-scale governance units that are linked together through information networks and monitoring at all levels. This paper was prepared as a background paper for the 2010 World Development Report on Climate Change.

Shalizi, Zamarak, Franck Lecocq. "Climate change and the economics of targeted mitigation in sectors with long-lived capital stock." Policy Research Working Paper, WPS 5063.

Strand, Jon. "“Revenue management” Effects related to financial flows generated by climate policy." Policy Research Working Paper, WPS 5053.


Beringer, Tim and Wolfgang Lucht. "Second generation bioenergy potential." Background note to the World Development Report 2010.

Füssel, Hans-Martin. "Review and quantitative analysis of indices of climate change exposure, adaptive capacity, sensitivity, and impacts." Background note to the World Development Report 2010.

Füssel, Hans-Martin. "The risks of climate change: A synthesis of new scientific knowledge since the finalization of the IPCC Fourth Assessment Report (AR4)." Background note to the World Development Report 2010.

Gerten, Dieter and Stefanie Rost. "Climate change impacts on agricultural water stress and impact mitigation potential." Background note to the World Development Report 2010.

Haberl, H., K.-H. Erb, F. Krausmann, V. Gaube, S. Gingrich, C. Plutzar. "Quantification of the intensity of global human use of ecosystems for biomass production." Background note to the World Development Report 2010.

Heyder, Ursula. Ecosystem integrity change as measured by biome change. Background note to the World Development Report 2010.

Lotze-Campen, Hermann, Alexander Popp, Jan Philipp Dietrich, Michael Krause. Competition for land between food, bioenergy and conservation. Background note to the World Development Report 2010.

Müller, Christoph, Alberte Bondeau, Alexander Popp, Katharina Waha, Marianela Fader. Climate change impacts on agricultural yields.. Background note to the World Development Report 2010.





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