The Cost of Waiting Policies

CLIMATE CHANGE


Climate change intertwined with democracy issues and population growth, forming most pressing issues of our time which require mobilization for an international response. Since 1750, carbon dioxide levels in the atmosphere have increased by around 30% from 280 parts per million (ppm) to over 380 ppm today. The rate and scale of twentieth century warming has been unprecedented for at least the past 1,000 years. Carbon emissions impact on the climate wherever in the world they are emitted and remain in the atmosphere for more than a century causing grave global consequences. This means that excess of emission wherever occurs is no longer local issue, it is everyone’s. What ever the causes of today’s global issues we need to deal with them on logical terms. Similarly, the fact that our society becomes ever more crowded, resource-demanding, and technologically complex should not be neglected as it is the main cause of uncertainty in many areas. Although the risk of over population in developing countries is culturally encouraged for large families, early marriages and child labour, however, the consequences have impact on the world at large. These practices have consequences on a global level which can not be justified merely on the basis of conserving local culture and must be addressed with the aid of international community. The argument is the same for recent fast pace of economic growth in developing world joining the developed countries responsible for the increases in greenhouse gas emissions including from energy use, agriculture and deforestation. (IEA)’s 2005 World Energy Outlook projects an increase of over 50% in global energy-related CO2 emissions by 2030 pointing out that developing countries will account for almost three-quarters of this increase.

Water issues

Climate change is increasingly marking its impact. Some areas will probably benefit from increased rainfall, but others are likely to be losers. We have to rethink how much water we really need if we are to learn how to share the Earth's supply. Various limitations are raising awareness on the need for devising environmental planning in order not to destroy our life supporting house. In 1992 it was an initial response of world leaders who convened an Earth Summit, in search of international agreements that could help save the world from pollution, poverty and the waste of resources. The result was emerging concept of sustainable development as a means of combining economic and ecological needs.

Seventy percent of the water used worldwide is used for agriculture. Much more will be needed if we are to feed the world's growing population – which is going to rise from about six billion today to 8.9 billion by 2050. Over 80 countries with 40% of the world's population are subject to water shortages. Since 1950 the world population has doubled but water consumption has increased six-fold and goes on growing as farming, industry and domestic demand all increase. The average amount of water needed to produce one kilogramme of potatoes is 1000 litres, wheat is 1450 litres and rice is 3450 litres. As groundwater is exploited, water tables in parts of China, India, West Asia, the former Soviet Union and the western United States are dropping - in India by as much as 3m a year in 1999. It should also be pointed out that it is not just us who need water, but every other species that shares the planet with us - as well all the ecosystems on which we, and they, rely.


Nonetheless, alarming evidences imply that the warming effect is greater than we had estimated along with more risks in triggering conflicts and war. e.g. global warming is the major motivating factors for pressing countries in central Asia into conflict with each other over access to water. In particular, melting glaciers are causing grave concern. Tajikistan generates 55 percent of all the water in the Aral Sea Basin, which it shares with four other countries, and much of that water comes from glaciers. Neighbouring Kyrgystan contributes another 25 percent. Yet the country’s glaciers have shrunk by 35 percent in the last 50 years. In neighbouring Kazakhstan the capital, Almaty, depends on water from the fast-shrinking Tien Shan mountain glaciers.

Global warming is therefore one cause, but by no means the main cause, of the region’s water problems, which are man-made in another way. In theory, there should be plenty of water for all. The central Asian countries are “locked into” water-intensive cotton farming, and have inherited irrigation systems that were already hopelessly inefficient, wasteful and poorly managed, and which required huge investment to keep going. Last year was unusual climatically; there was very heavy snowfall in the mountains followed by a rapid and sustained rise in temperatures in summer. The result was a sudden melting of snow, and a surge in river levels until the river burst its banks. Over 11,000 people were evacuated and many lost everything – their houses, gardens and crops.


Policies, plans and uncertainties


The risk of climate change and the important role that renewable energy should play in sustainable development and energy security, the increasing number of international initiatives and commitments, and vola¬tility of world energy markets, provide an unprecedented opportunity for addressing the strategic challenge of transforming our energy systems”. 1MDG 7 on environmental sustainability recognises the need to: “...integrate the principles of sustainable development into country policies and programmes and reverse the loss of environmental resources”. A comprehensive review of the links between MDGs and Strategic Environmental Assessment refer to IIED (2004), particularly Chapter 5. Strategic Environmental Assessment (SEA) – a range of “analytical and participatory approaches that aim to integrate environmental considerations into policies, plans and programmes and evaluate the inter linkages with economic and social considerations” – responds to this need. The term SEA to describe analytical and participatory approaches that aim to integrate environmental considerations into policies, plans and programmes and evaluate the inter linkages with economic and social considerations. It allows the integration of environmental considerations – alongside social and economic aspects – into strategic decision-making at all stages and tiers of development co-operation. SEA is not a substitute for traditional project impact assessment tools, but a complement to them. Many developed and developing countries have either national legislative or other provisions for SEA, e.g. statutory instruments, cabinet and ministerial decisions, circulars and advice notes. As SEA is becoming more widely adopted by donor agencies and their developing country partners, the donor community is committed to harmonising its procedures and requirements in this area.

Another key area of international action has focused on technology cooperation. The International Energy Agency has a range of programmes designed to help countries to share expertise on energy technologies. There are now a wide range of technology partnerships, including those promoting specific technologies such as those for renewable energy sources and carbon sequestration, and the newly launched Asia Pacific Partnership on Climate Change and Clean Development. Leaders at the G8 Summit at Gleneagles in July 2005 recognised the importance of using existing technologies and promoting innovation to tackle climate change, and created an Action Plan on Climate Change, Clean Energy and Sustainable Development. The Action Plan includes the creation of an Energy Investment Framework, led by the World Bank and other Regional Development Banks, to promote investment in lower-carbon energy infrastructure and in adaptation issues in developing countries.

Increasingly the wait and see policy proves to be more costly than previously thought. Recent feedbacks indicate that changes could lead to warming that is at least twice as fast as current high-emissions projections. A report by the team led by Paul Watkiss of AEA Technology and Environment addressed the use of estimates of the social cost of carbon in decision making (Watkiss et al. 2005). It produced new estimates of the SCC, most notably through upgrading the FUND model to allow full testing of parameter uncertainties and the analyses carried out in four MSc theses. The report reviewed existing estimates both from PAGE and FUND in addition to compiling Inventory research programmes on the subject.

Harnessing business opportunities

The challenge for policy-makers is to balance climate change policy goals with issues such as the impacts of climate change on competitiveness and uncertainty over the future international framework for responding to climate change. Among uncertainties in climate policy that are taken into account is the political context within which climate policy is developed (e.g. the level of government support for climate policy measures, concerns about energy security or wider competitiveness issues), the policy instruments chosen and the manner in which they are implemented, and perceptions of the credibility of the different actors (e.g. is government seen as committed to climate policy, are companies committed to minimizing greenhouse gas emissions?). It is important to recognize that there is also scientific uncertainty about the magnitude of climate change and how changes in climate will translate into impacts on human society.
Significant risk factor for business to include cost of climate change is uncertainty over whether there will be a firm international regime in future. Doubts over countries signing an international agreement to control emission creates a strong disincentive for policy-makers to implement measures that may affect the competitiveness and may result in an international policy gap.

Regulatory risk can increase as a result of frequent policy or rule changes, which would tend to increase the rate of return required from firms and new investments. Efforts to evaluate in advance the effectiveness of policy measures relating to climate change are complicated by factors such as uncertainties in technology costs and uncertainties in the responses of the parties affected by the policy measures. The fact that climate policy costs and outcomes are uncertain creates pressure on policy-makers to maintain policy flexibility in order to allow them to respond appropriately to new information. If governments are too fixed in their approach, they risk committing themselves to policy actions that may turn out to be either too stringent or not stringent enough, with limited freedom to adapt or change policy in response to these outcomes. On the other hand, flexible approaches to policy may create an additional cost to companies which will have to make decisions based on a changing policy environment. Ultimately, a balance needs to be achieved between flexibility and certainty. Companies delay investment because longer-term direction of climate change policy is not seen as fixed or certain. This is significant barrier to encouraging companies to invest in new generating capacity.

In order to address the issues caused by policy uncertainty, policy-makers need to signal their willingness to provide public money to support action on climate change, over the short and medium term. Climate change presents risks and opportunities for businesses both because of the physical impacts of climate change and because of government action to encourage companies to reduce their greenhouse gas emissions. It will require that both industrial and developing countries seize the current moment of opportunity to reform policies, institutions, and aid programs. Business actors are breaking the negative links between economic activity and the environment. The areas of focus covers a broad range including the economics of demography and migration; growth and development; industry; innovation and technological change; public finance; information; and environmental and public economics generally.

Certain targeted measures can bring dramatic improvements in environmental quality at modest cost in investment and economic efficiency. To implement them will require overcoming the power of vested interests, building strong institutions, improving knowledge, encouraging participatory decision making, and building a partnership of cooperation between industrial and developing countries. A credible long-term policy framework is essential for both investors and companies to plan how to respond to climate change risks and opportunities.

Finally, Climate change is no longer a science issue. Nor is it the exclusive franchise of environmental groups. It represents a titanic clash of interests. The real solution to global warming threatens the survival of the world’s oil and coal industries which, taken together, constitute the biggest commercial enterprise in history. The problem will be addressed only when there is a broad coalition of groups cooperating politically to force a global transition to clean energy. That coalition could include groups involved in international development and relief, environment, campaign finance reform, corporate accountability, public health, labor, environmental justice, and human rights—in addition to the religious community which is especially responsive to the moral dimensions of the climate crisis.

The bad news is that we have a very short time in which to fend off very serious disruptions. According to one study, the world needs to be getting half its energy from non-carbon sources by 2018 to avoid a catastrophic buildup of atmospheric carbon later in this century. The good news is that a solution to the climate crisis provides a common umbrella for many constituencies to come together
in a mutual campaign to further their individual goals. The outcome would be a dramatic expansion in the overall wealth and equity of the global economy.


Sources:
• www.oxfam.org.uk/climatechange

• Oxford University center for Environment, www.ouce.ox.ac.uk

• International Institute for Environment and Development, www.iied.org

• http://www.iigcc.org

• UK Climate Impacts Programme, Climate change scenarios for the United Kingdom, http://www.ukcip.org.uk/scenarios

• W. Blyth and M. Yang, Impact of Climate Change Policy Uncertainty on Power Generation Investments: Interim Report (Paris: IEA, forthcoming).

• R. Sullivan, W. Blyth, Chatham House; Climate Change Policy Uncertainty and the Electricity Industry: Implications and Unintended Consequences, August 2006

• International ad hoc detection group (2005) Detecting and attributing external influences on the climate system: a review of recent advances, Journal of Climate 18:1291-1314

• Hadley Centre (2005) Stabilising climate to avoid dangerous climate change, http://www.metoffice.com/research/hadleycentre/pubs/brochures
/2005/CLIMATE_CHANGE_JOURNAL_150.pdf
• Stern Review, What is the economic of climate change, Jan 2006,
• www.sternreview.org.uk.
• UN Framework Convention on Climate Change – http://unfccc.int/resource/docs/convkp/conveng.pdf