Aid, Environment and Climate Change

• Published date: 01 May 2017
• Author: Channing Arndt,Finn Tarp
• Date: 01 May 2017
• DOI: http://doi.org/10.1111/rode.12291

Aid, Environment and Climate Change

Channing Arndt and Finn Tarp*

Abstract

Aid and aid institutions constitute an important element of the global response to interlinked global

developmental and environmental challenges. As such, these institutions are now being drawn into new

arenas beyond the traditional focus on improving the livelihoods of poor people in low-income countries.

Development aid, by itself, cannot “save the planet.” Nevertheless, development aid and development

institutions do have the potential to become important catalytic actors in achieving developmental and

global environmental objectives. This requires bold reforms and political action. Without appropriate

restructuring of the international institutional architecture to confront the new development context

combined with the necessary complementary policy frameworks, future aid, including aid for

environmental objectives, risks substantially under-performing.

1. Introduction

We focus here on the implications of global environmental change in general and

climate change in particular for the international institutional architecture as it

relates to the conduct of foreign assistance. The paper is designed to serve as a

capstone to this special issue with the aim of bringing together the existing pieces

of evidence in a new and coherent manner and drawing out what can be said at this

juncture. A common theme is that aid and aid institutions constitute an important

element of the global response to interlinked global developmental and

environmental challenges. The process of engaging aid institutions in addressing

interlinked environmental and developmental challenges has recently been

formalized in the form of the Sustainable Development Goals (SDGs) approved by

the United Nations General Assembly in September 2015. While formal goals have

been established,

1

the means for achieving them remain as work in progress. The

same goes for the 230 indicators associated with the goals as well as assessment of

the potential tradeoffs between goals. Here, we argue that substantial institutional

reforms are required to confront environmental challenges alongside traditional

development challenges amid a new geography of poverty and fragility.

The rest of this article is structured as follows. Section 2 describes the context in

which development aid operates emphasizing both the continuation of traditional

goals centered on poverty reduction (see SDG 1) and the emergence of new goals,

frequently driven by environmental concerns (such as SDG 13). Section 3 considers

how the aid system has responded to this new context with particular emphasis on

initiatives designed to confront environmental challenges. Agriculture sits at the

core of traditional development issues (and hence aid) and the sector also has

strong environmental implications. It both impacts and is impacted by climate.

*Arndt (Corresponding author): United Nations University World Institute for Development Economics

Research (UNU-WIDER), Katajanokanlaituri 6B, 00160, Helsinki, Finland. E-mail: channing@

wider.unu.edu. Tarp: UNU-WIDER, Helsinki, Finland and University of Copenhagen, Denmark.

The copyright line for this article was changed on 09 February 2017 after original online publication.

Review of Development Economics, 21(2), 285–303, 2017

DOI:10.1111/rode.12291

©2017 UNU-WIDER. Review of Development Economics Published by John Wiley & Sons Ltd.

This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-ShareAlike License, which permits use

and distribution in any medium, provided the original work is properly cited, the use is non-commercial and the content is offered under

identical terms.

Agriculture is therefore treated as a cross-cutting issue in sections 2 and 3.

Section 4 then considers the future role of aid with emphasis on environment and

climate change. This section contains f‌ive lessons for the future role of foreign

assistance. A f‌inal section reasserts the need for bold reform of the existing aid

institutional structure and for equally bold policy initiatives in order to meet

development challenges of the 21st century.

2. The Context

Since about 1960, aid has sought to improve the economic and social conditions of

poor people; and a wide range of key indicators of well-being have improved

markedly during that time span. Notable improvements have been registered in, for

example, per capita gross domestic product (GDP), consumption poverty, infant

mortality, life expectancy and educational attainment. The role of aid in bringing

about these improvements has over the years been the subject of much debate. In a

review of recent studies, Arndt et al. (2015b) f‌ind that the scales in this debate have

tipped in favor of aid since 2008. The bulk of the available up-to-date evidence

points to positive and signif‌icant results. They conclude that aid has contributed

positively to economic growth and to a host of other economic and social

indicators. The recent literature also highlights the long time frames (three decades

or more) required for positive impacts to materialize and that there is a signif‌icant

heterogeneity of experience, particularly over the shorter time frames sometimes in

focus (e.g., Djankov et al., 2008).

2

In spite of these positive results, ample development challenges remain. With

respect to the traditional concerns of poverty, vulnerability, food security and

marginalization, about 900 million people are absolutely poor in today’s world

(down from about two billion people in 1990). In addition, 36 countries continue to

be mired in low-income status (down from 63 countries in 2000). The Organisation

for Economic Co-operation and Development (OECD) characterizes an even larger

number of states (47), as fragile, implying that some middle-income countries are

characterized as fragile (OECD, 2012).

The contours of the development challenge are also changing. The remaining

group of low-income and fragile states likely represent a core of more diff‌icult cases

where reliance on standard development recipes may not be suff‌icient. Importantly,

owing to the graduation of many states to middle-income status, the geography of

poverty has shifted. Not long ago, the vast bulk of absolutely poor people lived in

low-income countries. Today, about three out of four absolutely poor persons live

in middle-income countries.

Finally, huge environmental challenges overlay and interact with more traditional

development challenges. Humanity now confronts a series of environmental

challenges grouped under the rubric of global environmental change. Climate

change is a leading element given its potential to transform the environment of the

planet and its role as a driver behind other environmental issues such as

biodiversity loss and ocean acidif‌ication (World Bank, 2012). Formal analysis of the

distribution of likely climate outcomes by Webster et al. (2012), based on

unconstrained or only mildly constrained emissions, imply a near certainty of

temperature rises associated with ‘dangerous anthropogenic interference with the

climate system’ (United Nations, 1992) and a disturbingly high probability of

extreme, potentially catastrophic, temperature outcomes in the latter half of this

century (Weitzman, 2011). It is widely recognized that developing countries, with

286 Channing Arndt and Finn Tarp

©2017 UNU-WIDER. Review of Development Economics Published by John Wiley & Sons Ltd.