Climate change, adaptation, and development.

• Author: Cole, Daniel H.

1. INTRODUCTION II. THE COSTS OF CLIMATE CHANGE III. ADAPTATION PROVISIONS OF THE FRAMEWORK CONVENTION ON CLIMATE CHANGE IV. DEVELOPING "ADAPTIVE EFFICIENCY" IN LDCS A. What the LDCs Should Do V. HOW THE DEVELOPED WORLD CAN HELP A. Problems and Prospects of Foreign Aid B. Technological Innovation and Transfer VI. CONCLUSION I. INTRODUCTION

   The earth has entered a new period of significant climate change. While it has experienced many such periods in the past, this episode is different because there is a connection to human activities - specifically, anthropogenic emissions of greenhouse gases. As a result of the human connection, some scientists are now referring to this new geological period as the "Anthrocene Age." (1)

   Since the early 1990s, the international community has been working to mitigate climate change and its effects. Negotiations have focused on reducing levels of greenhouse gases (GHGs) in the atmosphere. That is the sole purpose of the Kyoto Protocol to the Framework Convention on Climate Change, (2) which calls on developed countries (but not developing countries) to reduce GHG emissions at least five percent below 1990 levels by the year 2012. (3) As the international community attempts to implement and enforce Kyoto, it bemoans the U.S.' failure to participate in the Treaty. (4) Additionally, many climate scientists and social scientists wonder whether Kyoto's targets are sufficient. (5) Moreover, another vitally important component of the Framework Convention has been largely neglected. That component is adaptation. (6)

   This paper argues that greater attention to adaptation is needed because mitigation efforts alone are unlikely to solve the problems of climate change. Even in the unlikely circumstance that a substantially strengthened version of the Kyoto Protocol were fully implemented and enforced, global emissions of GHGs almost certainly will rise at least in the short run, as emissions from developing countries such as China and India are expected to outpace any emissions reductions by developed countries. (7) Meanwhile, climate change is already occurring, (8) and its effects are expected to grow more pronounced over the course of this century. (9) As a consequence, the costs of climate change are expected to rise, especially in the less-developed countries (LDCs) of the world's tropical regions. (10) For those countries, adaptation efforts are crucial.

   Section I of this paper explains that the costs of climate change will not be distributed uniformly, equitably, or randomly, but will be most pronounced in regions of the world that can least afford to bear them. Section II describes the international community's general approach to adaptation in the Framework Convention on Climate Change and subsequent negotiations. Section III follows Thomas Schelling's (11) lead in arguing that the best adaptation policy LDCs can follow is to develop and diversify their economies, and further argues that the world's developed countries should assist them (to the extent feasible) in the process of building "adaptively efficient" institutions. (12)

2. THE COSTS OF CLIMATE CHANGE

   The costs of climate change are expected to rise during the course of this century, but these costs will not be distributed uniformly or equitably. They will be most severe for the countries that can least afford them - the less-developed countries (LDCs) of the world's tropical regions, where higher mean temperatures and coastal flooding will have costly and potentially catastrophic effects on human life and social welfare. (13)

   In relatively rich and well-developed countries like the U.S., which emit the most GHGs, climate change may significantly impact coastal regions and impose other costs amounting perhaps to two or three percent of gross domestic product (GDP). (14) However, climate change will not likely constitute a major threat to the overall economy, our government institutions, or our lives. Our existing government and market institutions are diversified, robust and adaptable; our technological capabilities are superior; and our economic ability to absorb exogenous shocks to the system is well tested. Although we do not always respond well to environmental crises like Hurricane Katrina, our failures are more a matter of political will (in both planning and response) than a lack of resources or incapability of national institutions. As Professor Schelling notes, even if the climate changes significantly, the U.S. will still be able to manufacture automobiles, refine oil, perform open-heart surgery, produce pharmaceuticals, and do millions of other jobs that are, at least relatively speaking, climate insensitive. (15)

   The point here is not to downplay the effects of climate change on the American economy. Even if the costs are not destabilizing, they will likely be significant enough to require or justify some amount of adaptation or mitigation. Moreover, the distribution of climate change costs will not be uniform across the country. The expected costs of climate change in Indiana are almost certainly much lower than the expected costs in a state like Florida, where rising sea levels are likely to inundate vast coastal areas.

   The effects of climate change in the U.S. are not likely to be nearly as destabilizing as in the world's poorer countries. These countries emit very few GHGs, but they are far more vulnerable to climactic impacts on health, resources, and economic production because they lack diversified economies and "adaptively efficient" institutions. They rely predominantly on agricultural or other resource-based industries like tourism or fishing, all of which are highly climate-sensitive. This is especially true for poor countries in warmer climates, where the marginal effects of additional heating are likely to be greater. (16) Simply put, these countries could not, at present, afford the costs of climate change. (17)

3. ADAPTATION PROVISIONS OF THE FRAMEWORK CONVENTION ON CLIMATE CHANGE

   The 1992 Framework Convention on Climate Change (FCCC) acknowledges that adaptation is both necessary and problematic. Several of the Convention's provisions address adaptation. For example, Article IV requires all parties to "cooperate in preparing for adaptation to the impacts of climate change," and obligates developed countries to provide financial and technological assistance to LDCs for purposes of adaptation. (18) The FCCC notes that climate change poses special risks for low-lying coastal areas, fragile ecosystems, arid and semi-arid regions, and areas that are subject to drought and desertification or prone to natural disasters. (19)

   Another adaptation provision (Art. III, [section] 5) calls for broader development assistance as an adaptation strategy: "the parties... should promote.., sustainable economic growth and development in... developing country Parties, thus enabling them better to address the problems of climate change." (20)

   Since the early 1990s, the international community's attention has focused mainly on mitigation efforts under the Kyoto Protocol. But, there has been some limited progress under the adaptation provisions of the FCCC. In 2001, the FCCC parties agreed to establish three funds: the Special Climate Change Fund, the Least Developed Countries Fund, and the Adaptation Fund. The combined purpose of these funds is to assist developing countries with technology transfers, capacity building, adaptation planning, and other needs. Although some contributions to the funds have been pledged, as of 2004 none of these funds were operational. (21) Aside from establishing assistance funds, the parties met at Buenos Aires in 2004 to prepare "a program of work on adaptation and response measures," and announced a decision to promote "capacity-building" in LDC parties. (22) Additionally, two other meetings have been held at Tehran and Bonn pursuant to the broader development assistance mandate from Art. III, [section] 5. These meetings focused on economic diversification in LDCs in recognition of the over-dependence of many LDC economies on sectors that could be negatively affected by climate change, including agriculture, tourism, and fishing. (23) Efforts to diversify LDC economies are consistent both with Doug North's focus on "adaptive efficiency" for long-run economic growth and Tom Schelling's call to promote economic development in LDCs for purposes of climate change adaptation. The next section highlights the significance of North's and Schelling's work for climate change adaptation.

4. DEVELOPING "ADAPTIVE EFFICIENCY" IN LDCS

   1. What the LDCs Should Do

   Professor Schelling has been studying both the science and the social-science of climate change since the mid-1970s. He theorized that LDCs can best assist global efforts to deal with climate change by developing their economies and increasing per capita income. (24) In contrast to many of his fellow economists, (25) Schelling believes that the Kyoto Protocol rightly imposed GHG mitigation burdens on developed countries instead of the developing countries that will bear the bulk of the effects of climate change. According to Professor Schelling, the LDCs' best "adaptation" strategy is to develop their economies because the wealthier they become, the greater their capacity to adapt to climate change. The implicit, seemingly inarguable presumption is that per capita income is among the most important indicators of a county's relative susceptibility or adaptability to climate change.

   The problem, of course, is that economic development can be an elusive goal. Certainly, it has eluded many of the world's LDCs up until now. In large part, this is because they lack the kind of "adaptively efficient" institutions that the economic historian Douglass North claims are necessary for long-run economic growth. In his 1973 book, The Rise of the Western World: A New Economic History, North and co-author Robert Paul Thomas noted that long-run...