The Economics of Climate Change

By Michelo Maunga

Introduction

The climate crisis is amongst the most pressing issues of our time, confronting global leaders and communities particularly those in Sub-Saharan Africa. The effects are, nevertheless, not confined to this part of the world. Across nations people are experiencing erratic weather patterns, spanning persistent droughts, floods, extreme heat and other weather-related calamities.

Climate Crisis, Around the Globe

Recently, Nigeria faced severe floods that left much destruction, displacing 1.4 million people and killing over 600, with close to 100,000 houses destroyed and over 300,000 hectares of land affected. Floods are also being recorded in parts of South Asia, where in 2022 monsoons took the lives of over 3,700 people. China, on the other hand, recorded record temperatures with attendant dry spells in the third quarter.  The height of which saw, the water levels in the second largest water body in the country, Poyang Lake, dwindle by over 150%, compromising electricity generation and farming. These patterns have been particularly devastating for societies heavily reliant on rain fed agriculture. In the horn of Africa, five consecutive droughts have resulted in widespread hunger, starvation and in many instances death. The United States recently deployed food aid to the stricken nation, which, however, has not been able to plug the food deficit. In Zambia, droughts in recent years have had far-reaching economic implications. Given the non-diversified electricity generation systems, the population has had to contend with economically crippling power outages at various times over the past 7 years.

The Ministry of Energy recently announced the resumption of load shedding beginning today the 15^th December, owing to depleted water levels at the Kariba dam which are below 10%. In view of all this, Zambians never know what to expect of the rainy season, at best hoping for adequate rainfall. The present season has, however, not began on a positive note.

Climate Change, what is it?

The United Nations defines climate change as variations in temperatures or weather patterns. These changes can be natural, however, since the beginning of the industrialization era they have increasingly been attributed to human activities. These activities primarily include the burning of fossil fuels, clearing of land for agriculture or other forms of deforestation and garbage landfills. Broadly speaking industry, transportation, agriculture, energy, buildings and land are the main contributors to greenhouse emissions.

These emissions, encompassing mainly carbon dioxide and methane, when released are trapped in the earth’s atmosphere. They then act like a blanket and trap heat within the earth. This manifests as rising global temperatures. With these rising temperatures, comes the erratic patterns of floods and droughts. How does this happen, you may ask? Well, higher temperatures increase evaporation over the earth’s surfaces. The warmer temperatures also mean the earth is able to hold more moisture. The consequence of this is greater severity of downpours. This explains floods, but what about droughts.

In the case of dry spells, whilst the amount of moisture in the air is increasing, the capacity of the atmosphere to hold moisture is not increasing at a commensurate rate. When it rains heavily, it thus takes longer for the weather system to recharge, meaning rain is less frequent. A further effect is from the soil. Heavy downpours do little by way of making the soil wet. During floods much of the rain water is washed into water bodies, as opposed to slowly soaking the ground. The soil being a source of vapor, this reduces its contribution to the water cycle.

Generally, as the climate crisis worsens, wet regions will be more prone to floods, with dry regions more prone to droughts.

Global Resolve to Addressing the Scourge

The international community has recognized the need to address climate change, through varying agreements and conventions beginning in 1980 with the first International Climate Program. The 1992 Rio Convention was a marker, however, of global resolve to take substantive steps to curtail climate change. The convention led to the ratification of the United Nations Framework Convention on Climate Change (UNFCC), which was signed by 166 countries. In it, countries acknowledged the role of their actions in creating the climate crisis. The COP (Conference of Parties) conference brings together the parties to this convention every year, who totalled 197 in 2021.

At the third COP conference, in Kyoto, Japan, an international emissions reduction act was adopted. It outlined plans to reduce emissions of six greenhouse gases by at least 5.2% against 1990 levels, at some point between 2008 and 2012. Adopted in 1997, it only came into effect in 2005. In the 2009 COP conference, world leaders met in Copenhagen to develop a successor to the Kyoto protocol. Whilst considered by many a failure, it did result in the universal adoption of a limit of increased temperature to 2 degrees Celsius by the end of the century. Its failure was attributed to the inability of participants to agree on specifics such as targets for greenhouse emissions reductions.

The breakthrough meeting came at COP21 where the widely known Paris agreement came into effect. Here, after many less successful attempts, world leaders agreed on a compromise that would seek to limit global warming by the end of the century to well below 2 degrees Celsius. In it developed countries also recognized the need to provide developing countries with the finances and technology to mitigate climate crises, in addition to acknowledging the role to be played by various stakeholders in achieving the over-arching objective.

Pledges

Since 2015, several members of the developed world have made pledges to attain carbon neutrality by a certain year, including the European Union, China, India and the US.  Where carbon neutrality means, net zero emissions, in other words not emitting more greenhouse gases than they can consume. This is in addition to the financial pledges that have been made towards the developing world.

This notwithstanding, much has been written about the failure of the developed world to meet, in particular, its financial pledge. In Copenhagen, the developed world committed to channel at minimum $100 billion dollars in climate finance to the less developed world by 2020, every year, who together contribute the least to emissions and are also the most exposed to climate disasters. In 2020, OECD countries contributed $83 billion to climate finance. Figures from the body have been refuted by agencies such as Oxfam, who argue their inflated. Often times developed countries consider all forms of aid as going towards climate finance in their reporting which masks the miniscule share which actually goes to climate. This is all the more troubling when we consider $100 billion falls short of what would be required to limit temperature rise to 1.5 degrees Celsius not to mention ameliorate the crisis in the developing world.  Known as the broken pledge, emerging markets have bemoaned what the term as paltry contributions made by larger nations, claiming contributions as little as a billion dollars were transferred in a given year.

There have also been disparities in the contributions of individual countries. Certain economies have been singled out for contributing much less than they ought to, such as the US. Additionally, a significant portion of these funds have been provided as loans and not grants. Thirdly, they have been targeted at reducing green house emissions more so than adapting to climate change.

Efforts at a Local Level

Most Zambians have awakened to the reality of the climate crisis. Repeated dry spells, uncertain food harvests and disruptions to power generation have made this all the more evident. Civil society has championed the cause for climate adaptation, together with private sector and indeed the government. Last year, the Ministry of Green Economy and Environment was launched by President Hichilema. The President has also been on record advocating for fulfilment of financial pledges at the COP conferences. These efforts continue, however, to be jeopardized by the actions of large sections of society. A recent study by the Ministry responsible for coordinating the climate effort revealed Zambia was the most deforested country in Africa and third in the world. Personally, I feel it is hypocritical to be asking for pledges at international conferences and yet we continue to indiscriminately cut trees, mainly for charcoal production. This is something I feel will worsen with power outages. The responsible sections of society, particularly the less literate continue to turn a blind eye to the impact of their actions. Charity they say begins at home. Climate resilience, adaptation and safeguarding will not begin with money from the West. It will begin with us as a people. The longer we play ignorant, the more pernicious the impact of our decisions. Unless we act urgently, rain will become scarcer, food production will decline and hunger will loom amongst other ramifications, eventually putting at risk much of the government’s economic agenda.

Conclusion

The fight against climate change, on both a global and local scale, has revealed disharmony and a lack of coordination amongst world and local leaders. You may put this down to it still being a new challenge, or at least one whose consequences have only become increasingly severe. Nevertheless, the world; encompassing leaders, citizens and other actors have to awaken to it. It can no longer be ignored. To do so would be to cause our own demise as a species and that of other life forms. What is clear, nonetheless, is a recognition of the importance of the issue. With this, we can only assume, that as the effects become greater, so will both the material and policy commitment to the attainment of the goals as set forth in the Paris agreement.

The Author is an Economist and Junior Member of the Economics Association of Zambia.