Climate action, if badly executed, could ‘worsen poverty’

Sustainability issues are intricately linked, but sometimes we might overlook how important those links are. A new study suggests that climate, poverty and inequality are more interconnected than previously thought.

The study, published in World Development, explores how different climate futures can impact poverty and inequality trends, comparing the business-as-usual scenario with one where climate action is aligned with the Nationally Determined Contributions (NDCs) to the Paris Agreement by 2030. Researchers say that theirs has been the first-ever assessment to consider the global impacts of the Paris Agreement on poverty and inequality.

Their findings indicate that implementing NDCs could slow down poverty reduction rates globally and lead to a 4.2% increase in the number of people living below the poverty line, as compared to the business-as-usual scenario. Overall, the impacts of achieving NDCs on countries’ GDPs vary from -6.7% to +5.6%, as compared to the business-as-usual scenario.

Brazil, Indonesia and some African coutnries are expected to lose out the most, witnessing a 23%, 15%, and 12% increase in their poverty rate, respectively. Meanwhile, Egypt, Venezuela and some countries in the Middle East and North African region will experience the greatest rise in GDP, although that may not necessarily lead to positive impacts in other areas.

In terms of equality outcomes, climate action often has a positive effect; however, these are usually canceled out by negative impacts on poverty. This can be remedied if developed countries increase their donations to developing ones from revenues acquired from carbon taxes and emissions trading. However, in some of the least developed countries, excess subsidies to climate action and clean energy can create imbalanced economic development.

The researchers suggest that international climate policies have to be particularly sensitive towards national peculiarities. For instance, in Ethiopia dedicated climate action can bring about vast improvements on inequality and almost no detrimental impacts on inequality.

Overall, the paper aligns with previous research that emphasizes the importance of nexus approaches, which focus on policies that jointly tackle diverse sustainability goals. It also draws attention to the economic benefits of climate finance and international collaboration, which are expected to lower the costs of climate action.

At the same time, the authors warn us to not disregard benefits of climate action that span beyond economy such as climate impacts on human health, biodiversity, and ecosystem resilience, as well as the damage that  can be avoided through climate action. A key is to balance the long-, medium- and short-term benefits of climate action across domains so it can lead to more equitable and effective outcomes on all SDGs.