The Challenge of Adapting to Climate Change in Developing and Industrialized Countries – The Case of a New Target by COP28

Current spending on climate change is a fraction of what’s needed. A report published recently by the U.N. says developing countries need at least 10 times more money for adapting to the effects of human-driven climate change than what they’ve been getting. Developing countries will need to invest more than $2.4 trillion every year for the next fifteen years.

So in 2009, industrialized countries set a goal to give developing nations $100 billion a year by 2020 to help them adapt to climate change. In 2015, countries extended the pledge to 2025. They also said they’d set a new goal that reflects the “needs and priorities of developing countries” before the old one expires. It is a new target that COP28 will help determine.

“I think the pressure will be put on very significantly at COP28 for the finance to flow,” Mathai says. Going forward, action has to be the focus. And that action costs” money.

Climate Funding is in Short Supply. So some want to rework the financial system: The Case of the United States and the World Bank

Industrialized countries like the United States built their wealth producing and using fossil fuels. The U.S. is by far the biggest historical contributor of greenhouse gas emissions that are heating the planet. Developing nations like thePhilippines contribute less to pollution than industrialized nations but are still sufferingdisproportionate harm because of their smaller economies.

The latest assessment by the Organisation for Economic Co-operation and Development found the developing nations received $88.6 billion in 2021, an 8% increase from the previous year, but still short of the $100 billion annual goal. The OECD says wealthy countries appear to have met the funding target in 2022, though the data is preliminary and unverified.

The cost of underinvestment is becoming clear. At least 1,700 people were killed and over $30 billion was destroyed in Pakistan as a direct result of the flooding in the summer of 2022, which may be caused by climate change. The $21.3 billion of public funding given to all developing countries in 2020 to assist them in adapting to the impacts of global warming is more than any other single sum. Early this year, international donors pledged more than $9 billion to help Pakistan recover.

Developing nations are in a bind. The future money that is promised will likely fall short of what’s needed. And they’ll be relying on wealthier countries that failed to deliver in the past.

“That $100 billion is a very important symbol of trust between wealthy countries and developing nations and so, of course, it’s important to keep that going with a new goal that reflects the climate risks that poor countries face,” said Rishikesh Ram Bhandary, assistant director.

Efforts to boost climate finance have moved past national pledges from big historical polluter and are now focused on something even larger: sweeping the global financial system to better channel money to vulnerable nations.

Officials from the World Bank and IMF say they are meeting regularly to coordinate their climate programs. The World Bank is currently working with corporate leaders to increase private investment in emerging markets. The African Development Bank and the Asian Development Bank are both trying to lend more money to developing countries.

The World Bank and the International Monetary Fund said that climate change is a threat to peace, prosperity and development in a statement in September.

Source: Climate funding is in short supply. So some want to rework the financial system

The World Bank’s “Hurricane Clause” and its Implications for Development and Climate Change in the Global South: A Case Study of Grenada

When it announced the bank collaboration in October, the World Bank said measures that had already been implemented or were under consideration could boost the banks’ lending ability by up to $400 billion over the next decade.

“The finance needs are huge,” says Aki Kachi, a senior climate policy analyst at the NewClimate Institute, a German nonprofit that advocates for more aggressive action on climate change. “We are talking about rebuilding, essentially, the whole global economic system, our energy systems, our transport systems, the way we heat our buildings, the way we cook, and the way we source our supplies.”

Easing countries’ foreign debt burdens is increasingly seen as a critical way to free up money that developing countries could use to prepare for climate change.

“[These] debt troubles are really contributing to a severe development crisis — a systemic development crisis, if you want to call it that — in the Global South,” Jensen says.

Nigeria is one of the countries under serious debt pressure. Almost all of the government’s revenue went to pay interest on its loans. And the country faces “major challenges” meeting most of its goals for sustainable development. Those goals include making cities and communities more resilient to extreme weather and ensuring people have access to clean and affordable energy. Nigeria was hit by intense rain and deadly flooding in 2022 that was made worse by climate change.

When they are hit by a disaster, they have to keep paying their old debt, and so much of the disaster help comes in the form of more loans which puts them deeper in debt. That’s kind of a vicious cycle.

Vulnerable nations have been pushing for years to get debt relief when disaster hits. In order to restructure its debts, Grenada secured a “hurricane clause” in its bonds. The provision allows the Caribbean country to stop paying its loan providers if it gets hit by a natural disaster. The idea has been catching on. The World Bank created a policy in June to allow certain countries to stop repayments in the event of a crisis. Countries should be able to “focus on meeting the urgent needs of their people instead of on loan repayments,” the World Bank said.

Kenya suspended salary payments to thousands of government workers earlier in 2023 to keep from defaulting on its loans. According to an adviser to the president, the country’s debt will be dragged out into restructure negotiations. In October, he requested $1 billion from China.

Source: Climate funding is in short supply. So some want to rework the financial system

Climate Change and Ponzi Schemes: How Global Financial Systems and Organizations Can Resiliently Operate in a Presence of Climate Change

It is like a Ponzi scheme in that it becomes sort of like that. “Because you’re just borrowing more and more to just keep making interest payments on your previous debt and only really default when things are just impossible and you actually cannot pay anything anymore.”

The challenge is trying to adjust how global financial systems and organizations operate when countries are already suffering the impacts of climate change.

“I think it’s very clear that it’s not changing fast enough,” says Kachi of the NewClimate Institute. “And we really need to accelerate that pace of change drastically.”