Climate Vulnerability and the Cost of Debt

We use indices from the Notre Dame Global Adaptation Initiative to investigate the impact of climate vulnerability on bond yields. Our methodology invokes panel ordinary least squares with robust standard errors and principal component analysis. The latter serves to address the multicollinearity between a set of vulnerability measures. We find that countries with higher exposure to climate vulnerability, such as the member countries of the V20 climate vulnerable forum, exhibit 1.174 percent higher cost of debt on average. This effect is significant after accounting for a set of macroeconomic controls. Specifically, we estimate the incremental debt cost due to higher climate vulnerability, for the V20 countries, to have exceeded USD 62 billion over the last ten years. In other words, for every ten dollars they pay in interest cost, they pay another dollar for being climate vulnerable. We also find that a measure of social readiness, which includes education and infrastructure, has a negative and significant effect on bond yields, implying that social and physical investments can mitigate climate risk related debt costs and help to stabilize the cost of debt for vulnerable countries

A Role for the G-20 in Addressing Climate Change?

Following the chaotic Copenhagen conference of the UN Framework Convention on Climate Change (UNFCCC), policymakers and pundits have discussed the G-20 as an alternative forum for advancing climate change diplomacy. This paper assesses the risks and rewards of tackling climate change in the G-20 and finds that despite its seeming attractiveness, the G-20, as structured, is not a suitable replacement for the UN-led process and has limited ability, at present, to advance climate change negotiations. There is much, however, that the G-20 can do to contribute to the goals of the climate negotiations outside of wading into the negotiations themselves. Building on its existing agenda the G-20 has the power to significantly reduce global greenhouse gas emissions, accelerate the deployment of clean energy technology, and help vulnerable countries adapt to a warmer world through the mobilization of public and private finance. Following through on the existing G-20 pledge to phase out and rationalize inefficient fossil fuel subsidies, establishing new green guidelines for multilateral development banks, coordinating green stimulus exit strategies, promoting open markets for environmental goods and services, and rebalancing global economic growth all fall well within the G-20's mandate and help meet the climate challenge.climate change, carbon, climate finance, UNFCCC, G20, green stimulus, macroeconomic imbalances, environmental goods and services, multilateral development banks, climate finance, fossil fuel subsidies

Working Paper 89 - Come Rain or Shine - Integrating Climate Risk Management into African Development Bank Operations

Climate change is happening now, and further changes during the next decades are inevitable (IPCC, 2007a). During the last century, the global climate warmed by about 0.7°C. At the same time, there were distinct changes in rainfall patterns, an increase in both frequency and severity of extreme weather events, and a rise in sea levels. The impacts of these changes are already being felt, and will intensify as further changes take place. Another 2–4°C rise is projected for the current century, mostly as a result of greenhouse gases that have already been emitted. This means that, although aggressive mitigation of greenhouse gas emissions is crucial to prevent longer term, potentially catastrophic changes, most of the changes projected for the coming decades cannot be avoided.Africa is especially vulnerable. This is clear from the effects of current climate variability and weather extremes – such as floods, droughts and storms – which severely affect economic performance (AfDB, 2003; G8, 2005; Stern et al., 2006; IPCC, 2007b). The poor pay the highest price, because their livelihoods are most affected, and they have fewer resources to help them adapt to the changing climate. Box 1 describes some of the areas where climate change will have its most severe impacts in Africa.African policy-makers and stakeholders are beginning to recognize the need to address adaptation to climate change. There is growing awareness of the setbacks to development and poverty reduction that will result from climate change, threatening the achievement of the Millennium Development Goals (MDGs). This was articulated in the multi-agency document ‘Poverty and Climate Change’ (AfDB, 2003), and more recently at the African Partnership Forum in May 2007 (APF, 2007). Climate change was placed on the agenda of the AU Heads of State Summit for the first time in January 2007, which resulted in the adoption of a Decision and Declaration on Climate Change and Development in Africa and in the endorsement of the Climate Information for Development – Africa (ClimDev Africa) Stakeholders Report and Implementation Strategy (GCOS, 2006).

The Global Risks Report 2016, 11th Edition

Now in its 11th edition, The Global Risks Report 2016 draws attention to ways that global risks could evolve and interact in the next decade. The year 2016 marks a forceful departure from past findings, as the risks about which the Report has been warning over the past decade are starting to manifest themselves in new, sometimes unexpected ways and harm people, institutions and economies. Warming climate is likely to raise this year's temperature to 1° Celsius above the pre-industrial era, 60 million people, equivalent to the world's 24th largest country and largest number in recent history, are forcibly displaced, and crimes in cyberspace cost the global economy an estimated US$445 billion, higher than many economies' national incomes. In this context, the Reportcalls for action to build resilience – the "resilience imperative" – and identifies practical examples of how it could be done.The Report also steps back and explores how emerging global risks and major trends, such as climate change, the rise of cyber dependence and income and wealth disparity are impacting already-strained societies by highlighting three clusters of risks as Risks in Focus. As resilience building is helped by the ability to analyse global risks from the perspective of specific stakeholders, the Report also analyses the significance of global risks to the business community at a regional and country-level

Sea-level rise and vanishing coastal parks: A call to action for park managers and leaders

A "Coloring Outside the Lines" editorial column

Addressing climate vulnerability : promoting the participatory rights of indigenous peoples and women through Finnish foreign policy

Julkaistu versi

Copenhagen, the Accord, and the Way Forward

Policymakers and the public had high expectations for the UN climate change summit in Copenhagen last December. Since the international community embarked on a new round of negotiations in Bali in 2007, elections in the United States, Australia, and Japan raised developed countries' climate change ambitions and a number of emerging economies--including China, India, and Brazil--announced their first ever nationwide climate change targets. Yet while political will to tackle climate change appeared to be building, international climate change negotiations were failing to deliver. The UN process launched in Bali struggled for two years to reach agreement on even the most basic issues between the Parties to the UN Framework Convention on Climate Change (UNFCCC). These two trends collided in Copenhagen, when ministers and heads of state arrived to find a negotiation process in disarray and no consensus text on the table. An eleventh-hour diplomatic flurry by leaders of a diverse and representative set of countries produced a political accord addressing the core issues of the negotiations. While attracting broad support among the 192 Parties to the UNFCCC, the accord did not receive unanimous approval. Instead, the UN "took note" of the agreement. This policy brief assesses the two-week conference, evaluates the Copenhagen Accord that resulted, and discusses key issues the international community will face moving forward. Author Trevor Houser argues that despite the chaos in Copenhagen, the accord is a significant step in addressing global climate change. The chaos in Copenhagen presents the international community with a unique opportunity to go back to first principles and craft a more suitable and sustainable long-term approach to this challenge. Houser calls for combining the UN process aimed at producing a legally binding agreement with a small-group process that would start work immediately on a politically binding basis--an approach that would prevent near-term substantive action from being held hostage to disagreements over legal form while demonstrating that meaningful international cooperation is possible and thus building support for a future treaty.

Gender and aquaculture: sharing the benefits equitably

Aquaculture is the fastest growing agricultural sector in the world; it can meet both the food security and cash needs of poor households in Africa and the Asia-Pacific region. Women’s involvement in aquaculture is more significant than often assumed. In many developing countries formal statistics often overlook the nature and extent of their vital contribution. Research on gender and aquaculture at the WorldFish Center identifies five key themes for consideration. 1) Market, trade and migration 2)Capabilities and well being 3)Identities and networks 4)Governance and rights 5)Climate change, disaster and resilience.Aquaculture, Women