SciDev.Net

This report by the Institute for Development Studies details the results of a pilot project in Bangladesh aimed at developing a screening process for the UK Department for International Development (DFID) to identify and manage climate change impacts on development investments.

The authors highlight predictions that climate change in Bangladesh may lead to stronger cyclones, increased flooding during the monsoon rains and exacerbated drought in the dry season.

They suggest that raising roads and improving drainage could be a cost-efficient way to reduce the impact. Other options recommended for managing risks include paying greater attention to infrastructure design in health, education and private sector development programmes; and to non-structural measures such as livelihood diversification, education and training about disaster risks and adaptation, and improved research and monitoring.

The authors conclude that DFID should support dialogue on disaster risk reduction and climate change adaptation, integrate priorities identified by the Bangladeshi government, increase emphasis for assistance on urban areas, and stimulate a multi-donor dialogue about water issues.

This independent review, commissioned by the UK chancellor of the exchequer, examines the economic impacts of climate change, the economics of stabilising greenhouse gas emissions and considers policymaker's challenges in adapting to climate change and moving towards a low-carbon economy.

The review uses scientific evidence to highlight the risk of irreversible climate change impacts in normal emission scenarios. Evidence of threats to the basic elements of life around the world, including access to water, food production and health are presented, with poorest countries projected to suffer the most.

The review also shows that, left unabated, climate change will damage economic growth. Mitigating climate change effects must be seen as an investment. Moving towards a low-carbon economy may have a significant cost and challenge competitiveness, but it will also bring opportunities for growth.

In discussing the policy challenges for reducing emissions, the review emphasises the need for strong international cooperation and collective action. Climate change policy, says the author, will need to focus on carbon pricing, low-carbon technology, and the removal of barriers to behavioural change across the world. Developing countries in particular will need carbon finance to support emission reductions and curb deforestation, as well as international aid to implement adaptation efforts.

The Clean Development Mechanism of the Kyoto Protocol makes it possible to carry out projects that reduce carbon dioxide emissions in developing countries with funding from the North. Using case studies from Barbados, Brazil, China, India, Mexico and South Africa, this report examines the contribution of solar water-heating projects to reducing carbon emissions. 

The report suggests that in these six countries, there is good potential for solar water-heating projects. However, the report also points to several obstacles including institutional inertia and a lack of communication between manufacturers and the building industry.

While somewhat technical, the report provides an interesting assessment of the potential opportunities of a specific alternative energy technology in a carbon finance context. It can serve as case study reading for those interested in carbon finance in the South.

This report, by Richard Newell and William Pizer of the independent nonprofit research institute Resources for the Future, highlights an important variable that often goes unexamined in current climate change models: uncertainty in future interest rates. Climate models incorporate discount rates to compare costs and benefits over time-in essence, they tell us how high future benefits need to be to justify spending today. Most climate models choose one rate and hold it constant over the time horizon of the model.

This study questions that conventional approach, arguing that future rates are uncertain. The authors demonstrate that acknowledging uncertainty about future interest rates leads to a higher valuation of the future benefits of reducing greenhouse gas emissions today — regardless of the initial rate one chooses. The authors conclude that, by ignoring uncertainty, current approaches used in economic modelling may be consistently undervaluing the future benefits of current climate change mitigation efforts. The report shows that including the effect of interest rate uncertainty in climate models could raise valuations of mitigation efforts by as much as 95 per cent relative to conventional discounting at a constant rate.