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No Money, Mo' Problems

Past? Perfect. Future? Tense: When the Bill is big and there are no Payers…

COP 27 (Climate Change Conference), being held in Egypt this year, is the regular convening of countries to discuss the achievement of the world’s collective climate change goals based on the principles of the Paris Agreement and convention. It serves as a platform for countries’ heads to give action points for better implementation of the Paris Agreement. The agreement, launched in 2015 at COP 21, aims to limit global warming temperature to 1.5 °C and reach global net zero emissions; to cut all greenhouse gasses without any new emissions being reabsorbed in the atmosphere. At COP 27, "loss and damage" for more vulnerable nations, such as island nations that have endured the consequences of climatic catastrophes at the cruel hands of wealthy nations, was one of the main topics of discussion. In this context, "damages" refers to the consequences done on the nation's infrastructure, while "loss" refers to the irreversible effects inflicted on people and other species of the land.

Why is this important?

A cursory glance through the internet will convince you of the extent of the plight of these countries. One google search loads your screen with videos of mutilated bodies of cows and black hazardous matter on forest grounds in Kenya. It only took forest fires, dead marine animals washed up to the shore of blue-turned-green lakes (if they haven't dried up already), and ice melts on the north pole for us to accept Climate Change as a real problem and not just a buzzword. These vulnerable countries are already neck-deep in their individual crisis, and another monetary problem will be the tip of the iceberg. For instance, Africa is already facing a failing debt problem, and dealing with negative externalities would push it to the brink of collapse. Research shows that Africa's total external public debt as of 2021 was 726.55 billion US dollars.

What’s the problem?

Developed countries have not reimbursed countries in accordance with the climate finance resolution, which obliged them to pay $100 billion in climate finance per year by 2020, or even while it was one of the COP 26 objectives. The reason behind their non-compliance stems from the belief that payment implies an admission of responsibility for the issue on their part – something they are not ready to bear.. They resisted accepting liability for compensation claims and blocked the proposal of a funding facility put forward by developing countries and settled for dialogue and further plans to discuss the issue at COP 27. Hence, we see them escaping the clutches of justice once again. The pressure has been on China and India this time to pay the bill as they emerge as the top two greenhouse gas emitters in the world.

The transfer of onus to emerging developing countries is a problem since this completely discredits the historical emissions by the cluster of wealthy nations that benefited from industrialization and warmed the Earth to this broiling pot it now is.

What do the numbers say?

The loss in GDP due to this is universal and will hit countries - poor or rich, small or large. But the variations are shocking. In a famous study conducted by an NGO, Christian Aid which took into account the Least Developed Countries (LDCs), Alliance of Small Island States (AOSIS), and those that are members of the Climate Vulnerable Forum (CVF), found their GDP decreasing by 19.6% by 2050 and by 63.9% by 2100. Even if we were to reach the conditions of the Paris Agreement, the GDP would still be hit by 13.1% by 2050 and 33.1% by 2100. In contrast to this number is the mean average per capita carbon emissions of the top ten most impacted countries (part of the countries mentioned above) which is 0.45 tonnes. The vast difference between these numbers requires no explanation.

One plausible explanation lies behind the agricultural dependence of these countries. The dependency on agriculture for their economic livelihood makes them prone to damage due to erratic (high) temperatures. This roots from high temperatures causing droughts, heat-related stress, low worker output, etc, and negatively impacting the crops further. These low-income countries already spend less than $80 on healthcare per capita which will not cover healthcare costs with the increase in health problems.

What can be done?

One solution is to look at accountability through data indicating how much the developing and vulnerable countries lost out on due to emissions through the burning of fossil fuels in terms of GDP. For instance, floods in Pakistan covered one-third of the country in a summer anomaly that left 21 million in desperate need of help with $30 million in damages. We clearly see the effects of climate change in Pakistan. But we also have data to back it up. We see a shocking linkage between the US and China, the two biggest emitters, contributing around $60 billion in overall economic losses to Pakistan. Should they, then, not be the compensators? It is unfair to look at the problem of compensation and liability as a one size fits all issues. Mapping the data of individual emitters to income losses for specific countries would help to create national accountability. But it is difficult to look at individual aspects. The more we dig, the more questions there are to answer.

What else?

A survey conducted by Politico found that respondents in the US, U.K., Canada, France, Germany, Mexico, Russia, and South Africa also believe that companies and corporations should be the ones to pony up. Large corporations alone are worth $59 trillion. Investors held a record $115 trillion in assets as of 2020. That's a lot of money that could be spent on solutions.

To put this in context, the total output of the US economy is approximately $24 trillion. But companies keep greenwashing customers and other stakeholders of their “sustainability” with the use of the powerful tool of social media. One of the most recent and widely criticized cases is that of Coca-Cola Co. It sponsored COP 27 while ironically being one of the worst global plastic polluters in the last five years. It is also the responsibility of the corporations that have benefited from industrialization at the cost of climate to step ahead and contribute to the climate issue through collaborations with governments and other measures. They must do this by lowering their carbon footprint instead of wasting money on sponsorships and ad campaigns.

Penny to save or Penny to earn?

The data highlights that emissions by the US caused Mexico, another agriculture-reliant country, to lose $79 billion of its GDP between 1990 and 2014. But the data also suggests that emissions from the US have positively impacted a few countries like Canada to raise their economic output. The underlying reason is the increased productivity of people due to warmer climates. Then, if the US is supposed to pay compensation to Mexico, must it also collect the same from Canada? This would make the compensation even more complicated and would require research and big calculations. We need not even look that far. Our own country is riddled with complications. India is estimated to have lost $159 billion in key sectors due to emissions. However, as we’ve stepped up development initiatives across the country, we have become one of the top five global emitters such that total losses exceed $500 billion. But if we break down and consider emissions per capita, we can’t label India as a big polluter. While the global average is 6.3 tonnes of CO2 equivalent (tCO2e), India’s is only 2.4 tCO2e.

“Climate solidarity pact or a suicide pact” is how UN general Antonio Guettersputs it blatantly at COP 267. Responsibility and Accountability must be assumed where they are due, or this money problem will balloon and consume all our nations, bringing doom to even the developed countries.

(Written by Nandita Bansal and Edited by Prakhar Singhania)


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