The world today faces a crisis of climate and a crisis of development. Both are consequences of the nature of growth of the world economy over the last two centuries, especially during the recent period.
The growth process was an enormous success on its own terms, raising incomes and opportunities, especially in industrial countries and more recently, in some developing countries for extended periods.
It has, however, been a failure in two other respects. First, it often widened inequality, both among and within nations, leaving much of the world’s population with crumbs. Second, it worsened the relationship between humanity and nature, rendering human existence, including economic growth itself, unsustainable.
The problems of climate and development must be addressed together. Protection of the Earth’s climate requires the cooperation of all; it cannot be imposed on an unequal world by an affluent minority.
Meanwhile, development has to acknowledge and progress in a climate-constrained environment, mitigating global warming with low-carbon economic growth while adapting to the irreversible consequences of climate change.
These interrelated challenges should frame the economic agenda for our times. Yet, they have received far too little attention from economists as inter-connected phenomena.
Climate economics, in particular, frequently ignores questions of international equity, assuming little or no change in the relative positions of rich and poor nations. Economic models which presume “inequality as usual” cannot address the related problems of climate and development, let alone propose viable and acceptable solutions.
Analysis and solutions must integrate and address climate and development concerns; its “optimal” policy scenarios provide climate protection while rapidly reducing global inequality. Indeed, inclusive and rapid development is supportive of and essential to the best sustainable climate solutions.
Global warming is threatening people and development in many countries. The vicious circles generating climate change are becoming stronger, with the emergence of new threats and the intensification of existing threats, such as the water challenge.
Hence, solutions to the climate threat are not acceptable if they fail to address these challenges, or worse still, widen existing gaps between rich and poor. A good deal of the current policy discussion sees the problem in incremental terms and ignores the different challenges faced by rich and poor countries.
The climate problem cannot simply be addressed by across-the-board uniform greenhouse gas (GHG) emission cuts by all countries from their present levels. The required response needs to be tailored, with a better sense of the size and nature of economic adjustments involved in moving to low-GHG emission development pathways. Such pathways will have to be combined with the goals of full employment and energy security in the North as well as catch-up growth and improved energy access in the South.
Long-term management of economic and natural resources in a more inclusive and sustainable manner is key. We cannot rely purely on markets, especially when changes are expected to be large-scale, returns are uncertain and complementarities are significant.
We need a vital public policy and public investment agenda, with strong multilateral support built around a global investment programme to fight climate change. Many investments will have to be front-loaded (i.e., scaled up now, rather than by 2030 or so) and undertaken by the public sector.
More integrated policy responses, at both domestic and multilateral levels, to tackle the interrelated threats will be needed. A range of possible multilateral measures in support of a global investment programme will be necessary, including a global clean energy fund, a global feed-in tariff regime in support of renewable energy sources, a climate technology programme and a more balanced intellectual property regime to facilitate the transfer of clean technologies. A global green New Deal will have to be built around a global investment programme and more integrated policy responses.
Jomo Kwame Sundaram is the Coordinator for Economic and Social Development at the Food and Agriculture Organization and received the 2007 Wassily Leontief Prize for Advancing the Frontiers of Economic Thought.