Climate variability impact on majority of the developing nations

Since the beginning of December, 2023 international analysts have been focusing on the need to have a rethink of the global financial system that is expected to bring reparatory justice to small, climate-vulnerable nations while offering concessionary development financing to those most in need of assistance.

The discussion was part of Climate+, a conversation series organised by independent news organisation Devex, which presented a frank analysis of progress towards climate justice, the current state of the global financial system, and why the two issues are inseparable. Ryder, an economic analyst from Kenya, observed, "We have been in the multilateral and climate finance space where we have been beating around the bush on a range of issues, and that has delivered the outcomes that we are talking about today. It has exacerbated inequalities even if there's good intention behind it."  In this context as an example it was pointed out that many low-income countries expecting to become a middle-income country apply for World Bank financing and are informed "as soon as you get past that threshold, you suddenly have to pay more interest". That takes away all inducement to declare that the country has reached middle-income status. This, in its own way, according to Ryder, is affecting many middle-income countries and casting a shadow on their "unmet need for concessional financing".

This situation has led many climate justice experts and analysts to observe that the landmark announcement of the operationalisation of the Loss and Damage Fund on Day One of the last COP28 was a long-fought victory, but agree that there still lies a long road before anything significant will emerge as a lot of questions still remains.

It may be noted that according to the United nations, so far, pledges to the Loss and Damage Fund total over USD 400 million. However, according to the UN, US Dollar 387 billion will be needed annually until 2030 to help developing countries adapt to climate change.

It may be added here that the Prime Minister of Barbados, Mia Mottley, has been on a global crusade to restructure the global financial architecture through an initiative named after Bridgetown, the capital of Barbados. It has called for an overhaul of development finance that would address issues like inequality and help climate-vulnerable nations build resilience and respond to climate change. In a manner of speaking, this benchmark is expected to bring forth justice for the world's most vulnerable countries.

This anxiety with different dimensions is surfacing as the world has started its stride in 2024. Consequently, many climatologists have been underlining the need for us to reflect on some of the key trends of the past year and discover how to pursue the path towards hope and promise for everyone, everywhere.

Climatologists S.R. Basu, Chen Weng, and Monica Das have in this regard made some important analytical observations. According to them it is clear that deepening global disparities are having enormous socio-economic implications across countries. Increasing income and social disparities are spreading around regions. Growing intensities of climate-induced natural disasters, the uneven speed of post-pandemic recoveries, and cost-of-living crises from conflicts and geopolitical tensions are also exacerbating inequalities and poverty traps globally.

The changing distribution of economic benefits vis-à-vis the rising prices of food and fuel are similarly causing social unrest and protests. Citizens are voicing their frustration not only in the streets of capitals but through exponential engagement on social media platforms.

With the intensification of various external shocks, and the lack of economic opportunities for accelerating growth and productivity surges, multidimensional poverty indices are on the rise. The inequality-poverty nexus is also contributing to a new form of uncertainty for disadvantaged households.

Intensifying hazards caused by climate variation-- such as floods, tropical cyclones, heatwaves, droughts and earthquakes are also impacting on agricultural outputs and industrial sectors, especially through decreasing productivity growth and falling real wages.

As a result, the widening gap between rich and poor in rural and urban areas has also been linked to extreme weather events due to the increasing frequency of natural disasters. These inequalities are further aggravating extreme poverty and creating the vicious nexus of climate-disaster-inequalities among vulnerable groups.

Evidence from around the world indicates that climate change is likely to impact more severely on vulnerable groups and coastal communities, because they are more exposed to the uncertainties of weather patterns. Lack of adaptive capacity are often constraining the ability of these communities to build resilience and cope with the severity of these environmental shocks.

Jeffrey D. Sachs, a world-renowned economist and global leader in sustainable development has interestingly noted that the United States contribution to the Loss and Damage Fund equals nine minutes of Pentagon spending. While the Loss and Damage Fund promise was made at COP27 in Sharm El Sheikh, Egypt, this was the first major milestone announced at COP28 in Dubai. It needs to be observed that so far, pledged contributions by various countries to the World Bank-hosted Loss and Damage Fund have reached US Dollar 700 million. While this is a major step in the right direction, there are concerns that the fund is too small and that powerful nations, according to Sachs, are not doing enough to halt the pace and rate of climate change which is causing hundreds of billions of dollars of climate-related losses each year.

Widespread incidence of climate relocation from low- to high-latitude areas and social mobility are also increasingly impacting the social fabric particularly of comparably smaller island developing countries and other developing economies. With the exodus of young and skilled labour force, transfers of income and the wealth gap is further worsening inequalities in communities and raising concerns of greater socio-economic uncertainties. From Fiji to Ethiopia, Bangladesh to Brazil, the exacerbation of inequalities due to climate change has been impacting socio-economic prosperity. Growth uncertainties are also causing extreme poverty to increase, while causing hardship and hunger for households in rural areas.

Socio-economic polarisation has been on the rise since the global outbreak of the COVID-19 pandemic. Due to differentiated impacts of national lockdowns, pandemic restrictions and vaccination measures have had adverse impacts on the existing inequalities and multifunctional poverty directories. As economic development stagnation persists, rural areas have seen rising impacts of extreme poverty and income divergence across households, leading to new episodes of income divergence within countries.

One also needs to remember at this juncture that the post- Covid 19 retrievals are also uneven. Rising levels of unemployment and stagnating real wages remain major indicators of corresponding economic growth deceleration. The differentiated policy measures to stabilise labour market distortions, social protection systems and sectoral productivity surges have not always achieved the desired outcomes in developing countries.

According to the labour force surveys in various countries, the majority of workers have been engaged in less paid work due to lack of dynamism in the labour market. Evidence suggests that the changes in work style and availability of types of jobs as well as their skills and profiles aggravate the income disparity within urban centers.

It also needs to be understood that in the spectrum that includes many African and Latin American countries, the pandemic-induced policy measures have  elevated the risk of vulnerability for the manual labour force. Similarly, research has also indicated that young, low-income and self-employed workers including women with limited education, have suffered greater job losses and earning reductions than other groups in the workforce in the UK, USA, China and India, among others.

Such a struggle quite often is also going beyond borders, causing immeasurable human suffering on the global scale.

With the volatility and uncertainties around supply chains, food and fuel prices have continued to curve upwards. This, as expected, has also resulted in a crisis in the context of cost-of-living. There has been an osmotic effect and this has spread around countries as governments have lost fiscal dimensions for developmental expenditure. This is taking place while the debt burden is gradually increasing. A classic example in this regard is Bangladesh.

Conflicts arising from differences of opinion in many cases have, unfortunately, led to people losing hope and opportunities. Such a scenario is true-- be it in the East, West, North or Southern countries. With the resulting lack of rule of law and property rights in many countries who are least developed and not yet a developing country, households and communities are having to overcome challenges being created through socio-economic poverty traps. This in turn is changing the face of socio-economic disparity.

As these struggles are prolonged, countries are often failing to overcome the existing infrastructural challenges, maintain production streams, and improve existing dreary infrastructure. A higher risk of falling into poverty traps and increasing scale of disparities is then the inevitable outcome. Such polarisation fears and lack of trust are now slowly becoming a certainty.

Today, as we look back at 2023, there is no doubt that in the end, common aspirations and outlooks remain our best hope to chart a new course to advance the Sustainable Development Goals. Evidence of successful policy coherence will provide valuable opportunities for policymakers to unite their priorities and lay the foundations for breakthroughs.

Muhammad Zamir, a former Ambassador, is an analyst specialised in foreign affairs, right to information and good governance.
[email protected].