COP20 ODI Discussion Paper: Targeting Zero Zero - Achieving zero extreme poverty on the path to zero net emissions

Published: 8th December 2014 13:01Last Updated: 8th December 2014 17:01


Executive summary

The eradication of extreme poverty is, perhaps, the minimum ethical floor for global development efforts. Progress over the past two decades has reduced extreme poverty from 43% to 17% for the population of the developing world, and macroeconomic projections suggest that eradication is possible by 2030, making the goal of ‘zero extreme poverty by 2030’ a compelling objective. Climate change, however, is a destabilising force that has yet to be factored in, not only to poverty projections to 2030, but projections that look far beyond that deadline.

The eradication of extreme poverty by 2030 will be no great accomplishment if we are incapable of sustaining that achievement once reached. On current trends, the costs of climate change will fall hard on poor people, making it harder for those in extreme poverty to escape it, and threatening to drag the moderately poor (those living on $2 per day) into extreme poverty. Their continued vulnerability may require even greater ambition to ensure the resilience of poverty reductions. At the same time, curbing climate change to manageable impacts will require the global economy to produce zero net emissions by the end of the century. While this paper focuses on countries with large populations of extremely poor people, the global scale of this challenge means that every country – rich or poor – needs to pursue a trajectory of very low emissions.

The most credible scenarios for zero net emissions by 2100, including those upon which this paper relies for its calculations, foresee greenhouse gas (GHG) emissions peaking in all countries well in advance of 2050, and in most countries within a decade of 2030. Developed countries already need to see declines against current levels, but even low-income countries will need to peak within the timeframe of the zero extreme poverty goal. That peak will need to be somewhat lower than it would be under business as usual (BAU), and materially lower than, say, the emissions increases of countries that have industrialised rapidly in the past 30 years, such as China and some of the lower-middle income countries of South East Asia. Therefore, while the achievement of a zero net emissions goal looks toward the end of the century, the magnitude of the goal has very immediate and global implications for development.

The economic transformation required to achieve a zero net emissions pathway presents an additional global challenge that is sometimes thought to conflict with the goal of zero extreme poverty. The domestic actions of richer countries are critical and will influence the opportunities for sustaining zero extreme poverty in poorer countries, and these actions have rightly received much attention. This paper focuses instead on the potential synergies between poverty reduction and low-emissions pathways in countries with significant populations in extreme poverty (and, implicitly, on the development policy priorities of richer countries supporting eradication of such poverty). There is strong evidence that a zero net-emissions pathway, both globally and in the poorest countries, is compatible with, and likely to be better at, achieving the moderate and sustained economic growth and addressing the inequality of growth – both prerequisites for the achievement of zero extreme poverty. This will, however, require significant improvements to institutional and technical capacity, as well as access to far larger amounts of investment than might otherwise be the case. 

Pathways to zero extreme poverty

Various projections conclude that effective poverty eradication, with less than 3% of the global population living on $1.25 a day, is feasible by 2030. These projections, however, are narrow in their assumptions and their results depend upon overly optimistic projections of the scale of economic growth and its uniformity across sectors and countries. In addition, we face diminishing returns in terms of poverty reduction from growth, given the location and structure of the poverty that remains, with more poverty concentrated in states with a poorer record of growth and equity, a more fragile political environment, and a less diversified and stable economic structure. Economic growth is likely to be more moderate and less effective in reducing extreme poverty in the coming decades than many projections suggest. Ensuring that we achieve the goal of zero extreme poverty by 2030 will, therefore, require a reorientation, and not simply a replication, of experience over the past two decades.

While moderate and sustained economic growth is necessary under nearly all poverty-eradication scenarios, it is also vital to reduce the inequality of the benefits of that growth. Poverty is reduced faster when poor people benefit more from growth and extreme poverty could be solved overnight if the inequality of wealth were addressed. Addressing growth and inequality together is far more likely to reduce poverty than a strategy that focuses on maximising growth alone. For example, the redistribution of wealth through cash transfers would, in theory, involve a relatively small fraction of the global economy, but such transfers can be quite costly at the local level, are politically unpalatable at scale, and have questionable sustainability if the inequality of growth has not been resolved. Robust poverty eradication must generate the circumstances in which the extreme poor can productively participate in the macroeconomy. Moderate, sustained, pro-poor growth – ‘fair growth’ – is likely to provide the best chance of reaching our collective goal of zero extreme poverty. 

The impact of climate change on poverty

Climate change is already happening, with an estimated 0.85° Celsius rise in average global temperatures since pre-industrial times. Due to historical emissions, efforts to reach the goal of zero extreme poverty will be affected by climate change even if all GHG emissions were to be halted tomorrow. This means that investments in adaptation and resilience-building will be vital to defend poverty reduction gains from the climate change that the world is already locked into.

Although such investments are necessary for achieving and sustaining poverty reduction, this paper focuses not on their precise nature, but on pathways to zero net emissions that will minimise interference, or maximise synergies, with the goal of zero extreme poverty. To do so, the paper draws on two well-analysed emissions scenarios to generate preliminary estimates of the number of poor people directly affected by climate change.

In the first scenario, the world does nothing beyond its current policies and continues on a BAU emissions pathway towards 3.5°C by 2100. In the second scenario, large structural changes are made across a number of sectors to put the world on a trajectory to zero net emissions and a reasonable chance of staying within 2°C by 2100. Each will have consequences for eradicating poverty, given their influence on climate-change costs, benefits and their distribution.

In summary, the pursuit of zero extreme poverty by major GHG emitters represents policy incoherence in the absence of immediate and ambitious efforts to move toward zero net emissions by the end of the century. This reaffirms the clear need for domestic mitigation by the world’s largest emitters and for an international agreement that is capable of addressing the interdependency of effective climate action, but also positions poverty eradication as a catalyst for more ambitious action on climate change.

This discussion paper aimed to stimulate debate on how to achieve Zero Zero – zero extreme poverty and zero net emissions. It was prepared to frame the Development and Climate Days 2014 at COP20 in Lima, Peru.  Feedback from the Development and Climate Days 2014 will inform a revised version of this discussion paper to be released in early 2015.

Authors

Ilmi Granoff, Jason Eis, Chris Hoy, Charlene Watson, Amina Khan and Natasha Grist