African development in an era of climate change

Poverty is not a viable climate strategy

I: Climate shocks and economic development

In a new Carnegie paper, Laurence Chandy raises an interesting question about the “deep” determinants of economic development:

A rich literature has sought to identify the “deep determinants” that best explain comparative economic performance over the long term. That search has increasingly boiled down to a focus on geography and institutions. A country’s geography affects its economy through multiple channels including agricultural productivity, disease vectors, and proximity to markets. A country’s institutions, defined here as the rules and norms that govern society—including those imposed by external actors—affect the incentives individuals face to engage individually or collectively in productive activity. Which of the two is the dominant factor cannot be definitively resolved empirically, and so it is partly a matter of opinion. Nevertheless, the majority opinion, and the weight of evidence, backs institutions.

Could climate change shift the dial toward geography?

… while global warming could spell greater economic productivity for countries whose average annual temperatures are low, rising temperatures augur increasingly dramatic falls in productivity in countries with already warm climates.s

I particularly like Chandy’s attention to shocks that punctuate growth episodes:

Virtually all countries have experienced periods of rapid economic growth and periods of dismal growth. Comparative performance is explained by the superior ability of some countries to sustain growth; poor countries have a greater propensity to reverse. In other words, shocks, and how they are managed, play a large part in explaining comparative economic performance.

Recent floods in Nigeria and Pakistan vividly illustrated this reality. Low-income countries, many of which have historically made little contribution to greenhouse emissions (see below), are the least prepared to deal with the consequences of climate change. Many are chronically food insecure and have more than 70% of their populations reliant on rain-fed agriculture. Unless they can quickly increase their incomes by shifting bigger shares of their populations away from agriculture, ongoing climate change will mean higher incidences of famines (and some conflicts over scarce grazing/farm land) in the countryside and instability in urban areas due to food inflation.

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In an era in which climate shocks routinely destroy hard-earned material accumulations, African countries will require more resources and take longer to improve livelihoods. Crucially, these countries lack the means of adopting aggressive industrial policies for the post-carbon future like we have seen the in United States and Europe.

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Sadly, the global distributive politics of climate mitigation strategies remain decidedly against low-income countries. High-income countries and their domestic politics still dominate the discourse on climate change. Right-wing climate deniers want little done. On the Left, calls for blanket bans on fossil fuel production or taxation of “dirty” imports from low-income countries betray a callous disinterest in the plight of workers (or cross-pressured politicians and policymakers) in countries like Bangladesh, Kenya, and Vietnam.

When low-income countries want to exploit their fossil fuel resources, we hear concerned lamentations about climate change. Yet when high-income countries ramp up their use of coal, everyone suddenly talks the language of energy security.

II: Growth is the answer

So how should African policymakers balance their developmentalist goals against the reality of climate change? Here are some quick thoughts that ought to guide African countries’ developmentalist agendas in an era when climate change (and related discourse) will dominate economic thinking.

• Poverty is not a viable climate strategy. Energy poor countries are more likely to rely on charcoal, which directly contributes to both deforestation and CO2 emissions (although even energy secure countries like “Germany, France, Japan, South Korea, United Kingdom, and the United States feature in the world’s top 10 charcoal importers”). As noted above, such countries will also struggle to fund climate mitigation or adaptation strategies (and their plight will only get worse over time) — especially in a world where high-income historical polluters’ (inadequate) promises of climate funds never materialize.

• You develop your economy with the energy resources you have. Access to energy is a critical component of economic development. More than 600 million Africans lack access to electricity. Too many people are willing to accept the dehumanizing poverty and lack of access to energy in Africa as natural. African countries need to grow fast. They should therefore, as a matter of policy, adopt a strategy of using all available resources they have to guarantee their populations and industries sustainable access to energy.

  

  Share of firms identifying the cost of electricity as a major constraint to their operations. Source: Energy for Growth Hub

  

  African firms spend an inordinate share of their resources on energy, with direct implications for their bottom line and overall sectoral productivity. The blithe acceptance of load shedding in some of the continent’s leading economies like South Africa, Nigeria, and Ghana is shameful.

• Play geopolitical hardball to pay for transition technologies. The global distributive politics of climate mitigation will largely reflect the de facto distribution of power in the international system. Strong or strategic countries (most of them historical polluters) will get what they want, and the weak will suffer what they must. The challenge for African countries is to ensure that they make themselves strategically important and their interests addressed in climate negotiations — including accessing funds and technologies needed for climate transition. One of the ways to win the ongoing game of chicken over who pays for energy transition is to credibly signal that they are willing to use any and all energy resources available (see above).

• Adapt in your own terms. Climate adaptation and mitigation strategies are inevitable. However, African countries should avoid accepting off-the-shelf procrustean policy packages from the usual foreign “experts.” Each country faces unique challenges on account of their politics and institutions, climatic conditions, population distribution, and sectoral structure/complexity of the economy. Therefore, African country’s adaptation and mitigation strategies should be be based on real facts on the ground.

  The promises of green development are real. But only sound policy approaches grounded in economic and political realities will enable African countries to walk the fine balance between urgently needed growth and long-term greening.

III: Are African leaders up to the task?

The above recommendations obviously hinge on having ruling elites capable of taking smart risks and making hard decisions. Thus far it is unclear if African leaders are up to the task. Few exhibit the urgency called for by the times.

That said, I am (weakly) confident that circumstances will drag them kicking and screaming in the right direction. The twin realities of population growth and climate change will take away one of the safety valves that have coddled African leaders over the last 60 years — rain-fed agriculture. Moving forward, macroeconomic failures will result in very visible suffering (and consequences for incumbents regardless of regime type).

Failure and consequent generalized political instability in many countries of the region is definitely an option. It is certainly possible that African leaders will stick to type and settle for keeping their emissions low by curtailing growth (in the name of “global best practices”), selling realized carbon credits, and shackling their populations to poverty for generations to come. Yet I cannot shake off this nagging feeling that the coming pressures from below will forge some good African leaders that will rise to the occasion.