Having your cake and eating it

The accepted wisdom is that you can’t have economic growth and mitigate against climate change at the same time. Not so, according to a new study. Ethiopia was one of three global case studies taking part in a year-long research project to prove this theory. The implications, for the world, are enormous. Report by James Jeffrey.

Achieving economic growth and prosperity while reducing climate change isn’t – contrary to popular opinion – a contradiction in terms, according to global research and a new international report that drew on Ethiopia’s experiences.

Launched jointly in the Ethiopian capital, Addis Ababa, and in New York, the New Climate Economy (NCE) is the flagship project of the Global Commission on the Economy and Climate, an independent initiative founded in September 2013 to examine whether lasting economic growth, while also tackling the risks of climate change, is achievable. However, the NCE’s seismic message that both are possible has, not surprisingly, been a headline grabber.

“The notion that economic prosperity is inconsistent with combating climate change has been shown to be a false one that doesn’t hold,” says Helen Mountford, director of economics at the Washington-based World Resources Institute, and future NCE Global Programme Director. “It’s an old-fashioned idea.” This economic and environmental turnaround has been made possible by structural and technological changes unfolding in the global economy, and by opportunities for greater economic efficiency, according to the NCE report.

But the next 15 years will be critical: the global economy will grow by more than half, a billion more people will move to live in cities, and rapid technological advances will continue to change businesses and lives. It’s estimated around $90 trillion will be invested in infrastructure in the world’s urban, land use and energy systems. How all these changes are managed, the report argues, will shape future patterns of growth, productivity and living standards.

Africa can make sure that commodities are transformed nearer to their sources and thereby reduce CO₂ – it doesn’t make sense for things to be sent from Africa to Asia to be manufactured and then shipped to Europe

Already, in the 15 countries with the highest greenhouse gas emissions, the damage to health from poor air quality – largely associated with the burning of fossil fuels – is valued at an average of over 4% of GDP. Increasingly, countries are recognising the negative costs of a high-carbon model of development, while acknowledging how many low-carbon policies deliver multiple benefits including greater energy security, less traffic congestion and improved quality of life. There remains, however, enough international disagreement on climate change to concern those behind the NCE.

“Humankind is facing one of the biggest challenges in history, and science has rested its case,” Felipe Calderón, former President of Mexico, and NCE chairman, said during the New York launch. “But the main obstacle is the general perception that combating climate change implies economic reductions that governments and businesses don’t want.”

Hence the report seeks to inform economic decision-makers in both public and private sectors – especially CEOs of major companies and the heads of major global economic organisations – many of whom recognise the serious risks posed by climate change but also must juggle more immediate concerns such as jobs, economic competitiveness and poverty.

If such decision makers can be brought onside, the hope is that well-designed policies, initiated by them, can make growth and climate objectives mutually reinforcing in both the short and medium terms. While in the longer term, if climate change is not tackled, it is feared that growth itself will be at risk.