Climate change economics

Last Tuesday Rachel Kyte was up at 3 a.m., just hours upon her arrival in Manila, to prepare for her flight to Tacloban City and other typhoon-devastated areas.

She was back in Manila the next day, sunburned by the searing heat in the Visayan disaster zone, and spent the day meeting with World Bank and Philippine government officials.

From the blistering tropical heat, Kyte flies to the freezing Arctic tomorrow, to spend three days in the northernmost inhabited place on the planet – the town of Ny-Alesund, which is home to an international scientific research and environmental monitoring center.

Ny-Alesund is on the Norwegian island of Spitsbergen in Svalbart, 1,300 kilometers from the North Pole. Spitsbergen is home to the Global Seed Vault. Also called the Doomsday Seed Vault, the bank built deep inside a mountain is meant to preserve the planet’s crop diversity for future generations.

Among the seeds kept in the vault are rice varieties developed in the International Rice Research Institute in Los Baños, Laguna.

Kyte will be visiting the seed bank because she chairs the CGIAR Fund Council, the governing body for the multi-donor Consultative Group on International Agricultural Research Fund administered by the World Bank. CGIAR is a global partnership of organizations engaged in research for a food-secure future.

The future is a key concern for Kyte, who is World Bank Group vice president and, since the start of the year, the Bank’s first special envoy for climate change. It’s a new position created as the World Bank sees climate change threatening economic growth and poverty eradication.

Kyte’s punishing itinerary reflects the challenge faced by the World Bank Group in encouraging governments to put climate change at the heart of their development agenda.

An Englishwoman who has made Washington her home, Kyte is in Manila for the 23rd World Economic Forum on East Asia, where she is expected to raise the urgency of dealing with climate change.

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Why was the position of special envoy on climate change created? Not too long ago, the World Bank saw corruption as a serious hindrance to development and poverty alleviation. The Bank’s assistance was pumped into programs to fight corruption. The United Nations also joined the battle, passing the Convention Against Corruption, with the Philippines among the signatories.

Today it has become clear that another serious hindrance to poverty eradication is climate change.

Kyte explains that in the past few years, the World Bank Group has been focusing on twin goals: the eradication of poverty by 2030, and equitable growth or shared prosperity.

The consensus that has emerged, she told me in an interview the other night, is that these twin goals “will be extremely difficult if not impossible to achieve” if climate change is not aggressively addressed.

“Climate change is now a threat to economic stability,” she said as she cited the risk that “countries that have come out of poverty might slip back.”

Yes, she’s referring to the Philippines, among others. Growth figures for Asia’s second fastest growing economy will be tempered by the impact of Super Typhoon Yolanda.

Those who prefer to look on the bright side told me earlier this year that the reconstruction effort could actually be good for economic growth figures. But let’s face it, “building back better” is moving way too slowly.

Kyte would not comment on the pace of the rebuilding in the typhoon-hit areas, but she said the disaster zone is “extremely vulnerable” if another powerful weather disturbance strikes.

For that matter, even Metro Manila is “extremely vulnerable” to natural calamities, she said. Kyte also visited Muntinlupa to assess flood risks in the Laguna de Bay floodplain.

As special envoy, Kyte has two tasks. One is to deliver the message that climate change “is an economic threat and an economic imperative.” The other is to make sure that everything done by the World Bank Group “is informed by our understanding of climate change.”

The World Bank is not the only organization that is worried about the impact of climate change on development. In December last year United Nations Secretary-General Ban Ki-moon also appointed two new special envoys on climate change: former Ghana president John Kufuor and former Norway prime minister Jens Stoltenberg.

Kyte, who is in charge of all World Bank Group initiatives on climate change, wants to shift funding priorities to favor disaster prevention over response.

She calculates that at present, for every dollar of disaster aid given by the Bank, only four centavos go to prevention; the remaining 96 cents are eaten up by response.

“We have to change that equation,” she told me. “All the evidence is that prevention costs so much less than response, relief, reconstruction.”

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Being a funding institution, the World Bank inevitably counts the cost of building disaster resilience. And it knows that developing countries will need a lot of help, particularly the extremely vulnerable that are regularly visited by typhoons, earthquakes and torrential floods.

After last year’s powerful earthquake and Yolanda, the Philippine government realized that the country could use a special fund facility for disaster resilience. Necessity, as Kyte pointed out, is the mother of invention. Philippine officials pitched the idea to the World Bank, which liked it and is now assisting in designing “financial innovations” that will help communities bounce back after a weather disturbance.

The World Bank and other Philippine partners are helping the country put together what is called the Climate and Disaster Resilience Fund, mobilizing even private sector investment and technical assistance.

Financial innovations may include incentives for such investments, and comprehensive insurance that can be paid out quickly. Social safety nets are being designed.

Intended as a sustainable funding assistance, the special fund may be replicated in other countries by the World Bank.

Resilience, Kyte said, must be built at the national, local and individual levels.

In the Yolanda-hit areas, the World Bank is currently assisting the Philippine government so the reconstruction can “pick up speed,” with disaster resilience built in, Kyte said. “We will pick up the baton from the aid and humanitarian agencies.”

Her message is that economic growth and climate change mitigation can and must go hand in hand. Nations can turn green without sacrificing growth and poverty eradication.

It’s a daunting challenge, but Kyte thinks climate change programs can succeed with the involvement of all sectors.

“This has to be everybody’s business,” she said.