ShockWaves 106202 Managing the Impacts of Climate Change on Poverty Policy Note 2/3 Policies Can Reduce the Impacts of Climate Change on Poverty—in Agriculture, Disaster Risk Management, and Health Climate change and poverty are inextricably linked. Climate change threatens poverty eradication. But future impacts on poverty are determined by policy choices: rapid, inclusive, and climate-informed development can prevent most short-term impacts of climate change on poverty, while a failure to adopt good development policies could mean more than 100 million additional people are pushed into poverty by 2030. And only immediate emissions- reduction policies can prevent climate change from threatening longer-term poverty eradication. Well-designed policies and international support can ensure mitigation does not threaten progress on poverty reduction. This is Policy Note 2 (of 3) drawn from Shock Waves: Managing the Impacts of Climate Change on Poverty (2016) by Stephane Hallegatte, Mook Bangalore, Laura Bonzanigo, Marianne Fay, Tamaro Kane, Ulf Narloch, Julie Rozenberg, David Treguer, and Adrien Vogt-Schilb. Climate Change and Development Series. Washington, DC: World Bank. It lays out sectoral policy recommendations. Policy Note 1 provides an overview of the report, and Policy Note 3 discusses the cross-cutting theme of social protection. Rapid and inclusive development can prevent much of the impact options are available to promote climate-smart agriculture and of climate change on poor people if it is climate informed—­meaning protect ecosystems from climate change. Governments can: designed to perform well under changing climate conditions, so ■■ Develop higher yielding and more climate-resistant that development itself does not create new vulnerabilities. practices, crop varieties, and livestock breeds, adapted But targeted actions aimed at lowering socioeconomic vulner- to developing country contexts and climate conditions. ability to climate change impacts are also needed. Some of these More productive and resilient practices will require a major policy actions are pure climate change adaptation measures—​ for shift in the way land, water, and soil nutrients are ­managed. example, changing land-use regulations to account for sea level Crop improvement, smarter use of inputs, approaches such rise. Others can be seen as generic “good development” and would as polyculture to strengthen crop resistance to pests and dis- make sense even in the absence of ­ climate change—like increas- eases, and a reduction of postharvest losses can all contribute ing financial access for all people. This policy note focuses on potential actions that can be taken in three sectors where climate-related impacts on poverty are Figure 1  Household vulnerability to droughts is especially important—agriculture and ecosystems, disaster risk reduced by agricultural techniques that integrate trees management, and health. Each country can identify its own pack- (Reduction in average annual number of drought-affected age of measures, based on its policy priorities and how it expects people) to be impacted by climate change. For instance, where urban 8 planning is a policy priority, an obvious action would be to factor Number of people (millions) natural hazards and climate change into its design. 6 4 Climate-smart agriculture and protected 2 ecosystems 0 Climate change threatens ecosystems and the services they pro- No trees Low tree density High tree density vide as well as the quantity and stability of food production from Agroforestry Drought and heat tolerance Soil fertility management packages agriculture. Poor people depend heavily on ecosystems and agri- culture and stand to be severely impacted. But many policy Source: See chapter 2 of the book. 1 agriculture—leading to to the sustainable intensification of ­ ­ limate change. A number of policy options can reduce vulnera- c increased food production. Importantly, the new techniques bility to natural hazards: that result from innovation must be broadly adopted, ■■ Fund more pro-poor and robust infrastructure. Many including by poor farmers. One way to improve adoption poor countries lack the type of protective infrastructure is through agricultural extension—that is, the dissemina- common in richer countries. For instance, poor households tion of good agricultural practices through farmer educa- are often exposed to recurrent floods due to the lack, or tion. In Uganda, the combination of new crop varieties and poor maintenance, of protective infrastructure like dikes extension visits increased household agricultural income by and drainage systems; even if these recurrent events do not around 16 percent. attract media and policy-maker attention, they can represent ■■ Invest in infrastructure and social protection to man- a large burden on poor people. Around $1 trillion per year age food price hikes. Poor people are particularly vul- would be needed in developing countries to close the infra- nerable to agricultural price hikes because they spend structure gap. Closing this gap would go a long way toward a higher fraction of their income on food—food rou- reducing the vulnerability of poor people, but only if new tinely represents more than half of the poorest house- infrastructure serves them. If investment is designed only hold’s expenses. To reduce the frequency and magnitude to maximize economic returns, it risks being concentrated of food price hikes, governments can develop transport in areas with the highest asset values—that is, toward richer infrastructure facilitating domestic and international groups. Explicit effort is needed to ensure poor people are market access. But prevention actions cannot reduce the not left out, for instance through project selection processes risk of food crises to zero. Governments can also offer that account for distributional and poverty impacts. protection to poor households by providing them with social safety nets such as cash transfers that are indexed And new infrastructure needs to be designed to remain to food prices. efficient through changes in climate and environmental ■■ Design land-based climate policies that benefit poor conditions. Innovative methods, collectively known as people and protect food security. Countries will need to Decision Making Under Uncertainty, can help manage the look into land-based mitigation policies to stabilize cli- uncertainty around when and how the climate will change mate change. These policies need to be carefully designed, locally, as well as multiple, sometimes conflicting, policy paying particular attention to their effect on food prices. objectives that policy makers have to navigate. These In fact, ill-designed mitigation policies could have a methods have been deployed in a number of World Bank larger impact on food prices than climate change. On the pilot projects to help policy makers design investments other hand, well-designed emissions-reduction options with climate change in mind—for instance on water sup- can strengthen the productivity of agriculture and ecosys- ply in Lima and flood risk management in Ho Chi Minh tems, boosting local incomes and reducing poverty. For City and Colombo, hydropower in Nepal, and adaptation instance, if targeted in a pro-poor way, payments for eco- of road networks in Peru and across Africa. system services could benefit an estimated 25–50 ­ million ■■ Invest in services and infrastructure to complement zon- low-income households by 2030. ing regulations. Today many poor people settle in locations ■■ Reduce nonclimate stresses on ecosystems. Healthy eco- vulnerable to floods or landslides. They do so because these systems are generally quite resilient, so protecting them locations offer opportunities such as access to jobs and ser- and restoring degraded lands can increase their ability to vices, better schools, and health care. When asked what it withstand climate-related disturbances. Adding trees to would take to consider relocating to a safer, less flood-prone agricultural land can also reduce household vulnerability area, 44 percent of flood-prone households in Mumbai to drought—and increase carbon storage (figure 1). reported transport infrastructure, along with the availability of health services, schools, and social networks. Governments should investigate and acknowledge the reasons why poor Better infrastructure, land use regulations, people settle in hazardous areas. With this information, policy makers can complement zoning regulations with and preparation for natural hazards the needed investments in transport, education, and health In many regions, natural hazards such as storms, floods, and in safe places to allow people to resettle while maintaining droughts will become more intense and frequent because of access to the same or comparable jobs and services. 2 ■■ Make risk information easily accessible, including early When Cyclone Phailin made landfall near Gopalpur, India, in warnings. Effective implementation of disaster risk man- 2013, it killed fewer than 100 people. This number is much agement policies requires appropriate data on risk and haz- smaller than the 10,000 deaths that a similar storm caused in ard, which remains limited in low-income environments. To 1999, before early warning systems and evacuation plans address this issue, the World Bank and the Global Facility were created. Generally, early warning systems are very cost- for Disaster Reduction and Recovery (GFDRR) are investing effective investments, with each dollar invested yielding more in risk information. The GFDRR’s Open Data for Resilience than $4 in avoided losses. However, over the past 15–20 years, Initiative supports the creation of GeoNode, a web-based the situation of many hydrometeorological services in devel- open source platform for developing, sharing, managing, oping countries has worsened, reducing their ability to detect, and publishing geospatial data. Such initiatives can make a ­ limate change. anticipate, and adapt to c difference locally, by making risk information available not only to professionals but also to the public at large. In addition to the policies mentioned above, governments can promote financial inclusion to reduce the vulnerability of Risk information also includes early warning systems—so poor households’ assets, increase their capacity to invest in risk the population can be warned of impending natural hazards. management, and improve their ability to smooth the effect of The combination of observation systems, early warning sys- shocks on consumption. Governments can also enact risk-­ tems, and preparedness—for instance through contingency sensitive and enforceable building norms and grant property plans or regular drills that improve households’ and firms’ abil- rights to poor people to incentivize investments in housing ity to act upon warnings—can save many lives at a low cost. ­ quality and resilience. Figure 2  People in poorer countries pay for most of their health care out of pocket, unlike in richer countries 100 90 Share of healthcare expenditure (% of total in 2011) 80 70 60 50 40 30 20 10 0 Low income Lower-middle Upper-middle High income Global income income Out-of-pocket expenses External resources Other private expenditure Private health insurance Other government expenditure Social security Source: Watts et al. 2015. “Health and Climate Change: Policy Responses to Protect Public Health.” The Lancet. 3 Better health infrastructure and universal health infrastructure, train health workers, and work to increase the quality of care. health care ■■ Invest in research and development for control and Climate change can reverse the progress made in containing eradication of diseases that affect poor people and that vectorborne and waterborne diseases such as malaria and diar- ­ will be worsened by climate change. Several neglected rhea. The good news is that a number of options can help reduce tropical diseases—such as dengue, leishmaniasis, and the vulnerability of poor people to climate change impacts ­ chikungunya—thrive mainly among the world’s poor- through health, including: est populations and are sensitive to climate conditions. ■■ Work toward universal health coverage. People in Private and public research is needed to develop proper low- and lower-middle income countries have lim- solutions to these problems. Today, annual research and ited access to health care, and can end up paying more development spending on infectious diseases of particu- than 50 ­ percent in out-of-pocket expenses, much lar concern to low-income and middle-income coun- more than the roughly 15 percent paid in rich coun- tries amounts to only $3 billion—a small portion of tries (figure 2). But better health coverage is possible in the nearly $250 billion spent annually on health-related emerging and low-income economies. In Rwanda, the research and development. In addition, countries need government invested in universal health coverage in strong monitoring and surveillance systems to detect 1994, and today nearly 80 percent of its population is emerging health issues that may arise in response to insured. On the supply side, governments can invest in changing climate conditions. SKU 32971 4