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Global Environment Facility
Scientific and Technical Advisory Panel
20 March 2013
The Economics of Climate Change
A Case for Urgent Action
Pavan Sukhdev
Founder & Author, Corporation 2020
Study Leader, TEEB
UNEP Goodwill Ambassador
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The Greatest Challenge
Scientific Assessment for the GEF by STAP team: Climate change is “one of
the single greatest challenges – perhaps the greatest challenge – facing
humanity” (Nov 2012).
“We have it in our hands to overcome these problems through sound policy,
collaborative behaviour, a more far-sighted approach to the consequences of
our action, and the processes of discovery about technology, organisation
and policy.” –Sir Nicholas Stern, in foreword to Corporation 2020
“[W]hat we do in the next 10 or 20 years can have a profound effect on the
climate in the second half of this century and in the next.”
–Stern Review of the Economics of Climate Change
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What will it cost?
Stern Review (2006): “If we don’t act, the overall costs and risks of climate change will
be equivalent to losing at least 5% of global GDP each year, now and forever. If a wider
range of risks and impacts is taken into account, the estimates of damage could rise to
20% of GDP or more.”
“In contrast, the costs of action – reducing greenhouse gas emissions to avoid the
worst impacts of climate change [stabilizing between 500 and 550ppm CO2e] – can be
limited to around 1% of global GDP each year.”
•Range is: –1% (net gains) to +3.5% of GDP
In 2008, Stern revised his estimate up to 2% of global GDP. And earlier this year, he
said that, in contrast to the 2006 report, which said that there is a 75% chance of 2-3
degree rise, he now believes we are “on track for something like four.”
We already see 400,000 premature deaths/year from climate change, costing $1.2
trillion, or 1.6% of global GDP.
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Summary: What will it cost?
• Stern: 2% of GDP = $1.4 trillion/year
• International Energy Agency: $38 trillion over 25 years
• World Economic Forum: $500 billion/year
• UNEP: $1.05 to $2.59 trillion/year to meet MDGs and IEA “Blue Map
Scenario”. T-21 model scenario used = $1.3 trillion
• Reasonable estimate: $1.5 trillion/year
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How much money is available?
Fund
Amount
Japan's Fast Start Finance
UK's International Climate Fund
Clean Technology Fund (CTF)
$15,000
4,640
2,849
Norway's International Climate and Forest Initiative
Germany's International Climate Initiative
GEF Trust Fund (GEF 5)
GEF Trust Fund (GEF 4)
Least Developed Countries Fund (LDCF)
Pilot Program for Climate Resilience (PPCR)
Global Climate Change Alliance (GCCA)
1,608
1,082
1,077
754
540
525
385
Scaling Up Renewable Energy Program (SREP)
Special Climate Change Fund (SCCF)
277
259
Australia's International Forest Carbon Initiative
Forest Investment Program (FIP)
216
206
Forest Carbon Partnership Facility - Readiness Fund (FCPF-RF)
180
Global Energy Efficiency and Renewable Energy Fund (GEEREF)
Adaptation Fund (AF)
170
136
Forest Carbon Partnership Facility - Carbon Fund (FCPF-CF)
MDG Achievement Fund
Amazon Fund
UN-REDD
122
90
33
27
Indonesia Climate Change Trust Fund (ICCTF)
Green Climate Fund (GCF)
21
6
Total:
$30,201
Millions of $. Cumulative since 2003. Pledged donations.
Fund to Fund Transfers Excluded. Data from http://www.climatefundsupdate.org/global-trends/size-spending
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From Macro to Micro:
Why the transition to a “Green Economy”
needs evolution to “Corporation 2020”
U.S. Gross Value Added
7.1%
5.5%
12.5%
74.9%
Private Business
Households
Nonprofit institutions
serving households
Government
Total = GDP (US$14,526.5 billion)
2010 data. Source: U.S. Bureau of Economic Analysis
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Micro-Policy Reforms
to Make Business Deliver
a Green Economy
Limiting Leverage : Introducing rules & limits to
govern financial leverage
Accountable Advertising : Making advertising
responsible & accountable via norms & standards
Resource Taxation : Taxing the “bads” more &
taxing the “goods” less
Disclosing Externalities : Measuring & disclosing
all major corporate externalities (+ve & -ve)
Read more at: www.corp2020.com
Source: “Why Corporation 2020?”, Island Press, 2012
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Thank You !
Pavan Sukhdev
www.Corp2020.com
Founder & Author, Corporation 2020
Study Leader, TEEB
UNEP Goodwill Ambassador