Climate change plan can generate $26 trillion for global economy
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Climate change plan can generate $26 trillion for global economy

GOVERNMENTS and corporations can generate an extra US$26 trillion to the world economy by 2030 if they undertake an ambitious plan on climate change, the Global Commission on the Economy and Climate said on Wednesday.

The think tank grouping of former government, economic and business leaders said the economic spillover from engaging in a low-carbon economy has been “grossly underestimated.”

“Bold action could yield a direct economic gain of US$26 trillion through to 2030 compared with business-as-usual. And this is likely to be a conservative estimate,” the commission said in its annual report.

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Over 65 million new low-carbon jobs can be created by 2030 and 700,000 premature deaths due to air pollution could be avoided if policymakers and corporations took on a dynamic action plan on global climate change.

“Seizing the economic benefits of low-carbon and resilient growth will only be possible if we act boldly over the next two to three years,” it said.

The commission also flagged the current situation as a “critical window” when current policy and investment decisions will shape climate change in the future.

Shifting priorities

The report highlighted five shifts that will drive the economic boost: the development of clean energy systems, improved urban planning, a shift towards more sustainable agriculture, smart water management, and decarbonising industry.

With smarter urban development, the commission said more compact, connected, and coordinated cities are worth up to US$17 trillion in economic savings by 2050 and will stimulate economic growth by improving access to jobs and housing.

“Better urban planning and strategic infrastructure investment, particularly the expansion of public and nonmotorised transport networks, can overcome bottlenecks to economic growth—such as congestion and air pollution—for more liveable cities,” the report said.

SEE ALSO: How Shenzhen became China’s most sustainable city 

Also, the shift to more sustainable forms of agriculture combined with strong forest protection could deliver over US$2 trillion per year of economic benefits and generate millions of jobs, mainly in the developing world.

Sustainable agriculture, it said, could also improve food security including by reducing food loss and waste.

“At the same time, restoration of natural capital, especially our forests, degraded lands, and coastal zones, will strengthen our defences and boost adaptation to climate impacts, from more extreme weather patterns to sea-level rise.”

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A Thai woman talks on her cell phone while wading through the flood waters in Bangkok on Nov 7, 2011. Source: AFP Photo/ SAEED KHAN

Despite the benefits, the study found that policymakers were “not taking sufficiently bold action to escape the legacy economic systems.”

It also warned that the window for change was narrow.

“We are at a unique ‘use it or lose it’ moment. Policymakers should take their foot off the brakes and send a clear signal that the new growth is here,” said the commission’s co-chair Ngozi Okonjo-Iweala, Nigeria’s former finance minister, as quoted by the AFP.

SEE ALSO: Combatting climate change could create 24 million jobs by 2030 

“There are real benefits to be seen in terms of new jobs, economic savings, competitiveness and market opportunities, and improved wellbeing for people worldwide.”

Bold action needed

Governments would have to take drastic measures to combat climate change, the study suggested, calling policymakers to put a price on carbon of at least US$40-80 per tonne by 2020 and to get major investors and companies to have a mandatory climate risk disclosure.

The report said both the public and private sector must also place greater emphasis on investment in sustainable infrastructure, with better-designed cities, buildings, transport, energy, and water systems.

Other investments included forests and wetlands that purify water and offer valuable flood control.

In order to do this, development bodies and financial institutions must also invest at least US$100 billion per year by 2020, doubling their collective investment in infrastructure, the report said.