Davos: $14 trillion needed is far less than cost of climate inaction

• January 28, 2013
World Economic Forum, Creative Commons: World Economic Forum, 2013

World Economic Forum, Creative Commons: World Economic Forum, 2013

At the 2013 conference of the World Economic Forum (WEF) the high-powered attendees sent promising signals on climate change, addressing the need for both climate solution and adaptation funding.  But shifting negative perceptions on the financial and political risks involved in these changes remains a significant hurdle to achieving critical mass of climate action.

The annual global conference of the WEF in Davos, Switzerland brings together top business, political, NGO, and civil society leaders to exchange ideas and address international issues.  The 2013 agenda featured more sessions on climate, resilience, food security, and natural resource management than in any previous year, about 15% of the overall program.

Just ahead the conference, a WEF commissioned study was released calling for $700 billion – $14 trillion total – to be invested annually for the next 20 years to green the global economy and slow climate change.  Given that Hurricane Sandy relief alone cost $50 billion, this funding is estimated to be less than the business-as-usual costs of coping with climate impacts.  However, the urgent call for this sum of investment was met with inconsistent responses from Davos attendees – while some discussed strategy to achieve this goal, others balked at making a large investment with uncertain risks.

Even with the environmentally focused agenda and the urgency of the financial study, climate change adaptation still ranked seventh on a survey of priorities for WEF attendees, less important than addressing the unstable global economy, Eurozone fragility, and financial system instability.

While it is not uncommon to see economic and environmental issues separated in this way, prominent economists and political leaders have repeatedly advised against ignoring their intersections.  Earlier this month, Nobel Prize winning economist Joseph Stiglitz warned of focusing on current financial crises at the cost of missing larger, long-term problems in the global economy – problems that are contributing to climate inaction.  World Bank President Jim Yong Kim published an op-ed coinciding with the high profile meeting, saying,

As economic leaders gathered in Davos this week for the World Economic Forum, much of the conversation was about finances. But climate change should also be at the top of our agendas, because global warming imperils all of the development gains we have made.

At Davos, however, the urgency of advice from the likes of Stiglitz and Kim was mediated by the more conservative approaches of many business leaders.  In the words of Dennis Nally, International Chairwoman of Pricewaterhouse Coopers:

Climate change is a long-term issue and it is not clear how it is going to play out or what the returns are going to be.  So CEOs have to measure how this investment stacks up vis a vis other opportunities that can generate clearer returns.

The conservative mindset of Nally and his counterparts, however, has not been left unaddressed.  The WEF’s Green Growth Action Alliance (G2A2) is a coalition of over 50 businesses and financial institutions working to accelerate both public and private investments in sustainability measures.  To reach the $700 billion annual investment goal outlined by the study, the G2A2 believes that government funding can be strategically used to lower the perceived risks of green investments and attract several times more in funding from the private sector.

To many, though, the halls of Davos may not hold the key to implementing the kinds of change needed to prevent catastrophic warming.  In a post ahead of his arrival at Davos, Kumi Naidoo, Executive Director of Greenpeace International, said:

What is needed is not system maintenance or system recovery but a substantial system redesign. Indeed, a small but growing number of CEOs are beginning to “get it”; however, the majority of CEOs must unshackle themselves from a business-as-usual mentality since the levels of popular disaffection we are seeing from the Arab world to the Occupy movement, will look like a Sunday morning picnic in years to come if business leaders do not recognize that time is fast running out.  At each WEF I carry the contradiction that many of the people whose views I respect and many of the people whose aspirations I seek to promote are the excluded, while others seek only to promote their own self-interest.

Greenpeace recently released a report identifying the 14 largest carbon projects in the world, including the governments and companies responsible for their advance despite the knowledge that over 75% of fossil fuel reserves cannot not be burned if 2 degrees of warming is to be avoided.  Naidoo encouraged activists and those excluded from the WEF to use twitter to give him their message to promote at Davos.

The 2013 WEF ended Sunday, January 27th.  See more about the highlights and conclusions of the conference at the WEF website.

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About the Author

Emily is a graduate of St. Mary's College of Maryland with a B.A. in psychology. While in school, she spent her time leading environmental and social justice campaigns. She recently worked for the Chesapeake Climate Action Network as a grassroots organizer for a moratorium on natural gas fracking in Maryland.

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