The poorest countries will bear the worst effects of climate change and the highest costs in terms of economic production and higher mortality, according to Nobel laureate Esther Duflo.
The 2019 Economics Nobel Laureate and professor of economics at the Massachusetts Institute of Technology (MIT) delivered the keynote at the African Development Bank’s (AfDB) 2021 Kofi Annan Eminent Speaker Lecture Series.
In her address titled Good Economics for Warmer Times – how to address our climate change challenge, Duflo said the imbalance between wealthy and poor countries followed the “10-50 rule” – “Ten per cent of the highest polluters are responsible for about 50% of global emissions, and 50% of the bottom emitters are responsible for 13% of global emissions. She attributed the disparity in part to the reluctance of wealthy countries to forcefully commit to tackling climate change.
The Nobel laureate said the International Monetary Fund (IMF) had made an estimate of $50 billion as the cost package for Covax to help most of the countries of the world vaccinate up to 60% of their population within two years. The estimated potential benefit, she said, was $9 trillion, which she added was an obvious win-win.
She said global efforts to tackle the COVID-19 pandemic had dampened her optimism about the global responses to climate change, urging immediate action but warning that the world cannot rely on innovation alone. “The impact of purely technological solutions is often very disappointing in real life,” she stressed.
Combating climate change necessitates a change in behaviour
According to Duflo, globally combating climate change will require changes in behaviour and consumption patterns. She noted that economists underestimate the capacity of humans to change behaviours, and that shifts in consumption would need to be made primarily in industrialised countries. “I don’t think we can tell Africans with a straight face that they need to consume less when they, in fact, need to consume more,” she said.
AfDB Acting Chief Economist and Vice President Kevin C. Urama said the topic could not be timelier, coming right after the COP26 global climate conference in Glasgow last month.
Duflo’s lecture was followed by a conversation with AfDB President Dr Akinwumi Adesina, who praised her pragmatic economic research and the insights she provided.
He said Duflo’s remarks underscored the need to change the way we measure wealth creation. “GDP tells us very little about how wealth is produced,” Adesina said. “I have been a big advocate of the need to weigh the GDP of countries by the extent of negative externalities they create.”
Adesina engaged in an extensive discussion with Duflo about the importance of accurate carbon pricing as an incentive to developing nations. He proposed the establishment of a long-term carbon sink fund to compensate countries like Gabon and the Democratic Republic of Congo for preserving vast forests that sequester carbon dioxide. He noted that the debt-to-GDP ratios of such countries would substantively be lower if their forests were taken into consideration.
Duflo said there was a crisis of credibility and trust for governments whose actions were not aligned with their commitments and that change would require a global enforcement of regulations. According to Duflo, “Nature is stronger than us and dire warnings do come to pass.” Hence the need for collective action.
Watch the highlights of Esther Duflo’s Good Economics for Warmer Times – how to address our climate change challenge presentation.
Professor Esther Duflo is the Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics in the Department of Economics at MIT and a co-founder and co-director of the Abdul Latif Jameel Poverty Action Lab.