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Climate change affects the world’s poorest first and worst. Yet it is a problem the whole world shares that can only be addressed through international cooperation. CGD’s work on climate finance looks at economic incentives that benefit us all—by helping developing countries work together with other governments, institutions, and corporations to reduce emissions.
Every year, millions of Americans power up decorative lights to celebrate the holidays. These festive lights invoke the best human aspirations of peace, joy, and generosity.
This time of year, Americans should also celebrate that we can enjoy these traditions because we live in a country with a modern energy system that (almost always) delivers affordable 24/7 electricity.
The holiday spirit is also about remembering the less fortunate. That’s where the lights are doubly useful as a timely reminder of the massive gaps in global energy access. Here in the United States, we have plenty of power for holiday lights, but many countries don’t even have enough electricity for their basic needs. Indeed, some entire countries use less electricity per year than Americans do on holiday lights.
To be clear, we’re not suggesting people stop decorating their homes and Christmas trees. We’re not even calling on people to consume less electricity. In fact, precisely the opposite: billions of people live today in countries that lack the energy needed to create the jobs they need or even to support the everyday lifestyles that we now consider normal.
If every human being will one day have a refrigerator, a computer, and an air conditioner, we’re going to need a High Energy Planet. We shouldn’t try to squash these aspirations. Instead, let’s find a way to meet them. What could be more in the holiday spirit than that?
Note: This is an update to a blog post from 2015. The country figures are for 2015, taken from the Department of Energy’s Energy Information Administration (EIA). The US holiday light estimates are based on a 2008 EIA report, which we adjusted for efficiency gains from LED market penetration growth from 5 percent to an estimated 50 percent.
What will you remember about 2017? The growing crisis of displacement? The US pulling out of the Paris agreement and reinstating the global gag rule on family planning? Or that other countries reaffirmed their commitment to the Paris agreement, that Canada launched a feminist international assistance policy, that Saudi Arabia finally let women drive?
CGD experts have offered analysis and ideas all year, but now it's time to look forward.
What's going to happen in the world of development in 2018? Will we finally understand how to deal equitably with refugees and migrants? Or how technological progress can work for developing countries? Or what the impact of year two of the Trump Administration will be?
Today’s podcast, our final episode of 2017, raises these questions and many more as a multitude of CGD scholars share their insights and hopes for the year ahead. You can preview their responses in the video below.
Thanks for listening. Join us again next year for more episodes of the CGD Podcast.
India’s tax revenue distribution reform creates the world’s first ecological fiscal transfers (EFTs) for forest cover, and a potential model for other countries. In this paper we discuss the origin of India’s EFTs and their potential effects. In a simple preliminary analysis, we do not yet observe that the EFTs have increased forest cover across states, consistent with our hypothesis that one to two years of operation is too soon for the reform to have had an effect. This means there remains substantial scope for state governments to protect and restore forests as an investment in future state revenues.
This paper covers qualitative case studies from Iran, Nigeria, and India to illustrate a series of lessons for governments implementing subsidy reform policies. From these three country experiences, we find that fostering public support to implement lasting reform may depend on four measures: (1) forming a public engagement plan and a comprehensive reform policy that are then clearly communicated to the public in advance of price increases; (2) phasing in price adjustments over a period of time to ease absorption; (3) providing a targeted compensatory cash transfer to alleviate financial impacts on low- to middle-income households; and (4) capitalizing on favorable global macroeconomic conditions.
The World Bank now has three benchmarks for measuring poverty. The “headline” extreme poverty threshold of $1.90/day will stay, but two new international poverty lines were added for lower middle-income ($3.20/day) and upper middle-income ($5.50/day) countries. While it’s great that the World Bank is bringing a little more nuance to the way we define poverty, it's still a repackaging of Lant Pritchett’s kinky development.
Kinky energy is still a problem for international measures of energy access. The International Energy Agency (IEA), in their 2017 World Energy Outlook have maintained the definition for “modern energy access” at a consumption rate of just 100kwh per person per year in urban areas and just 50kwh for people living in rural households. The IEA reports global energy access progress on these figures. Yet this level of energy consumption is far from anything approaching “modern.” It’s about what’s required to charge a cell phone and power a few lights. And it’s farcical to declare success for crossing this low threshold.
The World Bank and SE4ALL's Multi-tier Framework has five levels and is far better, yet this is still misleading because “very high power” is set at 600 kWh per person per year. There are zerohigh-income countries in the world with consumption below five times this rate. The United States is more than 20 times higher.
In the 2016 report, More Than a Lightbulb by CGD’s Energy Access Targets Working Group, we proposed redefining modern energy access and called for three new thresholds that are more meaningful and better reflect energy as development progress: 100 kWh as an extreme energy poverty line, 300 kWh for basic access, and 1,500 kWh for modern energy access.
As with poverty lines, maybe it's finally time the international community revised energy targets too?
Germans have given Chancellor Angela Merkel a fourth term as chancellor, but once again without a parliamentary majority. It seems likely that Merkel will now try to negotiate a black-green-yellow “Jamaica coalition” (referring to the parties’ colors) with the Greens and the pro-business Liberals replacing the Social Democrats as coalition partners. Despite the gain in vote for nationalists, our analysis suggests the Jamaica coalition could actually strengthen Germany’s role in accelerating global development, as well as benefitting Germany.
In this blog, we look at the what the Jamaica coalition means using the framework of our Commitment to Development Index—which ranks rich countries on aid, migration, technology, environment, trade, finance, and security.
Germany’s starting point on Commitment to Development
Overall, Germany ranked fifth (out of 27 countries that we assess) and first on migration, largely because it has accepted so many refugees in recent years. We counted migrants as “1” when they came from the poorest country (Democratic Republic of Congo) and “0” when coming from the richest country (Norway). This method quantified that Germany lifted the equivalent of “880,000 poverty weighted migrants” out of extreme poverty last year! But a ratio of one new migrant for every 92 Germans, contributed to the rise of the far right nationalists (AfD) who have become the third largest party in parliament. Regardless of the election results, mounting public pressure will reduce migration. But a poll of economists thinks the Jamaica coalition is actually more migration-friendly than a continuation of the previous grand coalition would have been.
On aid, Germany met the international commitment of 0.7 percent of national income (GNI) on aid (overseas development assistance) for the first time in 2016. This included high expenditure on hosting refugees—but to maintain 0.7 when fewer refugees arrive, overseas development assistance would have to ramp up quickly.
On environmental policies, high emissions per capita mean Germany might not meet the Paris agreement commitment to reduce emissions by 40 percent by 2020. The global poor will suffer the consequences: climate change might push 100 million people back into poverty by 2030. This is partly due to Germany’s poor policy choices, like burning and subsidising fossil fuels. Both the Greens and Liberals want to phase out these subsidies.
On technology more widely, there has been an increase in overall R&D spending to 0.88 per cent of GDP, but this is still lower than in many other countries. Spending more to create new technologies like mobile phones or biometric IDs can transform development and is a perfect example of investing in global public goods. All major parties want to increase R&D spending to 3.5 per cent of GDP by 2025—a “Jamaica coalition” will not change anything significantly here but this is a positive direction for development.
Germany’s trade policies have a significant impact on developing countries. Free trade agreements such as the EU’s “everything but arms” initiative give poor countries tariff-free access and have the potential to dramatically reduce poverty. For instance, a recent natural experiment suggests trade deals such as these can lower infant mortality by about 9 per cent.
On security policy, Germany has been criticized by the US for failing to spend 2 per cent of GDP on defence. This figure includes spending on UN peacekeeping, for which Germany spends only 0.03 per cent of GDP—less than the OECD average, and this at a time when the UN peacekeeping budget is facing deep cuts. This is a matter of real concern because security and development are closely interlinked—for instance, one study suggests that civil wars decrease GDP per capita by 17.5 percent. Merkel’s conservatives want to double defence spending to reach 2 percent of GDP by 2024. The Liberals also want to increase defence spending, unlike the Greens, who want to specifically focus on increasing support for UN peacekeeping.
Overall then, taking the policy commitments of the Liberals and Greens and adding them to Merkel’s conservative bloc in a “Jamaica coalition” could bode well both for Germany, and development beyond aid.
The Climate Investment Funds (CIF) are a pair of multilateral trust funds that provide funding to 48 developing and middle income countries in support of low carbon and climate resilient development. The purpose of this paper is to assess “leverage” in projects that receive funding from the CIF. Evaluating leverage in CIF projects can contribute to understanding how limited public resources can be best used.