Christiana Sherman

Economic concerns are central to climate change negotiations. Many states are unwilling or unable to compromise short-term economic growth to reap the long-term benefits of climate change solutions. While the 1987 Montreal Protocol remains a demonstrated success, we are still waiting for broad climate change agreement.  A recent report by the Global Commission on the Economy and Climate, titled Better Growth, Better Climate, can potentially change some of the climate change conversation by re-framing the relationship between a healthier environment and economic growth.

Better Growth, Better Climate indicates that previous economic models estimated the significant short- and medium term costs of climate change mitigation based on a classic economic assumption: the market is perfectly efficient.  While this assumption is necessary for sophisticated and aggregated analysis, market failures do exist (such as income inequalities, monopolies, or insufficient production of a good) which decreases economic productivity. Market failures can also mean that greenhouse gas emissions are higher than they would be in more efficient markets. The report argues that by working in these areas of inefficiency, we can simultaneously address climate change and stimulate economic growth. The report outlines opportunities in the following areas: 

Cities: Cities are expected to account for 60% of global GDP growth between now and 2030, but current urban sprawl decreases cities’ efficiency and productivity, and increases per capita emissions. Specific report recommendations for improved urban development include:

  • Manage urban growth to encourage higher densities, mixed-use neighborhoods, walkable local environments, and the revitalization of urban centers and brownfield sites
  • Reform fuel subsidies and introduce new pricing mechanisms to reduce incentives to use fossil-fueled vehicles
  • Develop a global organization to promote best practices and assist countries and cities in their urban development

Land use: Deforestation, agriculture, and other land uses—crucial economic sectors in many developing countries—account for one-quarter of greenhouse gas emissions. Specific report recommendations to make land use more productive and efficient include:

  • Increase agricultural research and development for more productive and resilient crops
  • Phase out direct agricultural input subsidies and redirect that money toward social goods and support for low-income farmers
  • Restore forests and degraded agricultural land
  • Reduce the rate of post-harvest food loss by 50%

Energy: Energy production and use account for two-thirds of greenhouse gas emissions. With increasing energy demands, additional investments will be needed in energy regardless, so we should direct this investment toward cleaner and more flexible energy systems. Specific report recommendations for a more robust energy infrastructure include:

  • Phase out fossil fuel subsidies, and redirect that money toward new energy industries and toward supporting fossil-fuel workers as they transition to new industries.
  • Increase public investment in renewable and other low-carbon energy, and adapt energy systems to fully integrate these sources

Some of the Better Growth, Better Climate recommendations reduce greenhouse gases as an added bonus to economic growth, while others are simply cost-effective ways to decrease emissions. Following all of the Commission’s recommendations could only require an additional US$4.1 trillion through 2030 over the US$89 trillion already required for the infrastructure development needed to accommodate population growth.

While this report is by no means exhaustive and is unlikely to be universally accepted in its entirety, it re-frames a significant portion of the climate change conversation by no longer treating climate change and economic growth as two separate initiatives unable to succeed simultaneously. This could be a small but significant step toward more progressive climate change negotiations; perhaps world leaders can soon experience climate change success similar to the results of the Montreal Protocol.