Combined impact of Covid-19 & climate change on poverty
Extreme poverty has been defined as household income of 1.9 US dollars a day. Researchers at Potsdam Institute for Climate Impact research found that the world was likely to have around 350 million people living in extreme poverty by 2030 .This is far short of the UN goal to eradicate extreme poverty by the end of the decade. This figure did not take in to account the economic disruption caused by the pandemic, or the adverse effects of climate change. According to a recent report of World Bank, under the worst case scenario, climate change will be responsible for about 132 million people being pushed into extreme poverty by 2030. The assessment was done to explore the combined effect of economic development as well as changing climate.
There is an increase in food prices as well as increase in diseases due to climate change. Diseases increased by climate change will push up to 44 million people into extreme poverty. Health impacts are important in richer countries while food prices have greater influence in poorer countries. Health shocks and disasters are expected to push people into poverty even if their incomes are high without climate change impacts.
Besides climate change, since December 2019, the world is facing the economic devastation caused by pandemic Covid-19. The pandemic is likely to push an estimated 88 million to 115 million people into extreme poverty this year, with the total rising to about 150 million by 2021.Global extreme poverty is expected to rise in 2020 and 2021 for the first time in over 20 years as the disruption of the Covid-19 pandemic compounds the forces of conflict and climate change, which were already slowing poverty reduction process. The Covid-19 crisis has also diminished shared prosperity – defined as the growth in the income of the poorest 40 percent of a country’s population. Average global shared prosperity is estimated to stagnate or even contract over 2019-2021 due to the reduced growth in average incomes.
The deceleration in economic activity intensified by the pandemic is likely to hit the poorest people especially hard, and this could lead to even lower shared prosperity indicators in coming years. The prospect of less inclusive growth is a clear reversal from previous trends. Average global shared prosperity (growth in the incomes of the bottom 40 percent) was 2.3 percent for 2012-2017. This suggests that without policy actions, the Covid-19 crisis may trigger cycles of higher income inequality and lower social mobility among the vulnerable. The convergence of the Covid-19 pandemic with the pressures of climate change will put the goal of ending poverty by 2030 beyond reach without swift, significant and substantial policy action. There is a need to fight on these two fronts simultaneously.
There are three key drivers of poverty all over the world. The first is availability of food and its prices. The second is non-access to health care, health shocks and prevalence of diseases. The third is natural disasters like floods, droughts, cyclones and other extreme weather events. While weather forecasts and early warning systems can reduce the impact of extreme weather events to some extent, the losses to homes and livelihoods caused by natural disasters are very large and often irreparable. Social protection measures help people to rebuild their lives to some extent but not everywhere we have such measures. When food prices increase, poor people living near poverty line have to spend a larger share of their income on food. Increase in food prices also reduces their real consumption. This happens also to poor people in the richer countries. The world’s poorest people are paying the highest price of climate change. The people in Malawi spend about 63% of their income on food and beverages due to the increases in food prices caused by climate change. It is estimated that about 25 percent of the Malawian population lives in extreme poverty. On the other hand, in Brazil, households spend only 23 percent of their income on food. In places like Brazil, health shocks are the main reason why people may fall into poverty because of climate change. Severe health issues, many of which may arise from environmental pollution, can put people in poverty.
Poverty impacts of climate change may increase after 2030 until climate policies succeed in reducing global carbon emissions to zero so that climate change can be stabilized. World Bank study shows that the impact of climate change on poverty can be halved if we stay on course with the Sustainable Development Goals adopted by all United Nations Member States in 2015. Climate policies safeguard people from climate change impacts like extreme weather risks or crop failure. Yet they can also imply increased energy and food prices. This could result in an additional burden especially on the global poor, who are already more vulnerable to climate impacts.
Food security is the priority action in the poorest regions. Ensuring agricultural production is essential to cope with climate change. But improving global food security also requires ensuring that food goes where it is needed. Rapid and inclusive development is needed to reduce the climate change impacts on poverty. There is a need to provide all individuals, especially the poorest with the capacity and resources to adapt to them. The researchers found that Governments could combine emissions prices with international redistribution of the revenues they generated – a kind of climate dividend. The revenues are returned equally to all citizens, which turns poorer households with typically low emissions into net beneficiaries. It has been suggested to launch a scheme of international climate finance transfers from high-income to low-income countries to offset the additional burden poorer nations face in seeking to limit climate change. Just 5 percent of emission pricing revenues from industrialized nations would be enough to more than compensate for the policy side effects of climate mitigation in Sub-Saharan Africa.
A collective action by all countries is called for to ensure years of progress in poverty reduction are not erased. Efforts to confront poverty caused by Covid-19 also face threats from climate change that disproportionately impact the world’s poor at the same time. Combining the national redistribution of emission pricing revenues with international financial transfers could provide an important initial step towards a fair and just climate policy in developing countries. It is not yet clear how long the devastation caused by Covid-19 will continue, but its larger impact on the poorest needs global and national policies of health care, food security, economic development and climate change with a great urgency.