The other cost of climate change

Most of the argument about climate change, apart from whether it is really happening or whether humans are causing it, is about how to stop or slow it. But there is another costly game in the interminable global negotiations: who pays the bill for adapting to the changes we are told are coming.

If the United Nations scientists are right, the world will have no choice but to adapt to different and variable weather, sea level rises and other impacts.

A rich country like ours can easily afford to adjust to rainfall pattern changes, bugs that like warmer climes and higher tides. Actually, the United Nations scientists say, the direct impact on New Zealand is expected to be relatively benign compared with almost all other countries. Lucky us.

Well, not quite. We taxpayers here will be expected to pay for other countries to adapt which are not so lucky and nowhere near as well off. That is especially so for the small island states in our part of the world. For around 100 countries worldwide adaptation is the dominant or only climate change focus.

Let’s generously assume that the global negotiators, who this past week have been in Barcelona en route down the “Bali road map” to Copenhagen in December, reach agreement sometime (next year, the year after or whenever) to constrain greenhouse gas (GHG) emissions enough to contain the warming to 2 degrees.

Rich-country analysts’ estimates of the cost of adaptation for the non-rich countries to a 2-degree warmer world range from $US50 billion to $US100 billion a year over the next 20 years. The “G77” (the 138 poorest and developing-economy countries) estimates $US200-400 billion.

The G77 says rich countries got rich by pumping out GHGs so the rich countries should pay the G77 countries’ adaptation costs. Depending how you do the sums, New Zealand’s share could start around $NZ225 million a year, equivalent to around a third of the current aid budget, and rise to $450 million by 2030. Bill English has not set aside a cent for that yet.

And that is in addition to any other costs, such as meeting Kyoto obligations and any new obligations under a post-2012 agreement and the cost of the emissions trading scheme and possible foreign taxes on our exports. It is also to be in addition to development aid.

The G77 says that is compensation for damage caused to them by guzzling rich countries.

Rich countries reject the compensation argument. They say they didn’t know when they were getting rich decades ago that what they were doing would eventually cause damage. Some talk of “insurance” but that, too, is a slippery concept.

Nevertheless, rich countries agreed in 1992 they had a obligation to help poorer countries deal with a phenomenon that transcends national borders. The argument is about how much the rich shall pay and how.

But who is rich? Singapore, now richer than New Zealand, was left out in 1992 because it was not (and is not) an OECD member. Should New Zealand pay for Singapore? Should Singapore foot some of the bill for the poorest and less-well-off countries? Singapore says no: it has only recently become rich.

How much rich countries pay will come down to haggling. How they will pay is complicated: at least four different mechanisms have been proposed, including one requiring compulsory contributions from rich countries and inviting voluntary contributions from the rest, notably China. Probably negotiators will settle for fixing an amount and leaving sourcing up to individual countries.

Next question: is this to be bundled up into a single fund, like the International Monetary Fund or World Bank? Is a new administrative agency needed or an existing one? Probably neither.

There are apparently about 20 adaptation funds of various sorts. Australia has one of $A150 million for Pacific states. A global adaptation fund dedicated to help least-developed countries is financed by a 2 per cent levy on clean development mechanisms (actions in poor countries paid for by rich countries to offset their GHG emissions).

But to draw on this global fund very poor countries have to produce action plans, which are very costly to do. So bureaucratic is the process that no actions in the 43 plans so far produced have yet been financed.

One reason for this roadblock is fear the recipient country will mismanage climate aid. In most poor countries corruption is rife and bureaucracies are incompetent. Should conditions be attached, including a measure of self-help? If so, will that mean some of the most needy and vulnerable people won’t get help?

You’ll be getting the drift. Not only will New Zealand be up for a fair-sized bill but it will have work to do in the Pacific where many states have limited governance and management capacity.

And if the sea really does rise as much as the United Nations scientists predict, where will the inhabitants of the lowest-lying islands go? Here, to join relatives.

Mitigation is optional. Adaptation is unavoidable. You’ll pay.