Driving commercial and political engagement between Asia, the Middle East and Europe
Driving commercial and political engagement between Asia, the Middle East and Europe
Driving commercial and political engagement between Asia, the Middle East and Europe
Writing for Asia House, Woochong Um, Managing Director General of the Asian Development Bank, calls for a smart science approach to climate change.
The IPCC’s climate report, Assessment Report 6, makes it abundantly clear that we are in a global emergency. And the report is unequivocal that the emergency is human-induced; caused by the unsustainable use of our natural capital and associated support systems.
Without an urgent, effective, and sustained global response, the climate emergency is likely to be even more perilous to our economic wellbeing, and to our planet’s health, than the ongoing COVID-19 pandemic.
Given these serious challenges, the Asia-Pacific region has a key role to play in mitigating the worst impacts of the triple-crises—the pandemic, a warming planet, and biodiversity loss—in helping us to move toward a more sustainable and prosperous future.
This calls for smart science and knowledge-based collective action across institutions and geographies.
Even before the pandemic, the region was home to more than 400 million of the world’s 767 million poor. ADB estimated in 2021 that the pandemic could push an additional 75 to 80 million into extreme poverty. Increased health costs as a result of COVID-19 as well as livelihood, income, and revenue losses have already depleted household savings and government budgets.
Continued livelihood and economic distress take both a mental and physical health toll, particularly on socio-economically disadvantaged and vulnerable populations. If left unaddressed, a weakened workforce can stall, or even reverse, the impressive progress the region has made in reducing hunger and poverty. It could also reverse the progress made on protecting global forest and marine biodiversity. Stressed budgets leave little room for households or governments to make the natural, social, and physical capital investments necessary for a timely, and climate resilient, economic recovery.
In Asia-Pacific, the global economy, and climate emergency, and biodiversity loss are inextricably linked. Today the region has half of the global population, but only 40 per cent of gross domestic product (GDP); by 2050 it is expected that this ratio will balance out, with Asia-Pacific accounting for half of global GDP. In the recent past, the region has played an indispensable role in mitigating the adverse impacts of global financial crises. For example, from 1999 to 2010, the region maintained an average growth rate of 7.6 per cent compared to the global average of 3.4 per cent. However, the anticipated climate change impacts are likely to disproportionately affect the region’s economic growth, as Asia accounts for more than two thirds of the global GDP at risk from climate change, according to a study published by McKinsey in 2020.
Climate change mitigation opportunities need to be taken up immediately in the region. In 2021, the region accounted for about 45 per cent of global greenhouse gases (GHGs) produced, up from 25 per cent 30 years ago. Without a significant and speedy reduction in GHGs in the region, it will be impossible to mitigate climate change and biodiversity loss globally. An important part of this opportunity lies in infrastructure (buildings, energy, transportation), while other key areas include land-sea-ocean-use and agriculture and food systems.
Asia-Pacific is one of the most biodiverse regions in the world, home to 17 of the 36 global biodiversity hotspots, seven of the 17 megadiverse countries, and the greatest marine diversity globally. These natural capital assets, restored and well-managed, can make cost-effective and impactful contributions to mitigating global climate change as well as biodiversity loss.
Our economies and livelihoods are built on natural capital that remains undervalued. Using its rich natural capital, over the last six decades the Asia-Pacific region has transformed itself from a region of food shortages to one producing a surplus. Without this success on the food security front, the region’s economic growth and poverty reduction would be unachievable.
In 2020, the World Economic Forum’s Global Risks Report noted that about $44 trillion of global economic output—more than half of total global GDP—is dependent on natural capital and associated ecosystem services. The Dasgupta 2021 Review on the Economics of Diversity pointed out that between 1992 and 2014 produced capital (such as manufactured goods) doubled per capita while natural capital declined 40 per cent per person, an unsustainable drawdown and use of natural capital. These natural capital-driven economic gains and losses are not reflected in official budgets and accounting systems. Consequently, the contribution of nature remains unrecognised and undervalued, leading to insufficient public and private sector investment in the protection, restoration, and management of natural capital. Once recognised and addressed, this downward spiral of undervaluation, underinvestment, and loss of natural capital can be stopped and reversed.
“These investments could globally mitigate over 70 per cent of delayed extinction,
what conservationists call ‘extinction debt’”
Rural areas have substantial climate change, biodiversity and income loss mitigation potential. For millions of households and migrant workers, the agricultural and natural resource sectors provided a safety net for families in the face of loss of livelihoods. We have an opportunity to build on this experience and momentum. For example, economic slowdown and reverse migration due to COVID-19 has resulted in substantial increases of semi-skilled workforce in rural areas. This creates opportunities for engaging them in cost-effective natural capital and ecosystem restoration efforts. Strategically located, these investments have a great potential to conserve species and mitigate carbon dioxide emissions. Some estimates suggest that these investments could globally mitigate over 70 per cent of delayed extinction, what conservationists call ‘extinction debt’ while sequestering over 49 per cent of carbon dioxide emitted since the beginning of the modern industrial era.
Similarly, improvements to the region’s and world’s protected area systems could provide ecosystem services that, among other critical considerations, are seen as providing positive health benefits (both mental and physical) that are estimated at providing US$6 trillion annually, far exceeding pre-COVID-19 tourism revenues.
The Global Commission on the Economy and Climate estimates that countries taking strong actions between 2018 and 2030 could, by 2030, generate more than 65 million new low-carbon jobs, and deliver at least US$26 trillion in net global economic benefits as well as prevent 700,000 premature deaths and other serious health problems tied to air pollution. A win-win-win solution to the triple-crises is not out of reach, but it requires increasing our knowledge capital to underpin our economic development and investment planning.
The enablers are transformative institutions and partnerships. Communities, markets, government agencies, businesses, and civil society are all central to addressing the triple-crises of the pandemic, climate change, and biodiversity loss. However, synergestic solutions will require working across sectors and jurisdictions, which historically within an organisation and national boundaries has been difficult. It is more so with respect to biodiversity conservation and climate change investment. The ubiquitous use of digital technologies during the COVID-19 pandemic offers useful lessons on how these technologies can help overcome these historical problems of policy and institutional fragmentation, coordination, and weak capacities in a cost-effective and timely manner.
Timely data, knowledge, and know-how sharing are key to any transformational change. To get the best possible results, the availability of, and accessibility to, user- friendly data, information and knowledge are critically important. This holds particularly true regarding climate change and biodiversity conservation. Science and evidence-based policy and investment design and delivery provides the only option to avoid unintended consequences, not only for natural ecosystems but also for people’s lives and livelihoods depending on them.
Recognising this need, ADB is in the process of establishing a Natural Capital Lab as a digital and virtual regional platform. This lab will enable ADB to support the region’s communities, governments, civil society, businesses, and investors in mapping, measuring, and quantifying natural capital benefits and risks. It will support governments in incorporating natural capital into their national accounting systems; further, it will enable the design and delivery of climate-smart nature-positive solutions and investments of the needed size and speed.
We believe knowledge-led development and investment planning is impactful in mitigating climate change, addressing biodiversity loss and supporting livelihoods. Moreover, the proposed Natural Capital Lab will also support our developing member countries in aligning nature, climate and livelihoods while charting a fair and equitable path to net-zero. ADB will play its part in this process. By 2030, 75 per cent of the total number of ADB’s operations will support climate action, while climate finance from ADB’s own resources will reach US$100 billion cumulatively by 2030.
The world will not be able to make the transition to a green economy and future without Asia-Pacific playing a central part. It is imperative that there is effective cooperation and collaboration in reducing the region’s climate, environmental, and economic risks and vulnerabilities. This requires aligning policy, technological, and financial initiatives and actions for the common good. We all will have our part to play in moving toward a greener economy and future at this historically critical time.
Woochong Um is Managing Director General of the Asian Development Bank.
