IMF tells rich nations that greater urgency needed on climate change

11 October 2017 | Markets

The International Monetary Fund has warned the world’s richest nations to have a greater sense of urgency about climate change, a day after the former Australian prime minister, Tony Abbott, delivered a bizarre speech to a London-based thinktank claiming climate change was “probably doing good”.

The IMF’s latest World Economic Outlook (WEO), released overnight, has dedicated an entire chapter to the impact of weather shocks and climate change on global economic activity.

It warns coping with climate change will be one of the “fundamental challenges” of the 21st century and it calls on the global community to mitigate greenhouse gas emissions before they create “more irreversible damage”, saying richer countries must help low-income economies adapt to rapidly increasing temperatures.

Directly contradicting one of Abbott’s arguments that Australia’s contribution to global emissions has been so small it is not worth restructuring its economy to change its energy use significantly, the IMF says nations with developed economies such as Australia – one of the highest per capita emitters in the world – have a responsibility to act.

“Advanced and emerging market economies have contributed the lion’s share to actual and projected climate change,” the report says. “Helping low-income developing countries cope with the consequences of climate change is both a humanitarian imperative and sound global economic policy that helps offset countries’ failure to fully internalise the costs of greenhouse gas emissions.

“Since the turn of the 20th century, the Earth’s average surface temperature has increased significantly. Sizeable swings in global temperatures used to happen over long periods, such as fluctuations in and out of the Ice Ages. However, the speed at which the climate has changed over the past 30-40 years appears to be unprecedented in the past 20,000 years.

“Climate change is a negative global externality of potentially catastrophic proportions and only collective action and multilateral cooperation can effectively address its causes and consequences.”

Overall, the IMF is estimating global output growth will increase from 3.2% in 2016 to 3.6% in 2017 and 3.7% in 2018, after upgrading its growth forecast by 0.1 percentage points for 2017 and 2018.

Maurice Obstfeld, the IMF’s economic counsellor, says the global cyclical upswing that began midway through 2016 is continuing to gather strength and is reaching more broadly than any upswing in a decade – roughly 75% of the world economy, measured by GDP at purchasing power parity, is sharing in the acceleration.

But he has cautioned the recovery may not be sustainable because growth in nominal and real wages remains weak compared with past recoveries, including in Australia.

“In particular, most advanced economies face medium-term growth rates significantly lower than in the decade before the global financial crisis of 2007–09,” he said.

Abbott warned this week, in a speech that was being politely ignored by some of his colleagues on Tuesday, that climate change itself was “probably doing good; or at least, more good than harm,” and measures to deal with climate change would damage Australia’s economy.

“In most countries, far more people die in cold snaps than in heatwaves, so a gradual lift in global temperatures, especially if it’s accompanied by more prosperity and more capacity to adapt to change, might even be beneficial,” he said.

The IMF warns specifically in its report that rising global temperatures could wreak havoc in parts of the world, particularly in hotter climates where people were too poor to migrate.

Obstfeld has called on the global community to exploit the current cyclical global upswing to pursue domestic and international reforms.

“Priorities for mutually beneficial cooperation include strengthening the global trading system, further improving financial regulation, enhancing the global financial safety net, reducing international tax avoidance, fighting famine and infectious diseases, mitigating greenhouse gas emissions before they create more irreversible damage, and helping poorer countries, which are not themselves substantial emitters, adapt to climate change,” he said.

“If the strength of the current upswing makes the moment ideal for domestic reforms, its breadth makes multilateral cooperation opportune. Policymakers should act while the window of opportunity is open.”



Source: The Guardian