Global Warming or Warning.

A couple of weeks ago, the IPCC released its evaluation of the risks and benefits associated with climate change. The report received scanty mention in the press even though "human interference with the climate system is occurring and climate change poses risks for human and natural systems". The report is not the most readable of documents, though it does contain some fascinating graphs and tables, so I have taken it upon myself to extract some of the key points, specially for African and other developing countries. Apologies for the length but it's difficult to know what else to leave out!

For most economic sectors, the impacts of drivers such as changes in population, age structure, income, technology, relative prices, lifestyle, regulation, and governance are projected to be large relative to the impacts of climate change. Climate change is projected to reduce energy demand for heating and increase energy demand for cooling in the residential and commercial sectors. Climate change is projected to affect energy sources and technologies differently, depending on resources (e.g., water flow, wind, insolation), technological processes (e.g., cooling), or locations (e.g., coastal regions, floodplains) involved.

Impacts from recent climate-related extremes, such as heat waves, droughts, floods, cyclones, and wildfires, reveal significant vulnerability and exposure of some ecosystems and many human systems to current climate variability. Impacts include alteration of ecosystems, disruption of food production and water supply, damage to infrastructure and settlements, morbidity and mortality, and consequences for mental health and human well-being. Climate-related hazards affect poor people’s lives directly through impacts on livelihoods, reductions in crop yields, or destruction of homes and indirectly through, for example, increased food prices and food insecurity. Violent conflict increases vulnerability to climate change. For countries at all levels of development, these impacts are consistent with a significant lack of preparedness for current climate variability in some sectors.

Freshwater-related risks of climate change increase significantly with increasing greenhouse gas concentrations. In many regions, changing precipitation or melting snow and ice are altering hydrological systems, affecting water resources in terms of quantity and quality. Glaciers continue to shrink almost worldwide due to climate change, affecting runoff and water resources downstream. The fraction of global population experiencing water scarcity and the fraction affected by major river floods will increase with the level of warming in the 21st century. Climate change is projected to reduce renewable surface water and groundwater resources significantly in most dry subtropical regions, intensifying competition for water among sectors. In presently dry regions, drought frequency will likely increase by the end of the 21st century; in contrast, water resources are projected to increase at high latitudes. Climate change is projected to reduce raw water quality and pose risks to drinki ng water quality even with conventional treatment, due to interacting factors: increased temperature; increased sediment, nutrient, and pollutant loadings from heavy rainfall; increased concentration of pollutants during droughts; and disruption of treatment facilities during floods.

Many terrestrial, freshwater, and marine species have shifted their geographic ranges, seasonal activities, migration patterns, abundances, and species interactions in response to ongoing climate change. While only a few recent species extinctions have been attributed as yet to climate change, natural global climate change at rates slower than current anthropogenic climate change caused significant ecosystem shifts and species extinctions during the past millions of years. A large fraction of both terrestrial and freshwater species faces increased extinction risk under projected climate change during and beyond the 21st century, especially as climate change interacts with other stressors, such as habitat modification, over-exploitation, pollution, and invasive species. Some species will adapt to new climates. Those that cannot adapt sufficiently fast will decrease in abundance or go extinct in part or all of their ranges.

Global marine-species redistribution and marine-biodiversity reduction in sensitive regions will challenge the sustained provision of fisheries productivity and other ecosystem services. Spatial shifts of marine species due to projected warming will cause high-latitude invasions and high local-extinction rates in the tropics and semi-enclosed seas. Species richness and fisheries catch potential are projected to increase, on average, at mid and high latitudes and decrease at tropical latitudes. The progressive expansion of oxygen minimum zones and anoxic “dead zones” is projected to further constrain fish habitat. Ocean acidification poses substantial risks to marine ecosystems, especially polar ecosystems and coral reefs.

Increased tree mortality and associated forest dieback is projected to occur in many regions, due to increased temperatures and drought. Forest dieback poses risks for carbon storage, biodiversity, wood production, water quality, amenity, and economic activity. Based on many studies covering a wide range of regions and crops, negative impacts of climate change on crop yields have been more common than positive impacts. The smaller number of studies showing positive impacts relate mainly to high latitude regions. Climate change has negatively affected wheat and maize yields for many regions and in the global aggregate. Effects on rice and soybean yield have been smaller in major production regions and globally. Several periods of rapid food and cereal price increases following climate extremes in key producing regions indicate a sensitivity of current markets to climate extremes among other factors.

At present the world-wide burden of human ill-health from climate change is relatively small compared with effects of other stressors and is not well quantified. However, there has been increased heat-related mortality and decreased cold-related mortality in some regions as a result of warming. Local changes in temperature and rainfall have altered the distribution of some water-borne illnesses and disease vectors. People who are socially, economically, culturally, politically, institutionally, or otherwise marginalized are especially vulnerable to climate change and also to some adaptation and mitigation responses. This heightened vulnerability is rarely due to a single cause. Until mid-century, projected climate change will impact human health mainly by exacerbating health problems that already exist. Climate change is expected to lead to increases in ill-health in many regions and especially in developing countries with low income, as compared to a baseline without climate chang e. The combination of high temperature and humidity in some areas for parts of the year is projected to compromise normal human activities, including growing food or working outdoors.

Many global risks of climate change are concentrated in urban areas. Heat stress, extreme precipitation, inland and coastal flooding, landslides, air pollution, drought, and water scarcity pose risks in urban areas for people, assets, economies, and ecosystems. Risks are amplified for those lacking essential infrastructure and services or living in poor-quality housing and exposed areas. Major future rural impacts are expected in the near-term and beyond through impacts on water availability and supply, food security, and agricultural incomes, including shifts in production areas of food and non-food crops across the world. These impacts are expected to disproportionately affect the welfare of the poor in rural areas, such as female-headed households and those with limited access to land, modern agricultural inputs, infrastructure, and education.

Due to sea-level rise projected throughout the 21st century and beyond, coastal systems and low-lying areas will increasingly experience adverse impacts such as submergence, coastal flooding, and coastal erosion. The population and assets projected to be exposed to coastal risks as well as human pressures on coastal ecosystems will increase significantly in the coming decades due to population growth, economic development, and urbanization.

Climate change is projected to increase displacement of people. Displacement risk increases when populations that lack the resources for planned migration experience higher exposure to extreme weather events, in both rural and urban areas, particularly in developing countries with low income. Land inundation due to sea-level rise poses risks to the territorial integrity of small-island states and states with extensive coastlines. Some transboundary impacts of climate change, such as changes in sea ice, shared water resources, and pelagic fish stocks, have the potential to increase rivalry among states. Climate-change impacts are projected to slow down economic growth, make poverty reduction more difficult, further erode food security, and prolong existing and create new poverty traps. Climate-change impacts are expected to exacerbate poverty in most developing countries and create new poverty pockets in countries with increasing inequality, in both developed and developing countrie s. In urban and rural areas, wage-labor-dependent poor households that are net buyers of food are expected to be particularly affected due to food price increases, including in regions with high food insecurity and high inequality, although the agricultural self-employed could benefit.

The report makes some broad recommendations for governments but none that organisations or individuals can use to mitigate the risk. In Africa, most national governments are initiating governance systems for adaptation. Disaster risk management, adjustments in technologies and infrastructure, ecosystem-based approaches, basic public health measures, and livelihood diversification are reducing vulnerability, although efforts to date tend to be isolated.

Growth in Africa (finally) but not enough.

At first glance, one of the first thing that jumps to anyone, is that even after more than a half a century or more of independence, the legacy of colonization is still very much present. The striking development in the former British colonies versus the Francophones ones (Belgium & France). One enjoys a strong, real nascent middle class rise with all of it's benefits, while the later, struggles in the 21st century to provide for it's populace basic needs such as electricity, waste management services and proper healthcare.

 At the macro level, economic growth in Africa has not been inclusive enough, the World Bank has warned in an unprecedented assessment of the limited progress brought by the overall GDP increase. Growth, which has been encouraging in most parts of Africa and even spectacular in a few cases, is expected to be close to 5% on average this year, and even more in 2014 and 2015.

Francisco Ferreira, acting chief economist for the Africa region, said GDP per capita growth over the past 10 years - 1.8% on average - had been "below the developing countries average".Nearly half of the African population was living below the poverty line in 2010, which was an improvement from the 58% that were registered by the World Bank in 1999, but the pace of reduction is "unacceptably low" and inequality "unacceptably high", he told Emerging Markets.

Progress towards reducing inequality in Africa has been slower than elsewhere. On average in the developing world, one percentage point of GDP growth reduces the incidence of poverty by 2%. In sub-Saharan Africa that number is 0.7%. That's simply too low.

 A few nations have made some good progress, that needs to be acknowledge and encourage. However, much still needs to be done. I do hope that the return of the diaspora will bring the kind of progress the continent needs.

Economic Policies for a Globalized World

Economic Policies for a Globalized World

What should policymakers, especially African policymakers, do to reap the benefits of economic globalization? I could now embark on an IMF list, including sound macroeconomic policies, better governance, legal and financial reform, privatization, price liberalization and infrastructure investment.

Let’s talk briefly about two priorities: trade liberalization and effective social spending. First, trade liberalization, which helps open economies up to competition and deepens their integration into the world economy. Sub-Saharan Africa is less open to international trade than other developing regions. Several studies have shown that liberalization should improve the region's trade performance significantly and thereby spur the growth of productivity and incomes.

Some African countries have made major progress in liberalizing trade over the past several years. For example, in recent years there has been important progress in adopting a common trade policy and a relatively open customs union in CEMAC. This will contribute not only to trade liberalization within the region but also to a considerable reduction and simplification of the region's external tariff structure. Such progress could now be strengthened and extended to other parts of sub-Saharan Africa - and the recent decisions in ECOWAS, as well as the revival of the East African trade bloc are also promising. Given the number of overlapping trade blocs in Africa, rationalization of their structure would be desirable. In light of the small size of many African economies, the impulse to regional integration is extremely important - but regional integration will help increase long-term growth only where it is truly trade increasing and not an attempt to erect new protectionist

Progress on trade liberalization in Africa should be matched by the opening of advanced country markets to the exports of African producers. In particular, the advanced economies should lower the effective protection on goods of interest to sub-Saharan African countries, such as clothing, fish, processed foods, leather products, and agricultural products more generally.

Second, let’s talk about the importance of effective social spending. Globalization delivers its economic benefits in part by promoting change, the rise and fall of different industries and economic activities. The process is not a painless one. Economists talk in the abstract about labor moving from low productivity to high productivity uses. But it is individuals and families who have to do the moving. If they feel threatened and unable to cope with the process of change, they will resist it and the economic benefits will be lost.

The answer is to invest in the human capital of the poor - increasing their access to health, education and economic opportunity - as well as to provide a cushion during the process of adjustment, in the form of efficient social safety nets. The IMF in partnership with the World Bank Have taken the problem into account and increase their effort via the poor countries debt relief programs. One result is that when poor countries need to get their budgetary house in order to ensure the sustainability of the growth on which long-term poverty reduction depends, there is indeed a very serious need to protect productive social spending from budget cuts.

In fact, among the low-income countries that have received IMF support since 1985, per capita spending on both health and education has risen by more than 4 per cent a year on average. But this masks big variations by country and for much of that period gains in education spending in Africa were much smaller.

In this globalizing, rapidly changing world economy, investment in education takes on special significance. The new technologies are knowledge and skill intensive, and there is a need to train people to work with those technologies. But the training cannot be too narrow, for adaptability to change is another key to success in the modern world. The generation gap in dealing with computers is obvious to every parent, and the benefits of starting where possible with young schoolchildren are obvious. Of course, this requires money, and here there is a special role for donors.

The HIV/AIDS pandemic is exacting a heavy toll in human lives. It is not only a humanitarian tragedy on an extraordinary scale, but it is also a potentially massive economic disaster for the continent. All the more reason, then, to seek to reduce the incidence of HIV/AIDS through public health policies that have worked in several African countries, including Uganda.

International Institutions

The IMF, the World Bank, and the GATT and WTO, were set up as part of an implicit bargain: that countries that elected to play by the rules of the international system, would be helped both by the basic pro-growth design of the system, and by loans and other assistance when in special need. That is one of the reasons why the former IMF's Managing Director, Horst Köhler, reaffirmed the role of the IMF in its poorest member countries through the PRGF shortly after he took office last May.

The issue of the representation of developing countries in the international institutions has been raised. With regard to the IMF, let’s note first that, given that the Executive Board prefers to work by consensus, the quality of the representation and the number of voices, as well as the share of votes, are important. With regard to the quality of African representation, the Executive Directors from sub-Saharan Africa are first-rate representatives of their constituencies. However, their constituencies have many members, and consideration could be given to providing each of them with extra resources to deal with the exceptionally heavy workload.

Conclusions

Let me conclude by reiterating that promoting growth and reducing poverty are best achieved by embracing the global economy, improving policies and strengthening institutions. This will be a difficult task, but one that can be accomplished, provided that policymakers in Africa and the international community alike are ready to do their part.

But some ask whether Africa is different. Pessimists claim that the continent is predestined to endure low growth, in part because it is tropical and suffers from systemic diseases such as malaria; because the quality of its soil is poor; and because many of its countries are landlocked.

I most certainly do not share this pessimism. The success of countries around the world that have managed to make serious inroads into poverty - in Asia and elsewhere - suggests that others, including African countries, can do likewise. Indeed, some countries in Africa have already shown that it is possible to sustain rapid growth, notwithstanding seemingly unfavorable conditions. In recent years, we have seen more and more countries adopt prudent, market-based economic policies, seeking integration into the world economy, and thus conducive to growth and poverty reduction - many of them with IMF and World Bank advice and support. This strategy is beginning to show encouraging results. There are useful lessons here for the beneficiaries of the HIPC initiative. Twenty-two countries - 18 of them in Sub-Saharan Africa - are already at the point at which they are beginning to receive debt relief under the initiative. On average it is reducing their debt service obligations by half. It is essential that these resources be used effectively for poverty reduction, both for its own sake, but also because waste will play into the hands of those who argue that aid flows are squandered and should be reduced.

Population Growth Challenges

The population of the world continues to grow, as does the average standard of living, increasing demand for food, water, energy and waste disposal and placing increasing pressure on the environment. The population of the world doubled from 3.2 billion in 1962 to 6.4 billion in 2005 and is forecast to grow to 9.2 billion in 2050. Fertility rates are dropping in developed countries, while migration could lead to significant changes in population compositions. In most countries life expectancy is increasing, leading to larger populations of retirees who require pension and health benefits to last longer. Relentless productivity improvements are causing rising unemployment. All these are placing pressure on private and state social security systems. As a result, national budget deficits are likely to worsen and could lead to default as politicians fail to face up to proper funding of future liabilities for fear of electoral defeat or even social unrest.

The health care sector is also under pressure to provide more cost-effective solutions. With 80% of deaths from cancer, heart disease and other chronic diseases now taking place in low and middle income countries, demand for low cost medicines in developing countries is leading to conflicts with first world pharmaceutical companies determined to protect their intellectual property. While the world's workforce is growing apace, education systems are failing to provide enough skilled professionals, artisans and managers to meet demand, particularly for the mining, energy, construction and education sectors. Paradoxically, at the same time unemployment levels are rising, specially amongst the youth, as technology drives productivity gains. This situation is likely to worsen as an ever-shrinking proportion of the world's population is able to provide the goods and services required by all. The income gap between the wealthy, on the one hand, and, on the other, average workers and the unemployed poor, continues to grow, another potential source of social conflict. The lot of women, in servitude to ignorant men in many parts of the world, continues to look bleak.

Though food supplies have more than kept pace with rising population levels in the past, a combination of biofuels, rising standards of living and climate change, including floods and drought, are stressing agricultural production and leading to significant increases in food prices. With food already representing 10-20% of developed consumer spending but 65% of developing nation consumer spending, this impacts most on the world's poor. Applying modern agrobusiness methods in Africa and Asia will drive subsistence farmers off the land. According to the UNDP, 40% of the world's population will suffer water shortages by 2050. Scientists forecast that there could be no commercial fishing by 2048 as present levels of fishing would cause stocks to decline to less than 10% of maximum catches recorded.

Fuelled by demand from China, the mining industry has grown worldwide. Supplies of oil, gas, coal and uranium are forecast to peak as reserves are depleted, though technology to access shale gas and oil has deferred that peak. At the same time, fear of climate change is putting pressure on the energy sector to move away from carbon burning to solar and other environmentally friendly energy sources. The future of nuclear energy is uncertain after the Japanese disaster. The combined pressures of environmental regulation and higher energy costs will lead to the relocation of energy-intensive, polluting industries, such as smelting and pulp and paper production, to developing nations with fewer safeguards.

Experts, in the face of aggressive disinformation campaigns by sceptics, warn that world temperatures could rise significantly during the 21st century, leading to climate changes everywhere, unless governments, companies and individuals take corrective action soon, something not likely after the dismal Doha meeting in November 2012 even though recent research shows global warming accelerating. Australia, for instance, is experiencing record high temperatures yet persists in exporting coal and natural gas, while depending largely on coal fired power stations. There is disagreement between developed nations, with a history of pollution, and developing nations, industrialising to improve standards of living, on the appropriate action to take. The transport industry is the one most likely to be impacted by the combination of rising standards of living in the developing world, specially China and India; increased prices of hydrocarbon fuels; and efforts to mitigate global warming. There will be a move to more hydrocarbon-efficient vehicles. Transport infrastructure will have difficulty coping with forecast increases in traffic.

The global economy continues to grow with Asian countries leading the way with export led manufacturing and services industries. However, this growth is dependent on buoyant consumer markets in Europe and North America. While many countries of the world continue to report regular GDP growth, the growth itself is uneven within countries with the rich growing richer and the poor poorer. As the average standard of living in booming economies rises, so too does the number of poor people around the world, many of them moving from the countryside to unemployment in the city slums as part of a search for a better lifestyle. Globalisation now comprehends the movement not just of physical goods, but also services, finance, people, information and ideas. As a result the world is becoming ever more interlinked putting pressure on global, national and local governance systems designed in a previous era by those with power and influence at the time and, as fiscal, trade and environmental agreements are negotiated, even now. At one and the same time, we are seeing the move to larger, and even global, groups covered by the same regulations as well as to the creation of smaller entities with niche interests. Corruption and crime, particularly drug and human trafficking, have become huge international money spinners.

Economic power is shifting from the governments and companies of the USA and EU to those of the energy rich countries of the Middle East and Russia, low cost Asian manufacturers and service providers and South American agribusiness. Asia now has nearly 60% of the world's population, accounts for more than 35% of world output and 26% of world trade and has contributed more than 50% of post 2000 world economic growth. Asian average per capita incomes are now 25% of those of the USA and rising though 20% still live in poverty. Although reports give the impression of a large scale move in manufacturing capacity from the G7 countries to Eastern Europe and the Far East, where wages are lower, the reality is that the move has been much more gradual and less spectacular. Companies domiciled in developing nations are increasingly buying companies in the developed world.

Military power could well follow the shifts in economic power. Tensions could be exacerbated as groups with different beliefs and ideologies battle to control scarce resources. Traditional warfare between national armies is increasingly being replaced by terrorist groups representing dissident groups and prepared to conduct suicide missions against civilian targets; drones and other weaponry that is more powerful and can be more closely targeted; and cyber-sabotage. The spread of nuclear weaponry continues to be a major risk.

Technology provides the best hope for solutions to challenges ranging from cheap medicines to food production and from greater global democracy to converting the heat of the sun to other forms of energy. Technology continues to play an important role in communication, entertainment and improving productivity. The rise of the Internet has made people data rich and information poor while convergence is leading to the merging of computers, cell-phones, hi-fi, TV and other electronic devices, as well as the blending of cable, wireless and satellite communication. Smart-phones have become the cake and circuses to distract the modern unemployed. The rise of outsourcing services in countries such as India and the Philippines is underpinned by improvements in the global telecommunications infrastructure. In the financial sector, technology is also allowing stock exchanges of the developed and developing worlds to merge and provide sophisticated trading products. A shift is taking place from traditional money managers to sovereign wealth funds managing the proceeds from huge trade surpluses, hedge funds and private equity groups, all of which are less transparent and relatively unregulated. In time, technology improvements will also lead to knowledge management jobs being replaced by artificial intelligence. The gainers will be the deployers of capital provided consumer markets don't shrink.

And Africa? In the short to medium term, the continent will be prized as a source of minerals, energy (oil, gas, uranium, coal, solar) and arable land rather than for its people. The challenge for its leaders will be to avoid corruption while making best use of the rent to educate a growing population and provide an infrastructure so they can produce competitive goods and services, if only for local consumption, in a world of high energy prices. As with cell-phones, there will be opportunities to use new technologies to leap-frog countries with a vested interest in obsolete technology, though in the medium term technology could lead to the rape of African resources with minimal local manpower involved. For Africa's people, the biggest drawback will be, it's reliance on a limited range of commodities and the extractive industries. Those industries are dead-end activities that only provide diminishing returns over time (primary agriculture and extractive activities such as mining, logging, and fisheries). These sectors are not generating the employment opportunities that would allow the majority of the population to share in the benefits. This is in marked contrast to the Asian experience, where the growth of labor-intensive manufacturing has helped lift millions of people out of poverty.

That's a thumbnail sketch of today's world and some of the intertwined factors we need to consider. What will the world be like in 2020 or even 2050? We don't know. All we can do is scan the mass of data coming our way and try to identify the signposts which might only hint at where we are all headed.