The United Nations Conference on Trade and Development (UNCTAD) has published its Trade and Environment Review 2021This edition focuses on ways in which developing countries can improve the resilience of their trade to climate change through economic diversification and adaptation actions.
La publication recognizes Climate change and policies designed to mitigate it will have complex and different effects on global trade and markets, affecting competitiveness, sectoral comparative advantages, productivity, transport costs and trade policies. The report examines the physical impacts of climate change, noting that society is “already committed to a certain level of warming” and is aware of the accompanying consequences. Therefore, “regardless of the level of progress achieved in mitigating global emissions, adaptation is an imperative.”
According to the report, Agriculture, fisheries and tourism are the three sectors most vulnerable to adverse climate impacts.. Many least developed countries (LDCs) and small island developing states (SIDS) will face challenges in maintaining production, employment and export levels related to these sectors in the future. The review notes that unless developing countries improve their trade resilience by taking actions that reduce exposure and risk, LDCs and SIDS will export “substantially less” in climate-sensitive sectors as the impacts of climate change accumulate. Furthermore, the report suggests that where adaptation is neither cost-effective nor possible, diversification within the area or economic restructuring to shift resources to less climate-sensitive sectors may be pursued.
UNCTAD discusses the costs of climate change adaptation and options for climate finance. According to the report, in developing countries, this additional cost has been estimated at between US$140 billion and US$300 billion per year, until 2030. Through the Green Climate Fund (GCF), developed countries have committed to mobilizing US$100 billion annually in financing to address the climate change mitigation and adaptation needs of developing countries. However, only US$50 billion per year has been allocated, resulting in financial inadequacy for this purpose. The report notes that possible measures to increase climate change adaptation financing could include carbon offsets or carbon taxes at the border. However, it cautions that the impacts of these measures on trade “cannot be generalized” and modeling studies will be needed to provide estimates of the direction and magnitude of the effects on trade that countries are likely to experience.
The Review proposes opportunities for developing countries to improve their “trade and climate readiness,” noting that each country will have its own resilience path. between trade and climate. To identify this pathway, nations will need to assess the physical impacts of climate change, potential national responses, and the competitiveness and export capacity of competing regions and countries.
Finally, the report recommends that stakeholders consider the temporal dimensions of when producers will experience impacts, the costs of specific actions, potential financing options for implementing climate change mitigation and adaptation measures, and timelines for implementation.
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