Climate: Mitigating the effects of climate change policy on poverty

Climate policies could increase global poverty, but the effect can be mitigated by compensation policy schemes, a new study in Nature Communications finThe impacts of climate change are often considered to disproportionately affect people living in poverty the strongest. However, policies that aim to mitigate climate change could also increase the financial burden on the poor and increase global poverty, such as through increased energy and food prices, although the magnitude of this effect is debated. Therefore, it has been suggested that climate policies should be combined with compensation policies in order to share the costs in a fair way.ds.

Bjoern Soergel and colleagues use a simplified model setup to study the effect of how climate mitigation policies might affect global poverty. They find that current socio-economic trends could result in around 350 million people living in extreme poverty by 2030 (not accounting for the impact of climate change or the COVID-19 pandemic). Ambitious climate policies that limit global warming to 1.5°C could increase this number by an additional 50 million people. The authors’ model suggests that progressive redistribution of national carbon pricing revenues can compensate for this effect and may even lead to a small reduction in the number of people living in poverty (approximately 6 million). However, the domestic revenues are found to be insufficient compensation for the side effects of climate policies in Sub-Saharan Africa, and as such international climate finance transfers are also recommended by the study. These findings highlight that climate mitigation does not lead to a disproportionate burden on the poor if combined with national and international redistribution policies.

After the embargo ends, the full paper will be available at: https://www.nature.com/articles/s41467-021-22315-9