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Viva El Niño!

In Ethiopia, El Niño-influenced drought continues to affect millions of people, deepening food insecurity, malnutrition and water shortages in affected areas. [..] It is projected that in 2016, 2.2 million children under age 5 and pregnant/breastfeeding mothers will be moderately malnourished and 450,000 children will be severely malnourished (UN-OCHA, 13 April 2016).

A major problem of climate change policies is their public good feature: (parts of the) benefits of the policies accrue to other countries. This may reduce the drive to take policy measures; it is cheaper to benefit from the measures taken by other countries. In addition, it may take years for the benefits of policies that are currently undertaken to become visible. Actually, it is a small wonder that about 200 countries succeeded to come to an agreement on climate change in Paris last year.

In Somalia, a severe drought exacerbated by El Niño conditions has hit parts of Puntland and Somaliland, affecting hundreds of thousands of people. [..] the total number of people who need humanitarian assistance and livelihood support to 1.7 million, or 37 per cent of the 4.6 million people living in Puntland and Somaliland.

Another problem is that climate change policies are costly. International agreements have to be translated into national policy measures. Next, there are winners and losers (as is the case for many types of government policies). On top of that, the financing of climate change policies may hinder economic growth. On the other hand, one can argue that investments in climate change may benefit the economy. The debate of which of the two effects is dominant, has not yet come to an end.

In Madagascar, almost 2 million people are food insecure, and households in the worst-affected areas are expected to be unable to meet basic food consumption requirements until the maize harvest starts in April. Poor households are engaging in negative coping strategies, such as selling small animals and migrating. Increased consumption of cactus leaves and unripe fruits has been reported among poor households.

As an example, take a look at the reduction of the emission of CO2, perhaps the most important element of climate change policies. This can be achieved by taxing the emission of CO2 or, in case a market in tradeable credits is in place as in Europe, by restricting the volume of emissions allowed. The economic effect of this is an increase in the price of fossil fuels and, consequently, downward adjustment of consumption and investment demand. This reduces economic growth when output is driven by domestic demand. However, the price increase may also contribute to economic growth; for example, it may induce firms to start investing in cost-reducing technologies, increasing growth through higher investment and through the saving on production costs.

In Papua New Guinea, the Government estimates that more than 2.7 million people are affected by drought and over 700,000 people live in areas classified as Category 4 and 5, where food production has been severely affected. Approximately 480,000 of these people are in Category 5 areas and facing critical food shortages.

One issue of climate change policies that is even bigger concerns their political-economic effects. Price increases are disliked by both consumers and producers. Policymakers that want to be reappointed cannot neglect that. This may give rise to delays in the implementation of policy change. The IMF lately noted that peer pressure may make such delay less likely. The simple fact that a large number of countries has come to an agreement in Paris may keep the train going. I do believe in such a peer pressure effect. However, I also think that things may go in the opposite direction. Should the implementation of policies stagnate in some (larger) countries, this could spread out to other countries.

Vanuatu continues to grapple with El Niño-influenced drought, with many of the most affected areas the same as those which were hit by Category 5 Cyclone Pam last March. [..] The country’s Climate Change Department continues to forecast below-average rainfall over the next few months, after which Vanuatu will move into its traditional dry season. There are concerns that food gardens may not be able to supply sufficient produce to keep all areas and populations appropriately fed in the coming months.

Political-economic effects may also occur in oil-producing countries. The recent sharp decline of oil prices already enforces Gulf states to reform their economies. Climate change policies would then trigger a further decline in oil revenues, requiring even more stringent reforms. In practice this means cuts in public spending and the introduction or increases of taxes in countries in which taxes are relatively unknown. Does that mean that we may expect that climate change policies run a risk of delay? It is difficult to think otherwise.

Haiti has suffered crop losses of over 50 per cent due to El Niño-influenced drought. A total of 3.6 million people are food insecure (one third of the population), and 40 districts are currently in crisis (IPC Phase 3). Of these people, 1.5 million are severely food insecure and need immediate food assistance, while over 130,000 children are suffering from acute malnutrition.

Climate change policies encounter many difficulties: it is costly, for consumers, firms, and governments in industrialized and emerging countries; it is to be enacted in a time in which the world economy is trying to recover from a serious crisis; some of the benefits of climate change policies take some time to become visible, others are enjoyed by other countries; and climate change policies induce political-economic effects that may hinder their implementation.

South-western Honduras will remain in crisis (IPC Phase 3) from March to August 2016. According to a recent assessment by the Humanitarian Network, chaired by the Government, more than 2 million people have been severely affected and close to half a million people require emergency assistance.

Nobody wants an El Niño. But an El Niño may have a message for the world; it may tell us we should do everything we can to challenge all the factors that may hinder climate change policy reform.


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