identifying regime complexes and analyzing their effects»
(Orsini, Morin & Young).

Our contribution will try to give a legal analysis of the regime complex for climate change, which has been until now mainly defined and characterized by international relations and political scientists.

After a legal mapping of the regime complex for climate change, the contribution will wonder what role play the Paris accord in the «de-fragmentation» of the climate regime. Beyond the well-known finding of a fragmented, polycentric and complex international climate governance, how to build a more integrated and effective regime complex on climate change? Much of the institutional innovation in regime complexes arises at the joints between regime elements. By drafting the Paris accord, negotiators should pay attention to various emergent networks of norms and actors. Finally, how to inject new life into the global community's response to climate change through systematic links (legal or institutional, formal or informal) to other regimes like for example the trade regime, the ozone regime or the biodiversity regime?

Our work forms part of a collective interdisciplinary project funded by the French National Research Agency and named CIRCULEX (Circulations of Norms and Actors Networks in Global Environmental Governance <ANR-12-GLOB-0001-03 CIRÇULEX>). Concerning the international regime complexes for climate change and biodiversity, the first objective of CIRCULEX is to highlight the plurality of "sites of governance" and formal and informal links between these sites. This work highlights the diversity of actors involved and their modes of interconnection, as well as the diversity of standards that circulate in the complexes, in terms of origin, content and scope. A first set of conclusions could be drawn about the internal dynamics of regime complexes, conflicts and convergence of standards and interconnections with other regimes. We describe also the modalities of circulation of norms and experts in the regime complexes, and measure the permeability of economic actors to environmental governance standards, evaluate the interconnections between public and private actors in the regulation. Finally, our project highlights the impacts of norms and networks of actors on the functioning of regime complexes, especially in terms of implementation and effectiveness. Does permeability favor a greater effectiveness of regimes or not ?

## O-4403-04

### The role of the trade system in promoting climate action

**S. Hawkins (1); R. Meléndez-Ortiz (2); I. Jegou (1)**

(1) International Centre for Trade and Sustainable Energy, Climate & Energy, Geneva, Switzerland; (2) ICTSD, Geneva, Switzerland

COP21, scheduled for December 2015 in Paris, is expected to deliver a "protocol, another legal instrument or an agreed outcome with legal force under the Convention applicable to all Parties". Whereas the exact shape of the future climate change architecture is still to be defined, the work under the ADP, including the INDC-process, indicates that we are heading towards an approach of best-endorse pledges by countries on individual mitigation contributions.

An advantage of this scenario is that it gives much leeway to countries to design and implement climate policies which suit their individual situations, needs and capacities. Among the challenges to be addressed are first how to ensure that the individual contributions add up to an ambitious enough response to climate change, and second that they are if not coordinated so at least mutually supportive.

In this context, the emergence of collaboration between groups of countries in "clubs" is an interesting and noteworthy development. Indeed, framing climate deals in smaller groups, designed in a way that encourages expansion of membership and linkages among groups over time, could be an effective way forward which complements multilateral efforts and reinforces the dynamic towards reaching collective agreements.

Taking into account the complexity of designing deals in the UN-oriented system of diplomacy, encouraging smaller club-like initiatives could contribute to the larger climate goal.

A recent ICTSD paper[1] identifies six main tasks that clubs could perform. They could provide a forum for enthusiastic countries to "do the deals" that would get reluctant countries to make bigger efforts; play a role in designing smart Border Carbon Adjustment Measures, BCAs; craft conditional commitments; craft and demonstrate technology strategies; tackle easier problems and last, learn how to help countries adapt.

In order for clubs to be effective and eventually attract new members, they will need to rest on coercion and on positive incentives working to ensure the realization of real gains. In this context, there may also be a need to develop benefits that are exclusive to club members. In the area of climate change, this is particularly challenging as the main gain of joint action on mitigation is aggregate emissions abatement, the benefits of which accrue to the whole world.

The possible linking of clubs, as well as the creation of certain exclusive benefits, are pertinent questions with respect to the world trade system. Can and should trade governance play a pro-active role to promote and facilitate the interplay between clubs, and if yes in what respect?

This intervention, based on recent and upcoming work in ICTSD, in particular under its joint E15-initiative, will address such questions. [2]

[1] Victor, David G. The Case for Climate Clubs. E15Initiative. Geneva: International Centre for Trade and Sustainable Energy.

Development (ICTSD) and World Economic Forum, 2015. www.e15initiative.org/

[2] http://e15initiative.org/

## O-4403-05

### Internal coherence of the Paris outcome and connections to other regimes : conditions for confidence, cooperation and ambitious action for climate

**T. Ribera (1)**

(1) Institute for Sustainable Development and International Relations, Paris, France

From the experience of the last Conferences of the parties to the UNFCCC, many things have changed in a very short time. Climate negotiations are not any more to be considered a zero sum game, but are now explicitly aiming to gather all countries in order to strengthen cooperative approaches, learning processes and mutual reinforcement of each one's efforts towards their own decarbonized and climate resilient future. The biggest challenge is to consolidate confidence, among governments and also from other stakeholders, both on the ability of governments to act and implement climate policies now, and on the ability to build a consistent framework to incentivize further and more ambitious action in the future.

This means, at least, two new streams of work. The first one could be defined as a positive differentiation within the multilateral platform: how to integrate plurilateral action in the multilateral context in order to ensure a common learning process from plurilateral experiences and benefiting from constructive attitudes to speed up the transformation, while also ensuring the capacity to maintain a full multilateral perspective and a global adequacy assessment mechanism. The second one relates to the bridges between the climate community of stakeholders and the outside world, between the climate regime and other regimes of governance at different scales : the objective is to build a new normality where climate action is consistently mainstreamed in other decision processes -either public or private, policy or investment measures, be they sectoral, regional or local-. What are the conditions for such an integration in a diversity of decision frameworks ?

Building the internal coherence of the Paris outcome as well as ensuring its connections to other regimes and for a will be two key milestones for the decades to come. This communication will develop some proposals concerning the expected Paris agreement and the organization of the post COP21 climate regime.
## Avoiding dangerous climate change: the role of shipping in delivering on the IPCC's latest carbon budgets

K. Anderson (1); M. Traut (1); A. Bows-Larkin (1)

(1) Tyndall Centre for Climate Change Research, University of Manchester, Manchester, United Kingdom

In 2015 and with global emissions rising at unprecedented rates one clear certainty is that the future will be very different from the past. Whether the world continues to follow a trajectory of greenhouse gas emissions exceeding those in RCP8.5, the highest in the IPCC's suite of scenarios and associated with an expected temperature increase of between and 3°C and 5°C, or whether we begin a program of shipping from 2020 to 2050 is a decision for the international community. These two paths lead to very different future futures, both radically different from the past. This paper reflects on and analyses the role of the global shipping industry as an important player in both these potential futures.

The Kyoto Protocol has called on the International Maritime Organisation (IMO) to "set a zero greenhouse gas emissions from shipping". In 2009, the then secretary general of the IMO concluded that "our collective way of life has become unsustainable" and stressed "the need to make some tough decisions ... and ... to start putting life ahead of lifestyle". In contrast, the baseline suite of six shipping emissions scenarios in the 2nd IMO GHG Study (2009) has CO2 emissions between 2007 and 2050 rise by a factor of between 2.2 and 3.1. Similarly, the 3rd IMO GHG Study (2014) presents a suite of sixteen scenarios, with rises of up to 3.5 times those estimated for 2012.

It is important to that the updated emissions estimates in the 3rd IMO GHG Study (2014) demonstrate a fall in CO2 over the period 2007 to 2012. It argues that much of this emission reduction was due to slow steaming in response to a global economic downturn. Recent emissions reductions may, therefore, represent 'latent CO2' that could be realised once the economic situation changes and vessels revert to pre-crisis speeds.

The paper contrasts the different emissions pathways for the shipping sector, placing them in the quantitative context of global emissions scenarios and associated temperature responses. It concludes that steering a mitigation course has never been more critical, nor the choice more stark.

## Opportunities and challenges for decarbonising the shipping sector

W. Conor (1)

(1) Tyndall Centre for Climate Change research, manchester , United Kingdom

The growth in transport emissions poses a particular challenge in meeting wider 2 °C emission targets. The demand for shipping experienced a significant period of growth during the first half of the previous decade, prompted by growth in regions such as Asia in conjunction with an increasing trade in manufactured material and dry bulk goods. This incentivised speculative ordering of new ships which meant that the fleet experienced over-capacity during the subsequent reduction in demand during the economic downturn. The third greenhouse gas report commissioned by the IMO estimates that between 2007and 2010 CO2 emissions due to international transport decreased by 13%. This can be attributed to an increase in ship size in some instances but also due to a reduction in ship speed, made possible by the overcapacity of ships. Therefore a reduction in ship speed and an increase in ship size (in conjunction with a reduction in demand) represent an opportunity to reduce the emissions associated with the shipping sector.

As the ships which experienced the greatest reduction in speed appeared to be the fastest ships, (such as large container vessels) it could be argued that such vessels will have the most to gain by resuming pre-existing speeds

once demand returns. Therefore the cyclical nature of the shipping sector may be seen as an opportunity for opportunistic emissions reductions but makes realising long term savings difficult. Through the generation of alternative scenarios for future global shipping emissions, this study seeks to better understand the elements, both internal and external to, the shipping sector which may assist or hinder it in reducing its emissions, commensurate with meeting wider 2 °C targets, which require a significant reduction in carbon emissions by 2050. For example while a significant reduction in speed is necessary, it must also be compensated for by making sure sufficient fleet capacity (in terms of number and size) is available to ensure adequate scheduling needs are met.

Furthermore as shipping remains a derived demand, changes to existing trading patterns will influence the extent to which the sector can decarbonise. However the shipping sector itself cannot readily influence the demand for trade. Scenario results show that under a different decarbonisation scenarios, a reduction in fossil fuel trade may be compensated for by an increase in biomass trade, or the successful implementation of carbon capture and storage technology may allow fossil fuel trade to continue. A scenario in which the future demand for trade is projected to increase makes decreasing the carbon intensity of shipping even more important. In that regard, decarbonisation cannot be envisioned without penetration of both appropriate technologies and the availability of alternative low carbon fuels. The scale of the emission reduction necessary implies that widespread uptake of new-build and retrofit technology will be necessary. The efficiency of former will depend on levels of ship turnover which also reflect fluctuations in the shipping market. Supporting technological uptake will necessitate the availability of flexible financing and opportunities to de-risk the uptake of new technologies. This will require identification of the most appropriate technological solutions, such as identifying the optimal routes for the application of wind technology. However lack of available berth space as well as a lack of appropriate training can impede the uptake of retrofit technologies.

Despite the scale of the challenge, the shipping sector arguably has greater opportunity to decarbonise than other sectors, such as aviation sector. However, given the urgency, it is imperative to identify synergies which may assist in sectoral decarbonisation in the near term. A reduction in trade demand, in conjunction with an increase in ship size will make a reduction in speed more viable, which can increase the impact of low carbon technologies. Modifying the conditions of vessel hire or enhancing supply in flexibility will also assist in making fuel savings more attractive and viable. In summary, allowing shipping to meet its commitments within a 2 °C framework may not be wholly within the gift of the sector itself and will require support from the wider system of which shipping is a reactive part.

## Geography of International Trade, Maritime Transport and Climate Change in XXI Century: A Descriptive Basis for Multilateral Action from a South Perspective

E. Tancredi (1)

(1) Universidad Nacional de Lujan, Departamento de Ciencias Sociales, Lujan, Argentina

This paper puts the focus of its analysis in the relationship among the main tendencies of the international trade of goods, the essential characteristics of the seaborne trade and the challenges of climatic change. From the beginnings of the XIX century, the characteristics of the seaborne trade can be pointed out. First, the significant expansion of the global value chains that represent the new form of disintegration and de-localization of the production of goods and services, which has driven to a new international division of the production (WTO, 2014). Second, the deepening of the regional integration and the cooperation South-South that reconfigure the seculars unequal relationships between the North and the South. In third place, the exponential growth of commercial exchanges. In this context, 80% of the world trade is carried out by maritime mean. Supply places have been diversified due to technological improvements and transport efficiency. Marine routes have been enlarged and new ones have been open (i.e. Channel of Panama and Artico routes). While some emergent economies (specifically in South Asia) reorient their exports toward medium and
high technological incorporated manufactures, many other monopolize their exports in agricultural products or mineral resources. Volumes expanded at the rate of 3.8% of nearly 9.6 billion tons. Of these shipments, dry cargo (major and minor) and dry commodities carried in bulk, general cargo, breakbulk and containerized trade) accounted for the largest share (70.2%), followed by tanker trade (crude oil, petroleum product and gas) which held a 29.8% share (UNCTAD, 2014). Developing countries have increased their contribution to these flows, although in an unusual contribution at individual terms. Regionally, Asia remained the main loading and unloading area in 2013 with its share of imports (unloading) being particularly dominant. Americas is the other major loading area and Europe on the unloading side. These shares are likely to further evolve with changing trade patterns and partners, the emergence of Africa and developing America as areas with a significant growth potential, and fast growing trade on secondary container trade routes supporting South-South and intraregional trade. Global containerized trade is projected to grow, given among other factors by improved prospects for mainlane East-West trade. The global fragmentation of the production and the development of multimodel systems of international transport are the elements that also lead to a reorganization of the ports. In this context, the sector of marine transport needs to adjust its commercial strategies to adapt to the changes of the world economy and rules of the trade, besides risks and current environmental uncertainties. As world seaborne trade increases, the main challenges - especially from the perspective of a social and environmentally sustainable

development, as well as from the point of view of the transport and trade facilitation - consist in reducing the GHG (mainly CO2) emissions from international shipping and define mitigation and adaptation policies. In terms of CO2 emissions/ transported ton, it is recognized that the marine transport is the more effective one. Nevertheless, due its enormous scale, it is estimated that ship emissions (especially from oil-tankers and container ships) represent 11,8% of the emissions of the transport sector and 1,6 to 4,1% of the CO2 world emissions resulting from burning, according to the International Maritime Organization (OMI), they will increase in a factor from 2,4 to 3 between 2007 and 2050 (UNCTAD, 2008; OMI, 2009; OMC/PNUMA, 2009) This linking of climate change challenges with the tendencies of international seaborne trade and their emissions of GHG have relatively little presence in the multilateral negotiations. But OMI has recently adopted a group of technical and operative measures to improve the energy efficiency and of GHG emission from ships with the aim to promote trade but in turn energy efficiency and sustainable development, according to the principle of the common but differed responsibilities among developed and developing countries. In this sense then, it is sought to advance in this proposal a detailed characterization of the main tendencies of international trade and seaborne trade in the XXI century, analyzing their complex links with climate change, and the main challenges for a negotiated multilateral action, putting the accent, as case analysis, in the emergent economies of Latin America (in particular Brazil, Mexico and Argentina).

# 4404 - Climate finance: New sources, new instruments, more effects?

## ORAL PRESENTATIONS

### K-4404-01

#### Sources and instruments for climate finance

##### A. Torvanger (1)

(1) CICERO, Oslo, Norway

Long-term investments in climate-friendly and climate change resilient infrastructure, buildings and energy is essential to both mitigate greenhouse gas emissions and adapt to climate change impacts. Such climate finance is particularly in need in many developing countries due to limited economic resources and expected impacts from climate change. Direct government contributions can help, but a large share of the agreed 100 Bill. USD annually from 2020 for climate measures in developing countries can only realistically come from the private sector.

What is the status of sources and channels of long-term climate finance? I present a new status report on the most promising sources of climate finance. Relevant sources are public carbon-related revenues (taxes and emissions trading), carbon offset markets, international transport, removal of fossil offsets, direct budget contributions, finance development institutions, private flows, green bonds, 'debt-for-climate' swaps, and export credits.

What can developed country governments do to catalyze private sector investment in developing countries? There is a range of de-risking interventions and instruments available, from credit enhancement to guarantees.

Green bonds finance low-carbon or climate-robust projects. Private sector investment in green bonds has tripled in each of the last two years. Pension funds, insurance companies, and socially responsible investors are increasingly investing in green bonds. Can the momentum of the green bond market be harnessed to make a real difference to the climate and for climate finance in developing countries? Can Green Bonds funding be combined with multilateral climate finance such as the Green Climate Fund?

Key issues discussed are:

* What are the most promising sources of climate finance?

* What is the scope for government de-risking of private finance?

* What government measures are most efficient to stimulate private finance?

* To what extent can Green Bonds make a difference in climate mitigation and adaptation?
* How can Green Bonds be adapted to the needs of developing countries?

How can governments facilitate Green Bond investments in developing countries?

### K-4404-02

#### Mobilising capital for green infrastructure investments

##### C. Kaminker (1)

(1) OECD, Environment Directorate, Paris, France

A keynote presentation focusing on OECD analysis on what developed country governments can do to catalyse private sector investment in green infrastructure of developing countries.

The presentation would cover key lessons from the following OECD work streams: Mapping Channels to Mobilise Institutional Investment in Sustainable Energy: An OECD Report for G20 Finance Ministers and Central Bank Governors; which uses an empirical base of 70 deals to identify barriers and advise on how governments can overcome them to mobilise institutional investment in sustainable energy and how governments can support the development of potentially promising investment channels and consider policy interventions that can make institutional investment in sustainable energy infrastructure more likely.

Green Bonds: a new report will analyse the potential, barriers and policy solutions for scaling up green bonds across their various different forms (including municipal, corporate, asset-backed, covered, project).

The OECD-led Research Collaborative on Tracking Private Climate Finance, an OECD-led network of governments, research institutions and international finance institutions. Over the past two years it has explored data and a range of methods to estimating private finance mobilised by developed countries for climate action in developing
countries. In 2015, work conducted under and in co-operation with the Research Collaborative will focus on the further development and ground-testing of estimation methods in the context of pilot measurements of mobilisation for climate-relevant sectors, different types of interventions/instruments, as well as at the level of individual/groups of countries and public finance institutions.

The OECD Policy Guidance for Investment in Clean Energy Infrastructure: Expanding Access to Clean Energy for Green Growth and Development is a good example of our efforts to improve the enabling conditions for private investment in clean energy infrastructure. Non-prescriptive tool to help governments identify ways to mobilise private sector investment in clean energy infrastructure, annexed to the Communiqué de G20 Finance Ministers in 2013.

OECD report on Overcoming Barriers to International Investment in Clean Energy discusses the rise of hidden indirect protectionism in clean energy since the 2008 financial crisis. The report provides empirical evidence on the negative impact that LCRs have on international investment in solar PV and wind energy, as they increase the cost of inputs for downstream segments of the value chain like renewable energy-based electricity generation. By assessing the impacts of measures such as LCRs across different segments of the value chains, this report provides policy makers with evidence-based analysis to guide their decisions in designing clean energy support policies.

## O-4404-01

### Result Based Financing for Mitigation: choosing the right "triggers" to drive a "paradigm shift"

R. Spalding-Fecher (1)

(1) Carbon Limits AS, Pelham, United States of America

Results-based finance is an emerging tool to link public and private financing to a more sustainable and climate-friendly future. The main goal of many of these new funding sources is to create a "paradigm shift" towards low carbon and climate resilient development. But what does this mean for how new mitigation financing could be allocated and what types of projects, programmes or larger policy changes could be targeted? This contribution explores two specific question in the RBF decision making process. This first is how to ensure that RBF for climate finance promotes mitigation even after the payments for emissions reduction stop, and supports technologies and practices that are part of the "end game" for climate stabilization. Second, how should the required policy and institutional changes, which are not normally linked to project or programme-based financing. In addition, focusing on long term results means avoiding technology "lock in" and driving innovation in mitigation technologies. The second question is what type of non-climate criteria are needed for RBF, including environmental and social safeguards, and how might these be integrated in the payment system. In other words, how might non-climate impacts not only be monitored, but how would their achievement (or avoidance) affect the results-based payments.

## O-4404-02

### Smart Unconventional Monetary (SUMO) policies: giving impetus to green investment

R. Morel (1) ; B. Leguet (1)

(1) CDC Climat, PARIS, France

Today, given the amount of investment needed to reach a 2-degree emissions reduction target and the tight budgetary constraints of governments worldwide, public spending alone will not be sufficient alone. Therefore, there is a double need to not only shift private financial flows from "brown" sectors to "green" sectors, but also to leverage new sources of financing. Addressing the second challenge, this study reviews three families of proposed funding mechanisms based on unconventional monetary policies targeting "green" or "climate" investments. These "Smart Unconventional Monetary" (or SUMO) policies include: (i) the use of Special Drawing Rights (SDRs) issued by the International Monetary Fund (IMF), (ii) green quantitative easing and (iii) the issuance of Carbon

Certificates.

This contribution will first present the basic elements of these three approaches, it will then identify and discuss the implementation challenges to overcome. These include both concerns over inflationary worries as well as the difficulty to reach multilateral agreements in the short run, and the involvement of the private sector. Finally, the presentation will look at the key conditions for ensuring the environmental integrity of the unconventional monetary policies, both ex-ante – during the selection of eligible projects – and ex-post. This contribution will look at lessons drawn from Monitoring, Reporting and Verification (MRV) methods used in the Clean Development Mechanism as well as other existing schemes (white certificates, etc.).

## 4404-POSTER PRESENTATIONS

### P-4404-01

#### Public Financial Institutions and the Low-Carbon Transition: Five Case studies on Low-Carbon Infrastructure and Project Investment

I. Cochran (1) ; V. Marchal (2) ; R. Hubert (1) ; R. Youngman (2)

(1) CDC Climat, Paris, France; (2) OECD, Climate, biodiversity and water division, Paris, France

This study, jointly undertaken by the OECD and CDC Climat Research, analyses the role of Public Financial Institutions (PFIs) in fostering the low-carbon energy transition through domestic climate finance activities. The study maps the key tools and instruments currently used by five institutions to mobilise private sector investment in low-carbon infrastructure projects in OECD countries in three sectors: sustainable transport, energy-efficiency and renewable energy. Between 2010-2012, these five institutions - Group Caisse des Dépôts in France ; KFW Bankengruppe in Germany ; the UK Green Investment Bank ; the European Investment Bank and the European Bank for Reconstruction and Development - have provided over 100 billion euros of equity investment and financing for energy efficiency, renewable energy and sustainable transport projects. Finally, it indicates that these institutions play a key role in leveraging private sector participation in low-carbon, climate-resilient investment through the use of traditional and innovative approaches to link low-carbon projects with finance through enhancing access to capital; facilitating risk reduction and sharing; improving the capacity of market actors; and shaping broader market practices and conditions.

### P-4404-02

#### Tracking low-carbon investment in France in 2011: a landscape of sources, flows and channels

R. Morel (1) ; I. Cochran (1) ; R. Hubert (1)

(1) CDC Climat, PARIS, France

This report presents the first comprehensive view of climate finance flows in France to reduce GHG emissions. Funding for the energy transition is a central issue for which the available data are often incomplete. This report aims to further the current debate by providing economy-wide estimates. This study identified and analyzed the investment spending in France in 2011 that contributed directly or indirectly to the reduction of greenhouse gases emissions (GHG); this corresponds to investment in low-carbon infrastructure and fixed assets (renewable energy, building high environmental quality, public transport, etc.). This information has been used to identify the distribution of flows across sectors, the share of different instruments, their use and the role of different actors.

This analysis has identified EUR 22.2 billion of investment in France in 2011 in physical or tangible assets that reduce greenhouse gas emissions. Across all sectors, renewable energy accounted for EUR 9.0 billion of investment, including investment subsidies of 1.0 billion EUR. Energy efficiency was the second largest area of climate investment, totaling EUR 8.3 billion. The share of grants and concessional loans - with thus a cost for the public sector - totaled EUR 2.3 billion. These investments are
concentrated in the construction sector (buildings) (EUR 6.7 billion). Private actors financed 75% of renewable energy and energy efficiency investments. In the transport sector, the picture is less clear as project were initiated principally by public bodies, and with financing provided (through debt and other means) in part by private actors. The EUR 22.2 billion annual investment estimated by this

report – and excluding investments in the nuclear energy – is below the annual flows identified as necessary to achieve long-term objectives. The financing challenge should thus not be underestimated. The Panorama France 2011 suggests that part of the funding needed for the energy transition is already being provided, however efforts are still needed to reach long-term climate and objectives.

# 4405 - On the macroeconomic opportunity of climate policy

## ORAL PRESENTATIONS

### K-4405-01

#### Why finance ministers might favor carbon taxes, even if they do not believe in climate change

**O. Edenhofer (1); M. Franks, (2); K. Lessmann (3)**

(1) Potsdam Institute for Climate Impact Research, Potsdam, Germany; (2) Potsdam Institute for Climate Impact Research (PIK), Potsdam, Germany; (3) Potsdam Institute for Climate Impact Research, Sustainable solutions, Potsdam, Germany

The economic forces of globalization constrain democratic governments increasingly. According to Dani Rodrik, we cannot have democracy, national sovereignty, and hyperglobalization at the same time (Rodrik, 2011)[11]. Hyperglobalization impinges on democratic choices within sovereign nations by giving rise to corporate tax competition, which “restricts a nation’s ability to choose the tax structure that best reflects its needs and preferences” (ibid., p. 193). Declining corporate tax rates, complemented by a rising share of labor taxes, give evidence of the resulting race-to-the-bottom.

The fact that this race-to-the-bottom impedes a government's ability to raise sufficient funds has far reaching consequences. Funds are required, e.g., not only for health care or education, but also for productive public infrastructure, which is important for both efficiency and equity. Accordingly, an emerging consensus in the empirical literature suggests that these stocks are underfunded. This raises the question how to reduce exposure to tax competition and generate funds to finance essential public goods.

We identify taxes on the use of carbon resources as a superior alternative to capital taxes. Even though fossil resources are also traded internationally, there is an asymmetry in efficiency between capital and resources as tax base. While ownership of fossil resources gives rise to a rent, capital does not. Taxes on either factor cause an intergovernmental reallocation by driving economic activity out of countries with relatively high tax rates. The carbon tax has the advantage, though, of capturing part of the resource rent. Governments can use the appropriated rent for productivity enhancing infrastructure investments, which in turn attracts investments in domestic capital stocks.

Further, it turns out that a carbon tax may not only have fiscal benefits. When the motivation to tax the use of fossil resources is based exclusively on fiscal needs, then fiscal exporters react by reducing both the rate (a timing effect) and the cumulative amount of resource extraction (a volume effect). Thus, carbon taxes do not cause a green paradox in this situation, but can be part of an effective green tax reform. Governments may not take climate externalities into account, as modeled in our paper. In that case, timing and volume effects per se do not affect decisions about fiscal policy. Nevertheless, these introduces effects show that a unilateral tax reform which introduces a carbon tax also has beneficial environmental implications.

Our contribution is thus twofold. First, we bridge the gap between horizontal fiscal federalism, in particular the tax competition literature on the one hand, and the economics of exhaustible resources on the other. Using a numerical general equilibrium model we compute optimal tax portfolios and precisely assess their opportunity costs. To our knowledge, our model is the first to combine the following key features. We implement a decentralized market economy with several representative agents and strategically interacting governments. The tax

instruments, which governments use to finance productive infrastructure stocks, are determined endogenously for both cooperative and non-cooperative behavior in the Nash equilibrium. Capital and fossil resources are traded on international markets. Finally, we include the intertemporal dynamics of capital accumulation and resource extraction (based on the respective model of Frank P. Ramsey and Harold Hotelling). Second, we shed light on the supply side dynamics of fossil resource extraction. So far, most of the research on the conditions under which a green paradox occurs has used partial equilibrium analysis. Only recently has this strand of literature been extended to general equilibrium. Now, we take even one step further. Our model allows strategic interactions between fossil fuel selling and buying countries, as well as among the governments of buying countries themselves.

We conclude that even when governments do not intend to address climate change, they still have an incentive to implement a carbon tax to improve their fiscal policy. Then, the carbon tax nevertheless helps mitigating the adverse effects of climate change. It is thus not only the environmental ministers who should favor carbon taxes, but also the ministers of finance.

### K-4405-02

#### Climate change and adaptation: A new opportunity for public debt relief?

**E. Delpiązzo (1); C. Carraro (2); F. Bosello (3)**

(1) MCCE, Venice, Italy; (2) FEEM, Climate change and sustainable development, Milan, Italy; (3) University of Milan, FEEM, and MCCE, Dep. of economics, Milan, Italy

Notwithstanding a consolidated and vast literature on the possibility to conjugate development and environmental protection, a view still rooted in the policy domains considers the environment as a luxury good less important than social goals like growth or employment. This is epitomized by the climate change challenge. On the one hand the trade-off development/ GHG mitigation is at the heart of the difficulty to involve developing countries in an international agreement on emission reduction. On the other hand, especially in a background of a financial crisis along with high levels of indebtedness and aging population, high unemployment levels and the need for fiscal outlays for unemployment compensation or welfare benefits, climate change policies seem to appear as something which would not be regarded as an urgent policy also in many European countries. In fact, in a situation where public budgets are overstretched due to economic crisis, there is an increasing need to understand the implications of climate change impacts, climate change mitigation and adaptation policies on the fiscal side.

This is particularly true for those countries which experienced growing levels of deficit and debt in the last decades, and especially for adaptation that typically implies an increase in expenditure coming from the public sector. In this context, cuts in public expenses to reduce the gap between revenues and expenditures might appear to be the winning strategy, however there are also impacts to cope with whose timing and magnitude are uncertain as uncertain are their fiscal effects. Policy intervention may lead to an inefficient result with negative ramifications for the economy if adaptation measures are either too paltry or too ambitious. Different options also have different implications for fiscal costs and government revenues.

We tackle these issues using a recursive-dynamic Computable General Equilibrium (CGE) model: the Intertemporal Computable Equilibrium System (ICES) model, enriched with a more realistic description of the government sector both on the revenue and the expenditure side. The relations between debt sustainability and climate change are analyzed both in their short-term
and long-term dimensions.

More specifically: firstly, we assess the "direct" or "first round" effects of climate change on the public budget through changes in total tax revenues induced by impacts on production, consumption patterns and trade structure. This also originates indirect fiscal costs (or second round effects) as it impacts governments' fiscal capacity.

Then, we introduce the possibility of adaptation expenditures to reduce the climate change impacts. We explore adaptation long-run effects on fiscal capacity and fiscal flexibility under different assumptions of financing. Could there be room for issuing more debt (adaptation bonds) to cover climate adaptation expenditure inducing anyway in the long term a decrease in the debt/GDP ratios exploiting adaptation effects on avoided future damages? Even though possible, would it be more efficient and growth enhancing to support adaptation expenditure with revenues from other, e.g. carbon-energy taxes? What are the different crowding out effects on public/private investment?

It can be established, that climate change has introduced a new aspect into the structure of public finances both in expenditure and in revenue side. In the context of the current multi-year crisis, public finances in the EU are strained, and thus the fiscal consequences of climate change are important to estimate and the worst case scenarios need to be avoided. From few case studies in literature, it is evident that the fiscal consequences are not negligible. However, there has not yet been any study that satisfactorily addresses the way climate change and adaptation affect the state budget, and particularly its stability, in a general equilibrium framework.

### K-4405-03

## Complexity and Green Growth: A Practical Perspective

S. Van Der Leeuw (1)

(1) Arizona State University, Tempe, Arizona, United States of America

Practical policy aiming to seize macroeconomic opportunities for climate policy has to deal with complex interactions between macro-variables and the many processes that may or may not lead to such opportunities. The Global Institute of Sustainability at Arizona State University is presently involved in a Chinese initiative to implement a green growth strategy in a poor rural region where these interactions can be investigated in real time.

The initiative is based on the seminal report «China 2030» produced by the Development Research Council (DRC), the think-tank of the Chinese prime minister, together with the World Bank. This report outlined the new growth strategy pursued by the Chinese leadership installed in 2013. The key macroeconomic variables relevant for the initiative are straightforward: GDP, employment, etc. The policy variables, however, are much more complex than typical discussions about simple variables like carbon prices, government deficits and the like suggest.

The initiative started by outlining a shared vision in an intense dialogue between the provincial government, DRC and international partners like Arizona State University and the Global Climate Forum. This on-going dialogue involves a wide variety of local actors. An instructive example is the founder of a large company for electric bicycles who established a green theme park in the region in question. A key instrument to launch this dialogue was a trans-continental conference on green growth connecting audiences in America, Europe and China. On this basis, a selection process is presently under way to determine initial intervention points. These may include sites for a green community center and an international study center, collaborations between specific enterprises and research institutions, platforms for e-commerce and e-learning, product designs to create a regional green growth brand, and more. A commercially operating green-growth investment funds will be established by leveraging contributions from the provincial and central governments. In a step-by-step process these initial interventions shall lead to new, environmentally friendly jobs and revenues, expanding up to the point where macroeconomic advantages for the region in question become visible and can be reproduced in other regions.

The initiative is based on a series of theoretical conjectures

and insights. They include the following:

* the environmental crisis is fundamentally due to the inability of present societies to process the complex information flows generated at the interface between society and environment

* therefore, effective crisis responses require an enhancement of the societal capacity to process complex information by combining new information technologies with new concepts and institutions

* in particular, this means to increase the division of labor by reducing transaction costs, in line with the insights of Adam Smith, Xiaokai Yang and others

* it also means to embed climate policy in a comprehensive vision of green growth

* this strategy fosters cultural diversity by treating money not as the common denominator of preferences and values but as one of several dimensions of social status competition

* a competition for successful models of green growth is a promising way towards a transition to global green growth.

### K-4405-04

## Modelling the macroeconomic opportunity of climate policy

S. Wolf (1) ; F. Schuetze, (1) ; C. Jaeger (1)

(1) Global Climate Forum, Berlin, Germany

Economic policy analysis modelling has largely depicted climate change mitigation as a drag on economic development. In contrast, concepts as green growth or green economy and results of recent studies, such as the New Climate Economy Report, suggest that reducing emissions need not slow down, but may benefit the economy.

The possibility of protecting climate while enhancing economic development deserves to be carefully researched; economic models constitute an important tool for doing so. Unfortunately, this possibility is beyond the horizon of marginal analysis conducted with many conventional climate policy analysis models. Rooted in the general equilibrium framework, these models mostly find economic costs of mitigation when optimizing in the vicinity of a <business as usual> equilibrium.

A survey of models that can represent economic benefits from climate change mitigation reveals a large spectrum of approaches for going beyond this standard modelling setup. At the more conventional end of the spectrum, the literature provides theoretical model extensions, for example to address external effects, that open up the possibility of positive economic effects from climate policy. Computational models further away from the general equilibrium and optimization approach, such as system dynamics models or a macroeconomic model for climate policy analysis, can be viewed as the other end of the spectrum. Within the general equilibrium framework, but outside common modelling practice, several studies conceptualize the current fossil-fuel based economy and a low carbon economy as different equilibria of the economic system. For example, inframarginal economics generalizes the marginal analysis approach by considering different structures of specialization and division of labour. By modelling structural change to the division of labour that is triggered by mitigation policy, the possibility of green growth can be represented and analysed. Similarly, an analysis of a virtuous circle of expectations, investment and learning-by-doing has shown that investment oriented climate policy can induce a shift to a new growth path with lower emissions but higher growth and employment.

This contribution focuses on the question how climate policy can facilitate a recoordination of investors' expectations so as to induce a transition to a green growth equilibrium and how this can be modelled.

### O-4405-01

## Overview of climate finance at scale

TE. Downing (1)
Climate finance is essential to reducing climate risks, and take advantage of emerging opportunities. This presentation introduces a panel on Climate Finance At-scale. Four questions drive the search for solutions:

1. Three major domains—sustainable development, climate change and disaster risk management—are negotiating goals, governance and finance in 2015. What modalities of governance achieve synergies?

2. Achieving at-scale impacts requires transformative investment: What are the modes and prospects for engaging the private sector?

3. Negotiations on loss and damages are well advanced and widely seen as a mechanism for scaled up finance. What are the prospects for a robust analytical regime?

4. Transformation of climate resilience requires leadership that recognises emerging good practice: What does recent research offer to inform sound investment in adaptation?

## O-4405-02

# Managing Climate Change Risks and Vulnerabilities: A Microfinance and Climate Finance Perspective

### D. Chirambo (1)

(1) Seeds of Opportunity, Blantyre, Malawi

Climate change touches upon a myriad of inter-related and multi-dimensional aspects of societies, economies and the environment. From an African perspective, climate change may be considered as a phenomenon that may simply hamper the continent's future development and pose as an additional impediment to sustainable development. Since climate change impacts are anticipated to vary across countries and localities with some geographic regions being at risk to suffers more from climate change than others due to variations in national capacities, it can be argued that the poorest and most vulnerable groups and countries will likely be the most affected, consequently increasing world inequality.

Even though different countries have various models and approaches for climate change risk assessments and management, it is widely believed that in-order to reduce the impacts of climate change on various countries, and to ensure that international consensus and policies for climate change mitigation, adaptation and financing can be achieved, the post 2015 development agendas should increase funding towards climate change initiatives most notably in developing countries and promote mechanisms for raising the capacity for effective climate change management in Least Developed Countries (LDCs), including focusing on women, youth and local and marginalised communities

To date, most climate financing modalities and projects in Africa have had limited or no effect in terms of poverty alleviation and sustainable development due to a lack of emphasis on strengthening the participation of marginalised groups, and the continent's adaptation deficit as caused by a lack of institutional, financial or technological capacity to adapt effectively to climate change. In addition to this, even though climate financing for mitigation and adaptation should be addressed with the same priority, research has shown that the implementation of climate finance modalities are highly construed towards mitigation efforts whereby 91% of climate finance flows are for mitigation efforts, 7% for adaptation efforts and 2% for activities with both mitigation and adaptation objectives. Cumulatively, these issues suggest that most communities in Africa could be limited by less financing more vulnerable to the impacts of climate change.

Recent research shows that almost three-quarters of climate finance flows are invested with the expectation of earning commercial returns, hence signifying the need for innovative climate financing models that provide win-win situations for funders and recipients, as well as the world at large to suffers more from climate change attributed to climate change can be minimised. In-order to determine the opportunities that exist in enhancing the capacities and opportunities for microfinance for climate change mitigation and adaptation initiatives, and disaster risks

and management, this paper expands the Microfinance-Climate Finance Framework that was shortlisted for the 2014/2015 UNDP MDG Carbon Climate Finance Innovation Award. Using this framework, it is possible to highlight the challenges and opportunities that microfinance institutions could have in the mobilisation of funds and resources from various types of funders, and redistribution of funds and resources to various types of recipients. This paper concludes that fostering international and domestic policies that encourage remittances and financial inclusion may be an effective strategy to encourage microfinance based climate change management funding.

## 4405-POSTER PRESENTATIONS

### P-4405-01

# Relative price adjustment of energy and labour: The case of energy-dependent and small open economies

### E. Combet (1)

(1) Centre International de Recherche sur l'Environnement et le Développement (CIRED), Nogent-sur-Marne, France

The increase in energy prices is the corner stone for policies that seek to manage efficiently energy systems in the long run (including climate policies). However, such a price increase may harm the economy during the transition, when substitutions have not yet taken place. In this paper, we consider an increase in the relative price of energy with respect to labour, and we analyse its consequences for aggregate domestic production and employment. We develop a general equilibrium model of small open-economy assuming unemployment and high dependence to imported energy. Simplified enough to be solved analytically, this model does not restrict the analysis to the neighbourhood of an optimum. We examine how the qualitative result – a net positive or negative impact on production and employment – is sensitive to a set of debated parameters on 1) the behaviour of the economy (the reactions of domestic wage and the response of external trade), and 2) the initial state of the economy, and the levels of energy consumptions, unemployment and wages, the import price of fossil energy, and the relative initial taxation of energy and labour).

### P-4405-02

# Carbon Tax, Pensions and Deficits

### E. Combet (1)

(1) Centre International de Recherche sur l'Environnement et le Développement (CIRED), Nogent-sur-Marne, France

This paper aims to draw attention on the consequences of the prevailing intellectual compartmentalization between 'energy and climate', on the one hand, and 'the viability of social security systems', on the other. We take the methodological venture of building a general equilibrium model to analyse jointly these issues. The model is applied to France and projected to a future horizon (2020). It ensures consistency by linking together 1) a description of the future consequences on energy and demand, and 2) a partial forecasting scenario of the pension system. First, we analyse two types of archetypical reforms that use one instrument to meet one objective. The first type recours to one of the present instruments of the pension system (social security contributions on wage income, age of retirement). The second type absorbs the deficits of the pension system by preempting revenues generated by the climate policy (here a carbon tax). After examining the limitations of those single-instrument, single-objective policies, we provide an example of a multi-objective policy package that enables the limitations to be removed. In so doing, we present a way of exploring potential synergies between long term development goals.

### P-4405-03

# The role of transparency and accountability for impact investment

### B. Fernandez Milan (1) ; M. Hoffmann, (2)

(1) Mercator Research Institute on Global Commons and Climate Change, Berlin, Berlin, Germany; (2) Software Systems AT, Finance & ethics research group, Diex, Austria
Today's financial markets are characterized by globalization and interdependence, while nations around the world are still suffering from the economic and social aftershocks of the global financial crisis. Politicians, economists, NGOs and concerned citizens have scrutinized the weaknesses of the current financial system. A consensus is emerging that the current financial and economic structures are not sustainable and the danger of another socioeconomic crisis persists in spite of a plethora of regulatory changes. A grass-roots movement for sustainable development is leveraging investments as a tool to achieve social and ecological benefits while promoting fundamental structural changes in the finance industry and in public finances. A variety of innovative investment strategies including ethical, "green", "social", "responsible" investments as well as social banking and sustainable investing combine social, ethical and/or ecological objectives with financial returns, distinguishing them from so-called mainstream investments pursuing only risk-adjusted returns. At the same time, many large financial institutions have jumped on the "sustainable" investment bandwagon, trying to profit from the rapidly growing demand for sustainable investment products by "greenwashing" conventional investment products, which do not offer any sustainability benefits. Contradictory marketing claims confuse potential investors and prevent the successful mainstreaming of genuine, sustainable investment products. False marketing claims lead to consumer cynicism and growing mistrust towards the financial services industry. We draw upon a case study of "Impact Investments" to explore this issue. We are going to utilize analogous cases in different industries to draw lessons for marketing and certification strategies for Impact Investments. In view of the insights from diverse economic sectors, e.g., the chocolate, forestry and fishery industries, we observe that certification systems are an efficient mechanism to foster principles of sustainable development within a globalized market economy (i.e. Fair Trade, Forest Stewardship Council, Marine Stewardship Council). We further identify the current certification schemes existing in the financial sector and discuss their repercussions, also considering

ongoing projects that seek to tailor accounting guidance to different actors of the financial system. Based on the insights taken from these case studies, we plead in favour of the idea that a standardized international certification would help to restore trust in financial services and help to mainstream impact investing (getting it out of the "green nches"). Certification could help impact investments gain the necessary «critical market share», and ultimately, intentionality to consume impact investment products.

P-4405-04

## Impact of community own revolving fund in adapting with changing climate in Nepal

S. Paulud (1)

(1) The Small Earth Nepal, Kathmandu, Nepal

By now the scientific community agrees that climate change is occurring and its impacts are more in low income countries. Nepal is experiencing significant changes in climate, which have a direct and severe impact on the livelihood of its people, most of whom are still rural. A study has been undertaken to look at the impact of a community own revolving fund - a concept of micro-financing in adapting to changing climate in Nepal. The farmers in three agro-ecological zones of Nepal have been provided with the bucket drip irrigation set for their kitchen gardening, the system which is highly water efficient and less time consuming. The farm cooperative is charging NPR 100 (~USD 1) per set and the money is collected as a source of revolving fund. The money now has been given to the needful member of the cooperative which needs to be invested only in vegetable cultivation sector which gives quicker income. After six months, the amount is offered to the second needful persons and so on. In this particular paper, we describe the fund circulation mechanisms, community engagement on the project and its benefits in short and long run.

# 4406a - Climate, Sustainable Development and Energy Security

## ORAL PRESENTATIONS

### K-4406a-01

#### Energy and Climate Challenges: The case of India

P. Shukla

Abstract not communicated

### K-4406a-02

#### Energy and Development in Emerging Countries: Examples drawn from China

J. Reilly

Abstract not communicated

### O-4406a-01

#### Nexus of climate mitigation and key development objectives - An analysis for South Africa

J. Schers (1) ; F. Lecocq (2) ; F. Ghersi (2)

(1) CIRED, Nogent sur Marne, France; (2) Centre International de Recherche sur l'Environnement et le Développement, Nogent sur Marne, France

South Africa is a rapidly growing middle-income economy with a coal-based energy system that generates high greenhouse gases emissions, on par with the richest economies in the World. The country has pledged to significantly reduce its emissions (by 34% in 2020 and by 42% in 2025 relative to business-as-usual, under the condition of finance and technical support from the international community). It is actively discussing policies

to achieve this goal, including a carbon tax.

Yet, climate mitigation is not the only challenge that South Africa faces. Despite significant progress in overcoming the inequalities inherited from the Apartheid era and in improving quality of life since the onset of the democratic regime in 1994, economic growth has slowed down in recent years, poverty remains high and large inequalities persist. In particular, the South African economy is still experiencing very high unemployment, in particular amongst low-skill individuals, while there is shortage of high-skill workers.

The present paper aims to provide some insights on the nexus between South Africa's mitigation objectives and the key development challenges outlined above. It focuses in particular on economic growth and unemployment, in the context of inequality and education. For this purpose we developed IMACLIM-SA a dynamic, computable general equilibrium of the South African economy. IMACLIM-SA represents the South African economy as a small, opened economy with ten sectors (five energy, five non-energy) and five household classes. Calibrated on 2005 data, the model produces an equilibrium of the economy in 2035 based on assumptions about change in key parameters.

Particular attention is paid to the input data, with the production of a revised social accounting matrix to match monetary flows drawn from macroeconomic statistics and energy flows drawn from energy tables. The model also captures differences in the prices of goods and services (notably energy) between firms, households, the public sector and exports. We use outcomes of runs of the SA TIMES model of the Energy Research Centre of the University of Cape Town to inform changes in electricity production in IMACLIM-SA. Particular attention is given to the labour market, in terms of supply—with three skill classes—, labour demand in production and market functioning and imperfections.

In the reference scenario, given our assumptions, GDP grows at an average rate of 3.4% per year, and GDP per capita more than doubles over the period. It must be noted
that to generate such level of growth in the baseline, we must assume not only capital and labour productivity improvements, but also an increase in international prices relative to domestic ones, thus improving competitiveness of South African products on the export market. Unemployment decreases markedly, though it remains important in 2035, and shortage of high-skill labour persists. In the reference projection, emissions increase substantially, despite implementation of the Updated Integrated Resource Plan of 2013.

We then explore seven policy packages based on the imposing a carbon tax of 100 Rand (ZAR 2005) per tonne of CO2 with different recycling schemes. We find that CO2 emissions in South Africa are sensitive to even a relatively "small" carbon tax by international standards, though it is high relative to 2005 domestic prices of energy. A R300/tCO2 carbon tax might help achieve the country's pledges. This is consistent with prior literature on mitigation in South Africa. Impacts on GDP growth and on unemployment reduction can be significant, with total GDP in 2035 at 2.5% to 15% lower for a R300/tCO2 carbon tax, but strongly dependent on the revenue recycling mechanism.

Amongst the recycling options we test, using carbon tax proceeds, we reduce a sales tax results in GDP growth on par with the reference projection, and in a higher level of employment, while CO2 emissions decrease. Using carbon tax proceeds for lump-sum transfers to households underperforms the reference in terms of GDP and employment, but achieves a strong reduction of inequality. Using part of the proceeds to invest in education results in accelerated growth, reduced employment and lower emissions—but this result depends on assumptions concerning the impact of additional investment in education, namely joint increase in growth of labour and capital productivity relative to the reference projection.

## O-4406a-02

### A Dynamic General Equilibrium Assessment of the Energy-Climate-Development Link in Mexico

F. Grazi (1); G. Landa (2); FX. Belloq (3); F. Reynés (4); I. Islas Cortes (5)

(1) Agence Française de Développement (AFD), Research Department, Paris, France; (2) OFCE, Paris, France; (3) Agence Française de Développement (AFD), Paris, France; (4) TNO, Delft, Netherlands; (5) National Institute of Ecology and Climate Change, Directorate for sectoral policy, Mexico City, Mexico

This paper offers an empirical application of the notion of energy transition to the Mexican economy and takes the next step of simulating medium- and long-term impacts of proposed and future energy policy on the environment and the Mexican economy. The starting point of the analysis comes from ThreeMe framework, a Multi-sectoral Macroeconomic Model for the Evaluation of Environmental and Energy policy, which is motivated by neo-Keynesian theory. It is designed to address dynamics of global economic activity, energy system development and carbon emissions causing climate change. The ThreeMe model is well suited for policy assessment purposes in the context of developing economies as it informs the transitional effects of policy intervention. In particular, disequilibrium can arise in the form of involuntary unemployment, inertia of technical systems and rigidity of labor and energy markets, as a result of delayed market-clearing in the goods markets and slow adjustment between prices and quantities over the simulation time path.

Calibrated to updated aggregate and sectoral national accounts data, a Mexican version of the ThreeMe is developed that accounts for 24 commodities—including 3 energy sources—and 32 sectors, with an explicit distinction between 11 energy sectors and 7 transport sectors. Electricity production is disaggregated into 9 technologies: hydro, geothermal, wind, solar, biomass, nuclear, coal-based, oil-based and gas-based. The ThreeMe-Mexico model is used to gauge the economic and environmental effects of energy fiscal policy measures in Mexico (namely the phasing out of energy subsidies and the implementation of a carbon tax). Different policy scenarios are assessed, each reflecting a different strategy of fiscal revenue recycling. We consider fiscal policy for energy transition in Mexico of the type of carbon tax and simulate the effects on Mexico of the emissions of alternative government's patterns of transferring tax

revenues. The level of the carbon tax is endogenously computed to meet national emissions reduction targets, as stated in the Mexican "Climate Change Law". In line with government's "IDEAL scenario", we consider emissions cuts of 40% in 2030/50% in 2050 as compared with the baseline and the 2000 levels, respectively. This requires carbon tax to reach US$ 100 in 2030 and US$ 867 in 2050. We take the case with no tax compensation for the first. Because of substitution effects in energy-intensive production industries, income taxes and producers' policy is successful in reducing CO2 emissions by more than 80% by 2050 with respect to BAU. But the environmental goal is achieved at very high economic costs, with GDP dropping by more than 10% after 2040.

Then we test the hypothesis of full redistribution of carbon tax revenues among consumers (through reducing household income taxes) and producers (through compensating for social security payroll taxes), which appears as a way to reconcile environmental and economic goals. It is shown that such pattern of revenue transfer has beneficial impacts both on GDP and CO2 emissions reduction. With respect to the no-redistribution pattern scenario gains on latter feature slightly lower (75% vs 80% decrease in emissions, respectively) because of rebound effects: increased economic activity from redistribution leads to enhanced production and consumption, which ultimately drive energy use. Our results support the notion that promoting a carbon tax is compatible with both environmental and economic gains. Sensitivity tests are undertaken including utilizing alternative parameter values for the alternative substitution mechanisms. It is found that CO2 emissions reduction is low when the elasticity of substitution between capital and energy is constant (in absence of endogenous energy efficiency) and when the elasticity of substitution across types of commodities is low. Moreover, the economic gains from the tax crucially depend on the inflationary pressure resulting from the taxation policy (and therefore on the wage setting process) and on responsiveness of Mexico's economy to foreign competition.

This paper is the result of a two-year research collaboration involving the National Institute of Ecology and Climate Change (INECC) the French Economic Observatory (OFCE) and the French Agency for Development (AFD).

## O-4406a-03

### A conceptual framework for the quantification of co-benefits

D. Urge Vorsatz

Abstract not communicated

## O-4406a-04

### The Interaction of Climate Mitigation and Universal Energy Access Policies

S. Pachauri (1); N. Rao (2); K. Riahi (3)

(1) International Institute for Applied Systems Analysis, Laxenburg, Austria; (2) IIASA, Energy, Laxenburg, Austria; (3) International Institute for Applied Systems Analysis, Energy Program, Laxenburg, Lower Austria, Austria

The vast majority of scenarios assessed in the IPCC's AR5 focus attention on mitigating greenhouse gas emissions, but fail to sufficiently analyze some of the critical linkages between climate and development (IPCC, 2014b). One of these linkages is the risk that higher energy prices from mitigation policies exacerbate energy poverty, which can in turn increase mortality from indoor air pollution. Four million lives are lost every year from traditional stove use (Pachauri et al., 2013). In India alone, over 700 million people still depend on solid fuels for cooking, whose eradication is an important development objective. With increasing pressure from the international community to undertake mitigation efforts, including removing fuel subsidies, the risk of slowing modern energy uptake is real.

No studies have examined the interaction between policies to promote (fossil-based) modern energy access for cooking and climate mitigation policies. The distributional outcomes depend on existing subsidy policies, patterns of income growth, and the types of climate policies. This paper presents a rigorous assessment of these issues using the MESSAGE-Access model, a household
fuel choice model that is part of the MESSAGE integrated assessment model at IIASA. The regional focus of this paper is South Asia. The paper will present outcomes of solid fuel dependence, income shocks, policy costs and environmental impact under different climate and access policies.

References:

IPCC, 2014b: Climate Change 2014: Impacts, Adaptation,

and Vulnerability. Part A: Global and Sectoral Aspects. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (eds.). Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA

Pachauri, Shonali, et al. «Pathways to achieve universal household access to modern energy by 2030.» Environmental Research Letters 8.2 (2013): 024015.

# 4406b - Climate change and Development: Alleviating poverty and achieving inclusive development within the constraints of a global carbon budget and other planetary boundaries

## ORAL PRESENTATIONS

### K-4406b-01

#### Climate change and poverty

##### S. Hallegatte (1)

(1) Climate Change Group, Washington, United States of America

Climate change and climate policies will affect poverty reduction efforts through direct and immediate impacts on the poor and by affecting factors that condition poverty reduction, such as economic growth. This presentation will summarize a research program conducted at the World Bank with many external partners to explore this relation between climate change and policies and poverty outcomes by examining three questions: (1) the static impact on poor people's livelihood and well-being; the impact on the risk for the non-poor individuals to fall into poverty; and the impact on the ability of poor people to escape poverty. The presentation proposes four channels that determine household consumption and through which households may escape or fall into poverty (prices, assets, productivity, and opportunities). It then discusses whether and how these channels are affected by climate change and climate policies, focusing on the exposure, vulnerability, and ability to adapt of the poor (and those vulnerable to poverty). It reviews the existing literature and offers three major conclusions. First, climate change is likely to represent a major obstacle to a sustainable eradication of poverty. Second, climate policies can benefit the poor provided that (i) poverty concerns are carefully taken into account in their design and (ii) they are accompanied by the appropriate set of social policies. Third, climate change does not modify how poverty policies should be designed, but it creates greater needs and more urgency. The scale issue is explained by the fact that climate will cause more frequent and more severe shocks; the urgency, by the need to exploit the window of opportunity given to us before climate impacts substantially increase.

### K-4406b-02

#### Planetary Boundaries: Abundance within a Global Carbon Budget

##### J. Rockström (1)

(1) Stockholm Resilience Center, Stockholm university, Stockholm, Sweden

Planetary Boundaries: Abundance within a Global Carbon Budget

Extraordinary climate stability since the end of the Holocene 11 000 years ago, has provided the necessary conditions for human development. Human activity is now pushing the Earth system towards the limits of its ability to support further unsustainable development, in many cases posing the greatest threat to the survival of the poorest and most vulnerable societies. These planetary boundaries describe the human influence on and limits to Earth's life-support systems. Within the current paradigm of development, we have already crossed planetary boundaries associated with carbon dioxide levels driving climate change, the loss of biodiversity, the addition of phosphorus, nitrogen and other nutrients to ecosystems, and deforestation. The latest research shows that in some cases these changes may be irreversible, having crossed

a tipping point.

A new framework of sustainable development is required to ensure that humanity remains within the 'safe operating space' of the planet defined by the planetary boundaries, whilst allowing all societies to become more prosperous on a resilient planet. 2015 offers a unique opportunity to address key aspects of this existential challenge. Negotiations on the new Global Climate Agreement in December and discussions on the UN Sustainable Development Goals in September, are important fora for charting a holistic path to an equitable and safe future for all societies. The risk of crossing additional planetary boundaries will rise with delay, action on both these fronts, driving the Earth system further away from the stable conditions that have supported human development until now. In particular, a global climate change agreement that limits warming to well below 2 degrees and respects key equity principles is necessary to enable achievement of development objectives.

This contribution draws on recent new research on Planetary Boundaries and on the Earth Statement project led by the Earth League.

### K-4406b-03

#### Feasible Mitigation Options for Developing Countries

##### J. Steckel (1); M. Jakob (2); N. Rao (3)

(1) Mercator Research Institute for Global Commons and Climate Change, Climate and Development, Berlin, Germany;
(2) Mercator Research Institute for Global Commons and Climate Change, Berlin, Germany; (3) IIASA, Energy, Laxenburg, Austria

This talk will emphasize challenges and possibilities for climate change mitigation in the context of sustainable development imperatives. Mitigating global climate change will require large scale reductions of GHG emissions not only in industrialized, but also in developing countries. However, historically, economic and social development has been highly correlated with fossil fuel use. In the recent past, economic growth in China, which has lifted hundreds of millions people out of poverty, has gone hand in hand with a dramatic carbonization of the Chinese energy system. As other newly industrializing countries are currently following the same track there is a risk of creating a lock-in of carbon-intensive energy infrastructures which will render ambitious climate stabilization targets difficult to achieve.

Even though the recent surge in coal has been accompanied by a market-driven proliferation of renewables in emerging economies, such as China and India, the question arises how, and to what extent, the pursuit of economic growth and poverty alleviation can avoid the repetition of historical carbon-intensive development patterns.

While mitigation costs are expected to be moderate on the global scale, they still can – depending on the burden sharing scheme in place – pose serious challenges for financially and institutionally constrained, developing countries. For these countries, other considerations, such as poverty alleviation, are likely to constitute more pressing short-term policy objectives. Even with financial support from the global community, there are serious concerns regarding the potential negative effects of financial inflows e.g. on the development of advanced industries.
Various approaches have been proposed to support developing countries in formulating national climate policies, including financial assistance of USD 100 bn per year from the Green Climate Fund. Such transfers can only be effective if they are designed in a way that minimizes potential adverse effects by means of transparency mechanisms, monitoring and conditionality. They also need to guarantee ownership by recipients by embodying a broad perspective on climate change that takes into account particular countries' specific development objectives. In this regard, recent research has highlighted that policies that do not only aim at reducing emissions, but also leverage substantial co-benefits are most likely to be politically feasible. Prominent examples of such 'win-win policies' include clean-air policies, reforming fossil fuel subsidies, and improving public transport systems, as well as improved agricultural practices and inclusion of climate change considerations in regional trade agreements.

As a consequence, these policies have the potential to
overcome the "dangerous climate change vs. dangerous
mitigation" dilemma. By defining appropriate guardrails
for natural as well as social objectives, they incorporate
a multi-dimensional perspective of sustainable
development. Such sustainable development objectives
could further advance bottom-up initiatives for individual
countries to embark on climate-friendly development
pathway which provide an important entry point for more
ambitious climate policies - including an internationally
binding agreement - in the future.

O-4406b-01

Human development in a climate-constrai-
ned world: what the past says about the future

W. Lamb (1) ; N. Rao (2)

(1) Tyndall Centre for Climate Change Research, School of Mechanical, Aerospace and Civil Engineering, University of Manchester, Manchester, United Kingdom; (2) IIASA, Energy, Laxenburg, Austria

Energy consumption is necessary for the delivery of human development by supporting access to basic needs, services and infrastructures. Given prevailing technologies and the high degree of inertia in practical rates of decarbonisation, raising global living standards may entail growth in energy consumption and consequent greenhouse gas emissions (GHG) impact on the climate system. Yet despite considerable elaboration in the literature on equity proposals and the 'fair burden-sharing' of emissions rights between industrial and developing nations, this is very little clear about the energy use necessary for development and likely arising emissions. This is a present issue in the context of on-going international negotiations, where it is now recognized that the participation of all major emitters, including key developing countries, is required to break the climate impulse. Our question thus focuses on extrapolating existing trends in energy growth, emissions and human development progress: highlighting the level of policy ambition that will be necessary to meet the twin challenges of climate change and poverty alleviation.

We build on recent work analysing the interaction between human development, energy use and GHG emissions [1-3] and base our presentation on a forthcoming publication in Global Environmental Change [4]. Yearly cross-section regressions on 3 pairs of country development and environmental impact indicators are performed for the period 1990-2010: life expectancy, access to basic needs and GDP per capita as dependent variables; per capita final energy consumption as an independent variable. Access to basic needs is a composite indicator comprising six dimensions of the bare minimum requirements for development (access to sanitation, electricity, water, food supply, education and a survival rate). Following Steinberger et al. [1] and Costa et al. [2], the estimate hyperbolic saturation curves from this historical data, on the basis of which we project future energy for 'development as usual' (DAU) to threshold levels of each human development indicator. This scenario incorporates the observed autonomous improvement in the efficiency of delivering human development, but assumes no near-term climate policy. In the final stage of our analysis, the DAU scenarios are translated into GHG emissions using intensities from an integrated assessment model (IAM) and the resulting pathways are compared to a cost-based

allocation of emissions rights. This allows us to contrast
likely development emissions with a mitigation scenario in
which only economic efficiency is prioritized.

We find an unbroken, near-continuous trend in human
development improvement over the past two decades.
As in previous studies we find a high rate of decoupling
between human development and energy consumption,
but with regionally distinct patterns leading to diverging
estimates of the total GHG emissions required for meeting
development needs. Nonetheless, in the absence of policy,
human development in these regions is likely to generate
approximately 1000Gt CO2eq at 2050, a quantity unlikely
to be compatible with internationally agreed goals to
limit the climate change to 20C. The results are sensitive to
the rate of decoupling and level of ambition in human
development progress, with existing examples of more
efficient pathways offering hope that such emissions may
be avoidable. Compared with the IAM scenario, a cost-
based allocation of emissions rights also appears difficult
to reconcile with poverty alleviation; while high levels of
basic needs and life expectancy can be satisfied at lower
levels of emissions than continued economic growth.

[1] Costa, L., Rybski, D. & Kropp, J. P. A human development framework for CO2 reductions. PLoS One 6, e29262 (2011).

[2] Steinberger, J. K., Timmons Roberts, J., Peters, G. P. & Baiocchi, G. Pathways of human development and carbon emissions embodied in trade. Nat. Clim. Chang. 2, 81–85 (2012).

[3] Rao, N. D., Riahi, K. & Grubler, A. Climate impacts of poverty eradication. Nat. Clim. Chang. 4, 749–751 (2014).

[4] Lamb, W. F. & Rao, N. D. Human development in a climate constrained world: what the past says about the future. Glob. Environ. Chang. (forthcoming)

O-4406b-02

Projecting Household Surveys to Assess
the Impact of Future Economic Conditions
and Climate Change on the Poor

J. Rozenberg (1) ; S. Hallegatte (2)

(1) World Bank, Climate Change Group Chief Economist
Office, Washington, DC, United States of America; (2) Climate
Change Group, Washington, United States of America

This paper quantifies the potential impacts of climate
change on poverty in 2030 and 2050, in 92 countries
covering 90% of the developing world population. It
accounts for the deep uncertainties that characterize
future socio-economic evolution. It also considers
many impacts of climate change, based on original work
commissioned by the World Bank.

To build scenarios, we use a micro-simulation model based on household surveys and explore a wide range of uncertainties on future structural change, productivity growth or demographic changes. This results, for each country, in the creation of several hundred scenarios for future income growth and income distribution. We then explore the resulting space of possible futures, using several indicators of poverty and income distribution and use scenario discovery techniques to identify the main drivers of inequalities and poverty reduction. Inequality and poverty depend on drivers that differ across countries. We find that in many countries, redistribution and structural change are powerful drivers of poverty and inequality reduction, except in low-income countries. In the poorest countries in Africa, for instance, reducing poverty cannot rely on redistribution but requires low population growth and sustained productivity growth in agriculture.

Once we have explored the space of possible outcomes for poverty and inequalities in each country, we choose two representative scenarios of the best and worst cases and model the impacts of each. In each of these two scenarios, climate change impacts are modeled through 4 channels. First, climate change has an impact on labor productivity growth for people who work outside because of higher temperatures. Second, climate change has an impact on human capital because of more severe stunting in some places. Third, climate change has an impact on physical capital via more frequent natural disasters. Fourth, climate change has an impact on consumption because of changes in food prices. Globally, we find that climate change increases poverty in the two scenarios. Impacts are very heterogeneous across countries and
are mostly concentrated in African and South-East Asian countries. For high radiative forcing (RCP8.5), the impact of climate change on poverty is 6 times larger in the pessimistic scenario than in the optimistic scenario, illustrating how development and poverty reduction are powerful adaptation tools. Our results stress the urgency of achieving poverty eradication by 2030 in order to limit the negative impacts of climate change on the poor.

## O-4406b-03

### Climate resilient development: indicators and selection criteria for climate aid financing

A. Miola (1)

(1) EU Joint Research Center Institute for Environment and Sustainability, Climate risk management unit, Ispra, Italy

This work aims to contribute to the debate on climate change policies and their link to development. We adopted a climate resilient perspective to understand how climate change policies objective can be reconciled with development goals and to explore win-win opportunities given by the integration of the climate change and poverty reduction policies.

First, we review the main theoretical concepts that characterise the scientific literature on climate risk and vulnerability assessments, and identify climate resilient indicators accordingly.

This made it possible to build the theoretical foundations for a newly design index, design to improve our understanding of the implications of aid financing on reversing unsustainable paths, reducing vulnerability to climate change related hazards and get more equitable outcomes.

The novelty of our contribution lies on the emphasis given to economic aspects related to climate risk assessment, most notably: the concepts of loss and damage, the understanding of factors enhancing economic resilience, the links between climate change policies and development (besides economic growth) and the acknowledgement of the role of natural capital in pursuing development policies.

By reviewing grey and peer-reviewed literature, we identified 133 suitable indicators, which have been grouped along six components. These have been selected from a preliminary list of 300 indicators, on the basis of general criteria like validity, data availability and their value in terms of information potential. Other specific criteria have been considered, to ensure that the indicators shortlisted are theoretically robust.

## O-4406b-04

### Historical analogies to forecast climate change induced fluctuations of Western African countries' macroeconomic indicators

F. Baarsch (1) ; M. Schaeffer, (1) ; J. Granadillos (1) ; AS. Lüttringhaus (1) ; D. Coumou (2) ; B. Hare (1) ; M. Krapp (1) ; A. Robinson, (3) ; R. Makhaza (1) ; R. Schwarze (4) ; M. Knaus (2)

(1) Climate Analytics, Berlin, Germany; (2) Potsdam Institute for Climate Impact Research, Potsdam, Germany; (3) Universidad Complutense de Madrid, Madrid, Spain; (4) UFZ, Leipzig, Germany

Due to the increased impacts of climate-related extreme events, a rapidly growing literature has documented the relation between macroeconomic outputs, climate variability and human induced climate change. Methodologies either rely on modelling or on statistical approaches showing that climate variability and future human induced climate change could have effects on gross domestic product (GDP). However, current statistical approaches mostly rely on linear econometric regressions with limited specifications of climate variables, while models have a limited evidence basis.

Using a statistical approach for its evidence basis, we investigate the relationships between macroeconomic variables (investment, trade balance, sectoral value added and GDP) and climate variables in Africa from the 1960s to the present. The approach is based on a

nonlinear econometric model using a piecewise regression function adapted from Schlenker and Robert (2009). Time-lagged effects are also investigated. A large set of specifications of climate variability is assessed as regressors including among others: weighted anomaly standardized precipitation, and Palmer drought severity index. For each 'piece' of climate variability in Western Africa we infer climate analogy coefficients estimating the relation between climate variability and a climate-induced fluctuation of macroeconomic output.

Applying the inferred coefficients to projections from global and regional climate models, we estimate their effects on GDP and adjust African Development Bank's forecasts for Western Africa.

This research project is supported by the United Nations Environment Programme (Regional Office for Africa), the African Development Bank and the United Nations Economic Commission for Africa.

## 4406 - POSTER PRESENTATIONS

### P-4406-01

#### Underlying causes of the growing adaptation deficit in the context of development

I. Burton (1)

(1) University of Toronto & IPCC (AR5 WGII Chap. 20), School of the Environment, Toronto, Ontario, Canada

Evidence is presented to show that climate change adaptation (CCA) and disaster risk reduction (DRR) are promoted and implemented with little or no reference to the development practices that are generating increased risk. The reverse is also true. Aggregate public and private investments made largely regardless of their contribution to increased exposure and vulnerability, exceed by orders of magnitude the present and projected expenditures on CAA and DRR. Reports on Inclusive Green Growth (World Bank 2012) and cumulative evidence on the changing pathways to impact (van de Berg and GEF 2013) provide information to show that the «cure to damage» ratio is in the order of 1:1,000. In the public sector a current estimate of what funds are available annually to developing countries for adaptation (S1 billion) compares with S1 billion of comparative estimates of amounts of public funding available for harmful practices such as subsidies for fossil fuels, water practices that deplete resources, fisheries and agriculture (IMF).

A similar story applies to increasing losses from «natural» disasters that will be increasingly related to weather and climate. The dominant economic and investment paradigm of development accords little attention to the incidental effects, in increasing exposure and vulnerability. Thus the adaptation deficit (Burton 2004) continues to grow along with the disaster risk reduction deficit.

Development investments (especially in the private sector) that increase risk are being explained as «the cost of doing business», or simply as «externalities». This is reminiscent of the problem of acid precipitation and other pollution issues of a generation ago, where eventually transboundary and regional agreements were achieved through the recognition of «the polluter pays principle». If humanity to move more effectively towards a common future there will have to be a similar recognition of the principle «the creators of disaster risk and the adaptation deficit pays». Without such transformation the adaptation deficit and the disaster risk deficit are likely to keep on growing with serious consequences for our common future.

### P-4406-02

#### Climate policy architecture for the Can-cun's paradigm shift: Building upon the lessons from history

C. Cassen (1) ; JC. Hourcade (2) ; PR. Shukla (3)

(1) CIRED, PARIS, France; (2) International Research Center on Environment and Development (CIRED), Paris, France; (3) Indian Institute of Management, Ahmedabad, India

In the succession of Conferences of the Parties (COP) since Copenhagen, the Canun conference (PART-16) marked a turning point at least on paper: it calls for "...a paradigm
shift towards building a low-carbon society that offers substantial opportunities and ensures continued high growth and sustainable development" (paragraph 10). It introduced a notion of "equitable access to sustainable development" (EASD) "in the context of "shared vision for long-term cooperative action" and "global peaking of GHG emissions". The economics of climate policy after Rio led to a climate centric paradigm which departs from the original UNFCCC's cooperative framework for setting climate policies in the perspective of sustainable development. This resulted in a pure cap-and-trade approach of which adverse effects on development should be mitigated through appropriate transfers. This "fair burden sharing" paradigm could not but fail to untie the development-climate GORDAN knot and lead to lose sight of the benefits of cooperation in a global agreement to abate GHGs emissions.

The challenge is now to align development and climate objectives considering the changing context since the nineties with both a re-equilibrium of the world economic balances and the adverse context created by the 2008 financial crisis. This paper proposes an organization of carbon finance as part of a general reform of the financial system, with the adoption of a carbon value as a notional price to trigger a wave of low carbon investments in the world and redirecting parts of the global savings towards low carbon investments, thus providing a lever for an equitable access to development.

The paper begins first by elucidating the misconceptions about the Kyoto Protocol (KP) so as to identify which of these may impair any approach to enforce the Cancun's paradigm shift. Second, it discusses the rationale for an international climate regime that the Nationally Applicable Policies and Activities (NAMAs) embarked in the INDICS are considered as the primary tool of GHGs abatement. Third, it lays out the principles of a climate regime centered on scaled up climate finance, through the issuance of a carbon asset by the Central Banks of volunteering Parties. A right balance between an aspirational regime and a least common denominator regime should follow five principles: a) preserve the idea of allocating targets and timetables for countries with a controlled degree of "when" and "where" flexibility (COP 1997), b) leave latitude to Parties to select the NAMAS apt to align their climate and development policies so that there is no misinforming about environmental colonialism, c) follow principle of "common but differentiated responsibilities (CDBR)" in accordance with the article 3.1 of the UNFCCC, d) ensure that renegotiations every five years will not generate unstable signals for economic agents, e) motivate countries to reflect on unmitigated emissions pledges and to narrow the gap between these pledges and an emissions trajectory compatible with the 2°C target, and f) deprive a defaulter country of the benefits of the system approach of technological cooperation or in varied scholars' proposals of a "carbon club" of voluntary countries.

A mechanism organized around carbon based assets could meet these principles through a pull-back force anchored around two pillars. The first pillar rests on allocating to each participating country a part of the global emissions budget. What makes a compromise easier with this mechanism force compared to the cap and trade system is that the pull-back force does not trigger immediate adverse impacts for households and industry. The second pillar rests on emissions pledges and commitments to issue carbon assets as means of motivating each country to announce emissions target at every five year period and to comply with their commitments.

The key features of this regime does not prescribe the content of the climate architecture several decades ahead but launches a learning process that follows principles robust enough to align climate and development policies without abandoning the 2°C stabilization objective.

## P-4406-03

### Can climate compatible development provide an alternative development pathway for the global south?

L. Ficklin (1); S. Sallu (2) ; L. Stringer (2) ; A. Dougill (2)
(1) University of Leeds, Sustainability Research Institute, Leeds, West Yorkshire, United Kingdom; (2) University of Leeds, Sustainability research institute, Leeds, United Kingdom

Climate compatible development (CCD) is increasingly important to policy makers as a 'triple-win' strategy, combining climate adaptation and mitigation with development (Mitchell and Maxwell, 2010). CCD characterises a development pathway in that it is multi-sector, multi-stakeholder and multi-scalar (Stringer et al., 2014). What is less clear is if in bringing together climate adaptation and mitigation with development, CCD is creating an alternative development pathway or providing a means to connect existing development trajectories to wider mitigation and adaptation initiatives. This is an important distinction, yet there has been little research addressing it, both conceptually and empirically.

To date much of the empirical research on CCD has been at the project level, analysing how initiatives such as climate smart agriculture and climate change and improvement of rural livelihoods (Lipper et. al., 2014). However, there has been significantly less research on the institutional adaptation and implantation of CCD at the national level where such initiatives and policies are developed and approved (Ficklin et al., forthcoming). This is, in part, due to the complexity of contextualised framings of climate change and development issues and the diversity of how they are being integrated into policy frameworks. However, we argue that it is also because CCD is an emerging concept and there is not a clear conceptualisation of what CCD is, and how it differs from other development pathways such as 'climate resilience', 'green growth' and 'low carbon development'.

In this paper we compare and contrast the opportunities and challenges, motivations and resistance to creating an alternative CCD development pathway in Tanzania. In Swaziland, we have analysed drawn from semi-structured interviews conducted with national policy makers and stakeholders in the NGO and private sectors working at and across multiple levels, to provide the institutional perspective of CCD that is missing in the current literature. In addition, analyses from existing and forthcoming climate adaptation, mitigation, and development policies for each country are presented. The data presented was analysed with coding software and thematic matrices to source similarities and distinctions between the two country contexts. We draw out key discourses around adaptation, mitigation and development, identify what kind of CCD is occurring, and how it is being presented in national policies. We present further findings on stakeholder engagement, analysing how CCD is being contextually understood and practised and whose definitions and values count at different levels.

Our data suggest that CCD rhetoric in policy is in its infancy and that its component parts are framed differently in each country context. Therefore triple-win thinking with adaptation, mitigation and development is not as yet being extensively considered in policy. However, as it is emerging it is provoking questions and debate about the definitions of adaptation, mitigation and development in policy and by extension the coherence of these definitions between institutions, policies and financiers. Our data from Tanzania and Swaziland makes an interesting comparison between different contextualised national framings of climate change and development issues and how this affects the opportunities, challenges, motivations and resistance to CCD as a development pathway in two contrasting country contexts.

In analysing CCD as an alternate development pathway, this paper presents data about the conceptualisation and framing of climate change and development issues in Tanzania and Swaziland. Furthermore, it analyses how CCD rhetoric is shaping how adaptation, mitigation and development are defined in national policies and institutions, and the impacts this has on the opportunities and challenges presented by a CCD development pathway. Our analysis suggests that although CCD rhetoric is only just emerging, it is gaining traction with international financiers and national policy makers. As such further research on CCD development pathways in both national and regional contexts is required.

## P-4406-04

### Ending Energy Inefficient Foreign Aid

D. Hamza-Goodacre (1)
(1) ClimateWorks, CA, United States of America

Improving energy efficiency is one of the most effective
ways to reduce energy demand and energy-related greenhouse gas emissions around the world. However, the adoption of energy efficient infrastructure and technologies often faces many barriers. One of the biggest barriers in the developing world, where many of the largest opportunities for improving energy efficiency reside, is finance—access to predictable and affordable capital for infrastructure and manufacturing.

One of the most significant and influential sources of capital in developing nations is official development assistance (ODA) flowing through bilateral and multilateral development banks, such as US Agency for International Development and the World Bank.

Unfortunately, ODA may actually be helping to perpetuate the cycle of inefficient infrastructure and technologies in developing countries. While international development agencies do finance energy efficiency investments—$200 billion between 2007–2013—they invest far larger sums in infrastructure and industry, without necessarily considering energy efficiency impacts. The extent to which ODA may actually be locking in energy inefficient infrastructure and industry—and thereby contributing unnecessarily to climate change, energy poverty, air pollution and other development challenges—is not well understood. And standards and best practice for mainstreaming energy efficiency into the core lending portfolios of international development institutions are not well developed.

ClimateWorks and Climate Advisors are currently researching and assessing the potential for energy efficiency improvements in current ODA financing in order to make recommendations to end energy inefficient ODA. Though difficult to quantify now because data is limited, such changes could deliver a massive reduction in climate emissions in key developing nations. The project seeks to measure the global mitigation potential of ODA reform relating to energy efficiency and assess the politically feasibility of securing those reforms. The latest project research will be shared at the conference and discussion stimulated about the sectoral, institutional and regional focus, to ensure maximum progress in ending energy inefficient foreign aid.

## P-4406-05

# Need for Subtle Policy Changes to ensure Food Security under Climate Change: Perspective from Global South

LB. Kameppali (1) ; SK. Pattanayak (2)

(1) Karnataka State Women's University, Vijayapur, India; (2) Gulbarga University, Environmental sciences, Gulbarga, India

Food basket, in India as well the global South, over the years, became Wheat/rice based but with inherent limitation of irrigated land. For instance, India has only 42.9% land equipped with irrigation. Rest of region that cultivates Coarse Cereals such as Pearl millet, Finger Millet, Sorghum, Barley, but were left out as their produce is no more part of food system. On the other hand, there was a spike in global food prices in 2008. Some say that it is Indian attempt to offset its shortfall in paddy production from international market was the cause, making “food affordability” a global concern. Put differently, this interlinkages stresses the need for diverse food basket for food security. On the other hand, records show that in India, from 2001 to 2011, an area of 3,768,000 ha which was under coarse grains such as Pearl millet, Finger Millet, Sorghum, Barley was put to other crops. Another angle of Indian agriculture is its changing land ownership pattern. With economy growing, contribution of agriculture as sole source of household income decreased. It contributed for increased absentee land ownership and lease farming. Neither of it cares for maintaining and promoting land fertility nor the global food security. However, we argue that with suitable subtle policy changes such as a) shift to more effective and direct transfer of benefits, b) promotion of coarse cereals, c) Focused target group benefits would help achieve food Security sooner.

## P-4406-06

# Development perspectives of Sub-Saharan Africa under climate policies

M. Leimbach (1) ; N. Roming (2) ; A. Schultes, (3) ; G. Schwerhoff (3)

(1) Potsdam Institute for Climate Impact Research, Postdam, Germany; (2) PIK, Postdam, Germany; (3) Potsdam Institute for Climate Impact Research (PIK), Potsdam, Germany

Reduction of global greenhouse gas emissions at acceptable costs requires the inclusion of developing countries into a climate policy regime because their emissions grow rapidly. But less developed countries fear to suffer in terms of economic growth and domestic wealth. This study focuses on Sub-Saharan Africa as the lowest income region and demonstrates how it could benefit from joining an international climate agreement without delay. Based on a scenario analysis with the Integrated Assessment model REMIND, we estimate the economic costs and transformation needs under different assumptions on the climate stabilization target, cooperation and technology diffusion. From simulation results it turns out that Sub-Saharan Africa will suffer aggregated consumption losses of up to 3% under a global tax regime, but can even gain under a cap-and-trade climate policy regime that starts early with cooperative action and consistently follows acknowledged equity principles.

## P-4406-07

# Trading off climate change mitigation and poverty eradication in developing countries: drivers and constraints to institutional change

B. Rennkamp (1)

(1) University of Cape Town, Energy Research Centre, Cape Town, South Africa, France

The assumption of a trade-off between climate change mitigation and poverty eradication generally goes unchallenged. The UN Framework Convention on Climate Change established this trade-off, arguing that climate change responses take “into full account the legitimate priority needs of developing countries for the achievement of sustained economic growth and the eradication of poverty” (UNFCCC 1992). Developing countries can in theory call for support under the principle of shared but differentiated responsibilities, but the attempts to support Nationally Appropriate Mitigation Actions (NAMAs) haven't materialized at a large scale. Currently, countries focus on defining intended nationally determined contributions (INDCs). The results will be presented in the next Conference of the Parties (COP) in Paris.

This contribution is part of a research project that challenges this assumption asking the question whether this trade-off is always there or if win-win situations are possible? [1]

The main question of this contribution to the conference is to find out how the trade-offs between climate change mitigation and poverty eradication translate into the national climate policy process in developing countries. The findings can inform climate responses that can solve this trade-off and meet both climate and development objectives. Another purpose of the research is to better understand who benefits and loses from climate response and how barriers to institutional change can be overcome.

The theoretical contribution of the paper adds to the literature on institutional change in the studies of political economy. The paper identifies the drivers and barriers to institutional change in the existing literature (e.g. Strecke and Thelen 2005). It establishes the argument that trade-offs and distributional conflicts are significant determinants of success or failure of institutional change.

The methodology is an innovative discourse network analysis combining qualitative discourse and quantitative network analysis (Leifeld 2012). The analysis shows how actors organize in competing coalitions in relation to others depending on whether they support or oppose a specific policy intervention.

The research design consists of three climate change mitigation policies in South Africa. (There will be more results from Mexico and Thailand coming out later this year). The three policies are the carbon tax, the renewable energy program as part of the electricity sector reform, and the National Climate Change Response White Paper (NCCR) process (RSA 2011). South Africa exemplifies the need for urgent emissions reductions and poverty eradication. The country's emissions range with 0.9 Mt per capita at levels similar to Germany, while poverty
levels remain at 39% counting the national poverty line of 390 Rand/- 30 Euros per household per month (NPC 2011). The main source of greenhouse gas emissions is the coal dependent electricity and liquid fuels sector. All three policies were announced before the 17th COP held in Durban in 2011, but only the renewable energy program and the NCCR are under implementation. The analysis shows that the discourse in the debate on the carbon tax establishes trade-offs between economic growth, poverty alleviation and emissions reductions. Mechanisms to offsetting the carbon tax attempt to minimize these trade-offs. The reason for the lack of implementation lies in the distributional conflicts. The negotiations between the competing coalitions occur mostly without the participation of poor parts of the population and lack clear evidence of the impacts on low-income households.

### References

Leifeld P., 2012. Discourse Network Analyzer (DNA) Manual, http://www.philileifeld.de

NPC (2011). National Development Plan -2030. National Planning Commission. Tshwane.

RSA (2011). National Climate Change Response White Paper, Department of Environmental Affairs. Tshwane http://www.info.za.za/view/DownloadFileAction?id=152834.

Streeck, W., Thelen, K., 2005. Beyond Continuity - Institutional Change in Advanced Political Economies. Oxford University Press, Oxford.

UNFCCC, 1992. United Nations Framework Convention on Climate Change - Preamble http://www.un-documents.net/unfccc.htm - preamble, UN, New York.

[1] This study is part of the research project Climate Change Mitigation and Poverty Reduction (CLIMIP) funded

by the Programme «Europe and Global Challenges»

## P-4406-08

### Climate Change-related loss and damage: An opportunity for transformative change?

E. Roberts (1)

(1) King's College London, Geography, London, United Kingdom

The residual impacts of climate change - or loss and damage - are already being experienced in both developing and developed countries and given current emission trajectories the level and extent of loss and damage will almost certainly increase. The fact that loss and damage is being incurred now is evidence that the global community has not been successful at achieving the objective of the international climate change regime, to prevent dangerous anthropogenic interference on the climate system. Clearly the collective global mitigation effort has been insufficient to avoid loss and damage. However, it could also be argued that business as usual efforts at addressing the impacts of climate change through adaptation have also been insufficient to avoid the residual impacts of climate change. In fact, in many parts of the world the limits of incremental adaptation are being reached and human societies are being forced with a choice between incurring loss and damage or undertaking transformation. This paper will argue that the loss and damage agenda should be used as both a vehicle through which to implement comprehensive risk management frameworks and a platform to transform both development and adaptation to address the underlying drivers of vulnerability and enhance resilience.

# 4407 - The Challenges and Opportunities of Multilevel Adaptation Governance

## ORAL PRESENTATIONS

### K-4407-01

#### Adaptation principles and their application: Effective determinants for multilevel climate governance?

S. Kreft (1)

(1) United Nations University, Institute for Environment and Human Security, Bonn, Germany

The UNFCCC COP 21 climate summit in Paris at the end of 2015 is expected to yield a new agreement on climate change, that will provide the framework for international climate policy cooperation in the coming decades. Advancing adaptation to climate change is a political priority for many countries, especially island states and least developed countries, and a major expectation towards the outcome of COP 21.

At the international level there are emerging norms on the conduct of adaptation interventions - for instance through adaptation principles stipulated by the UNFCCC's Cancun Adaptation Framework decided in 2010. The presentation addresses the question of how these principles are taken into account in programming adaptation actions by international climate funds and bilateral initiatives. Initial results based on a standardized analysis of board and programme policy documents as well as project documentation point to an uneven uptake and effect of internationally agreed adaptation principles on these institutions. I use these insights to discuss the effect of broad level policy principles on multilevel climate governance and adaptation practice, and to debate the relevance of an evolution of adaptation norms in the context of advancing the climate regime in Paris.

### K-4407-02

#### Challenges of scales: exploring pathways to integrate locally-developed adaptation initiatives with national and regional deve-

#### lopment plans and adaptation policies

S.Huq (1)

(1) International Institute for Environment and Development, United Kingdom

Abstract not communicated

### O-4407-01

#### Opportunities for municipal climate adaptation: aligning local adaptation plans with provincial and national policy in South Africa

G. Ziervogel (1)

(1) University of Cape Town, Environmental and Geographical Science, Cape Town, South Africa

While some argue for a dedicated policy domain to focus on reducing climate impacts, others suggest that more comprehensive responses that integrate climate into existing policy domains are important. This presentation seeks to share the opportunities that enabled a local government municipality in South Africa, the Berengeri municipality, to develop an adaptation plan that aligned with local development policy, provincial climate change initiatives and developments in national climate policy. We suggest that multiple opportunities converged to enable a municipal plan to be rapidly developed through a collaborative process that aligned with policy across different levels. The process built on the successful partnership between a range of scientists, local government and provincial government actors that worked together to develop a municipal adaptation plan. Key elements of success include ways that scientists worked with different levels of government, the flexibility of the process and the knowledge sharing and capacity strengthening this enabled. This knowledge exchange helped to strengthen understanding across the science - policy - practice divide, resulting in climate scientists having a better understanding of the multiplicitous complexity of local level governance, and by the same token, provincial and local officials and councillors gaining a better understanding of the complexity involved
in producing locally relevant climate information. The research suggests that mainstreaming local climate adaptation plans with local development plans on one side and aligning local climate adaptation plans with provincial and national priorities on the other side, can help to create a conducive environment to co-producing local adaptation plans that aim to reduce both specific climate risk and meet generic socio-economic development needs.

### O-4407-02

## Limits and opportunities of private finance for adaptation in Least Developed Countries

D. Adis (1); T. Corrado (2); P. Pauw (3)

(1) Stockholm Environment Institute, Stockholm, Sweden; (2)

Stockholm Environment Institute, York, United Kingdom; (3) German Development Institute, DIE, Bonn, Germany

Interest in private finance for climate resilience is increasing rapidly. A wide range of actors – finance institutions, intergovernmental organizations, policy-makers, negotiators, research institutions, insurers and reinsurers, and private investors themselves – have been quick to join efforts to further identify opportunities for private investment in developing countries. However, it is far from clear how the private sector might make a substantial contribution – particularly for adaptation, where attempts to assess the finance landscape have so far been unsuccessful. Research has shown that private adaptation finance has yet to prove its worth and the role of the private sector in adaptation and adaptation finance has received little attention from developing countries in the UNFCCC climate change regime.

This paper considers the limits and opportunities to stimulating private sector contributions for climate-resilient development. Its focus is on three aspects of climate finance governance – enabling environments, established and innovative mobilisation mechanisms, and delivery mechanisms – as well as their ability to ensure scaled-up finance for climate resilience, and developing-country accessibility to this finance.

Specifically, the paper questions the potential of private finance for adaptation in Least Developed Countries (LCDs). National Adaptation Programmes of Action (NAPAs) are used to indicate overall national adaptation priorities, and complemented with national development plans for selected countries. Foreign Direct Investment (FDI) is analysed as a proxy for where foreign private sector investment flows autonomously. This is complemented with qualitative assessments of alternative forms of private investments, including green bonds, risk guarantees and mutual approaches. Through policy analysis and semi-structured interviews the paper: 1) highlights the institutional and regulatory frameworks, as well as knowledge and cognitive aspects, which are currently a barrier for an investment friendly enabling environment for the private sector; 2) the paper assesses existing and innovative mechanisms for mobilisation of private sector investment; and 3) the paper's third focus on delivery mechanisms maps private sector investments through participation (purely private and public-private) and scale (micro, meso, macro).

It is found that private sector flows to adaptation priority sectors are scarce, and their impacts on resilience often unclear. Increasing these flows would require that country-specific challenges be addressed. The paper highlights a lack of innovative mechanisms for LCDs and discusses limits and opportunities for multilateral climate funds, such as the Green Climate Fund, to attract and leverage private finance for adaption in key sectors, including food security, water resources, health, and energy security and access. It concludes that climate funds need to seek a combination of climate change adaptation and social and economic development and employment in order to maximise private sector contribution, both financial and non-financial.

### O-4407-03

## Bridging Communication and Trust Building for Local Climate Adaptation: A Case study of Tainan, Taiwan

R. Chen (1); HC. Lee (2)

(1) Chinese Culture University, Taipei, Taiwan; (2) National Central University, Chung Li, Taiwan

Local implementation is a key to the overall efforts in response to climate change. In local settings, adaptation planning copes not only with various consequences induced by climate change, but the multiple interests raised by those affected stakeholders. Dissonance is commonly seen among different sectors with regard to agenda setting and resource prioritization. This study, as a part of state-funded program, "Taiwan Climate Change Adaptation Technology" (TaiCCAT), is designed to reveal and remedy the discrepancy among different policy sectors by focusing on a Taiwanese city, Tainan.

With a long colonial history Tainan is a vivid city of tourism and cultural events. However, as a municipality, Tainan has an extensive jurisdiction covering urban, coastal, and rural areas. This diversity in life styles and ecosystems has invited severe vulnerability to extreme weather and its impacts, both floods and droughts. The primary investigation of this study has shown there are a series of asymmetries existing in policy participation, information sharing, resource allocation, and action taking among different sectors. Employing social network analysis, text mining techniques, and co-design research principles, this study further examines the contents of these discrepancies and aims to identify the key actors who are in the best network positions to smooth the channels of communication and trust building for local adaptation initiatives and water resource management.

## 4407-POSTER PRESENTATIONS

### P-4407-01

## Climate Change Adaptation: A Community Adaptation Small Grants Facility in South Africa

MA. Baudoin (1); M. Barnett (2); A. Bourne (3); C. Forbes (4); H. Karathanassis (4); Z. Jakavula (4)

(1) Climate and Development Initiative, Cape Town, South Africa; (2) South African National Biodiversity Institute, Cape Town, South Africa; (3) Conservation South Africa, Springbok, South Africa; (4) SouthSouthNorth, Cape Town, South Africa

Internationally, there is increased funding for Climate Change Adaptation (CCA) projects, especially in support of bottom-up initiatives. This recent emphasis stresses the relevance of local knowledge and practices in risk management – including dealing with climate variability and change. It also attempts to avoid top-down adaptation plans that often fail to address local climate vulnerability and needs. As a response to climate change, bottom-up approaches build on existing knowledge and practices to propose locally-relevant adaptation strategies. Moreover, bringing adaptation to communities provides more tangible impacts at the local level.

The Adaptation Fund (AF) is one of the international institutions promoting this approach. The AF is currently pioneering a direct access climate finance modality where developing countries can directly receive financial support for CCA without working through an intermediary. This presentation describes the project Taking Adaptation to the Ground: A Small Grants Facility for Enabling Local Level Responses to Climate Change, which is an initiative of the South African National Biodiversity Institute (SANBI). SANBI is the National Implementing Entity for South Africa, accredited by the AF, and works with and through the Department of Environmental Affairs, who is the National Designated Authority. The Community Adaptation Small Grants Facility (SGF) project aims to enhance resilience to anticipated climate change impacts in two project target areas in South Africa: the Mopani District Municipality (Limpopo Province) and the Namakwa District Municipality (Northern Cape Province). The project's Executing Entity is SouthSouthNorth. The Facilitating Agency for Namakwa is Conservation South Africa and the Facilitating Agency for Mopani is still to be appointed.

Poor, vulnerable communities often lack the capacities to access adaptation funding and to implement well-informed adaptation measures. To ensure that climate finance for adaptation activities reach those most at
risk, the SGF sponsors a community-driven CCA initiative that involves engagement with local stakeholders and beneficiaries in project development and implementation. Three main components will be implemented: 1) providing small grants to vulnerable communities for projects that deliver tangible and sustainable benefits; 2) empowering local institutions to identify and implement adaptation actions; and 3) compiling and sharing lessons to facilitate future up-scaling and replication of enhanced direct access modalities.

The SGF approach is, thus, an example of an internationally-funded initiative that is rooted firmly on "the ground". It is designed specifically to pilot an enhanced direct access modality for climate finance under the AF. Through the learning component of the project, lessons will be identified, collected and shared in order to provide recommendations for scaling up and replicating enhanced direct access in South Africa and beyond. This presentation will explore opportunities and challenges of bottom-up approaches for adaptation and the interplay between adaptation governance, management and execution at different levels of the SGF project.

## P-4407-02

# Considering one's options when the fish leave: A case study of the traditional commercial hand line fishery of South Africa's Southern Cape region

L. Gammage (1); C. Mather, (2); A. Jarre, (1)

(1) University of Cape Town, Marine Research Institute (MARE) & Department of Biological Sciences, Rondebosch (Cape Town), South Africa; (2) Memorial University, Department of geography, St John's, Canada

Many pressures (socio-economic, resource scarcity, policy, and regulation) make small-scale fishers and their communities vulnerable on a variety of fronts. Fishers need to cope with local and global changes and require systems that support their strategies to achieve resilience. The impact and interplay of these stressors at multiple scales need to be taken into account to develop a clear understanding of social-ecological linkages if sustainable livelihoods are to be promoted and guaranteed. There is however, a shortage of appropriately scaled, context-specific data, which is needed to inform various decision-making processes.

The present study researched vulnerabilities, as well as coping and adaptation in the small-scale, commercial handline fishery in six communities of South Africa's Southern Cape region: Witsand, Vermaaklikheid, Stilbaai, Melkhoutfontein, Gouritsmond and Mossel Bay, using semi-structured interviews, available census data and literature. Participants comprise boat owners, skipper, rights holders, crew, spouses/partners, as well as fish buyer and other persons associated to the fishery. Faced with multi-scalar changes to the broader fishery system, these fishers are forced to employ a wide range of strategies to cope and adapt to change. These changes, driven by multiple stressors on various spatial and temporal scales, affect not only the region overall, but display much variation in the impact felt by both individuals and individual communities. Not only are fishers required to cope with, and adapt to variability in the biophysical system, but they are also subjected to social and economic pressures as well as those created by policy and management decisions. Examples of such pressures include variability found in the natural environment with specific reference to weather fluctuations and the scarcity of the primary target species, pressures created by a perceived inadequacy of regulatory oversight and the administration of fishing rights as well as pressures created by the costs of living. Notably, these fishers have very little to no control over most of these stressors, as many of these changes are the result of larger, macro-scale events and developments, from which they are disconnected.

The coping and adaptation strategies employed by these fishers can be grouped into three main groups with socio-economic conditions and life histories of individuals within the six communities seemingly the biggest determining factor in decision-making. Both cognitive and reflexive decision-making processes are shaped by the experience of their past and present environments of both individuals and their communities and cannot be understood by direct impacts of stressors alone, which highlights the need to understand indirect effects and feedback loops in the

future. Practical implications of actions are not always the overriding concern in decision-making, underscoring the importance of culture and belief systems in decision-making. The severity of the challenges experienced with policy and regulatory processes may be exacerbated by a strong resistance to change, and the varying levels of resilience displayed by the different communities may be viewed in both a positive and negative light. Whereas one group of fishers have modernised their business strategies and intensified their fishing by going further offshore on larger, but more economic craft, the second and third group of fishers navigate the status quo because it is 'what they know". The second group, characterised by low formal education, poverty and the political marginalisation, mostly waits for help from the outside (e.g. through government poverty relief programmes or international aid). The wide array of alternative income options displayed by the third group in particular has so far allowed them to make it through hard times whilst always resuming fishing with largely changed business and fishing strategies. Tightening regulatory frameworks are forcing fishers to make decisions that particularly those in the third group are not comfortable making, especially when considering implications of the implementation of a recently legislated small scale fisheries policy. Coupled to this is an unwillingness to accept that the biophysical system may not always return to or be able to return to, its former state, exacerbated by current considerable scientific uncertainty of climate dynamics in this region.

## P-4407-03

# The approaches to learning in multilevel adaptation governance research - a systematic literature review

J. Gonzales Iwanici (1); A. Dewulf, (2)

(1) Universidad Nur, Development Studies, La Paz, Bolivia;

(2) Wageningen University & Public administration and policy group, Amsterdam, Netherlands

Within just the last few years the governance of adaptation to climate change has become a truly multilevel affair from global to local levels. International institutions like the UNFCCC are currently building an institutional framework to support adaptation. In the past few years, the local and local levels, but also "local" and national actors are increasingly taking an active role in international policy processes and seeking to shape these creating an emerging multilevel institutional context. In this context learning has been recognized as a central mechanism for individual and collective actors in adaptation at different governance levels to better adjust their responses to environmental change and uncertainty.

Climate change adaptation has been addressed in the literature mainly as a local or regional activity and thus learning has been also explored principally linked to the participation of local actors. From a multilevel perspective learning and learning-leops happen in layers from individual to groups to institutional/social at different governance levels. In the context of adaptation governance, as the one shaped by the UNFCCC learning will be needed across different governance levels to be effective in pursuing adaptation goals, adequate the scale and magnitude needed, and ensure a better fit between top-down and bottom-up approaches.

This motivated the systematic literature review of learning in multilevel governance of adaptation to climate change presented in this paper.

The paper analyzes how learning has been addressed both in the general multilevel governance literature and in the climate change adaptation governance literature. The paper summarizes a typology of learning as described in multilevel governance and climate change adaptation literature, discussing the concept of learning emerging from this two literature branches, the main methodological approaches used to assess and measure learning, different learning types and the factors that typically foster, block or inhibit learning in the way it is viewed by the literature.

The review contrasts these results with additional insight from policy learning and social learning approaches frequently used in multilevel governance and climate change adaptation literature to discuss the implications for multilevel governance and climate change adaptation governance, literature and extract the elements for conceptualizing level learning in the governance of climate change adaptation.
P-4407-04

## The role of residents in climate adaptation: a systematic overview of default and alternative roles

D. Hegger (1); P. Driessen, (1); H. Runhaar (1); H. Mees, (1)

(1) Environmental Governance, Copenhagen Institute of Sustainable Development, Utrecht university, Utrecht, Netherlands

Literature on roles and responsibilities of public and private actors in climate adaptation has hitherto devoted limited attention to the roles of residents (homeowners/tenants). Yet their role is crucial in addressing non- or maladaptation, as their initiative or consent is often necessary to take private property level adaptation measures. This paper provides a systematic sketch of default and alternative roles of residents in climate adaptation, based on a review of literature on the climate adaptation actions of residents. This covers three forms of residents' commitment to adaptation: (a) as citizens falling under the jurisdiction of various governmental levels; (b) as consumers (including home owners) in the market; (c) as civil society members. The overview suggests that there would be scope for alternative roles for residents in climate adaptation, especially regarding the latter two forms of commitment. The paper also discusses implications for research into and practice of adaptation governance.

P-4407-05

## Sustainable Climate Change Adaptation through Community Organizing and Participation: The Case of Bakhawan Eco-Park in Kalibo, Aklan, Philippines

E. Serrano (1)

(1) University of the Philippines Los Baños, Institute for Governance and Rural Development, College of Public Affairs and Development, Los Baños, Laguna, Philippines

This study aimed to analyze how community organizing and participation helped ensure sustainable climate change adaptation in Kalibo, Aklan, Philippines. Through key informant interviews, focus group discussions, and other personal communications, data were collected primarily from community members, local leaders, and development workers. Data were analyzed qualitatively.

It was found out that sustainable climate change adaptation takes place through collaborative action. It involves the participation of the local government, people's organization, community members, the academy, the private sector, and other government agencies. Findings also show that pooling resources, mobilizing the community, and providing livelihood opportunities enhanced adaptive capacity.

Since sustainable climate change adaptation requires the active engagement of different sectors of society, community mobilizing and participation should be given more importance in climate change adaptation interventions.

P-4407-06

## Interpretation of adaptation to climate change and governance

G. Simonet (1)

(1) CDC Climat Recherche, Paris, France

Over the last decade, many studies have focused on the institutions responsible for managing climate risks by analyzing responses, limits or barriers. Several studies have explored this path by focusing on the sources of the cognitive barriers that prevent actions, on the reasons and aspects of interests that motivate the denial and on the influence of cognitive factors on decision-making. Today, it has been widely acknowledged that people's beliefs and perceptions influence implementation of climate change adaptation. Regarding perception barriers, some authors keep highlighting the confused definition of adaptation and its various interpretations. However, few studies explored these issues directly with local policy makers who work directly on the elaboration or the implementation

of adaptation strategies to climate change. Moreover, a clear definition of what really means 'adaptation to climate change' is still working in progress, letting local authorities with their own interpretation of the notion.

Based on this framework, the ABSTRACT-colurba was launched in January 2014 by CDC Climat Recherche and two French public agencies (ADEME and AFD). The project proposes to increase knowledge on climate risk management at the urban scale by analyzing the levers and barriers (economic, organizational, cognitive) attached to decision-making processes upstream to the implementation of adaptation strategies to climate change. Based on a field study through 10 French local urban communities, the project is conducted within an action-research approach integrating local stakeholders. More specifically, the focus of the project is made on the intermediate size urban areas (50,000-100,000 inhabitants) chosen through different criteria (local dynamism, awareness, diversity of issues). Based on interviews and focus groups directly collected in the chosen case studies, the project analyzes the way the local communities elaborate and implement their own actions to reduce the vulnerabilities of the climate change of their territories. The first results of the project show that each urban community has its own way to interpret what does 'adaptation to climate change' mean, depending of the local issues, the local stakeholders dynamism or the allocated resources. The study aims to contribute to better define the shape of adaptation strategies to climate change once implemented and to better understand the influence of the cognitive factors on the decision-making process linked with local climate policy. Through restitution to the local stakeholders, the results participate to reinforce the capacity of local authorities to cope with the new climate realities.

P-4407-07

## A field study at the urban scale on adaptation: the ABSTRACT-colurba project

G. Simonet (1)

(1) CDC Climat Recherche, Paris, France

Launched in January 2014, the ABSTRACT-colurba project proposes to increase knowledge on climate risk management at the urban scale by analyzing the levers and barriers (economic, organizational, cognitive) attached to decision-making processes upstream to the implementation of adaptation strategies to climate change. Based on a field study through 10 French local urban communities, the project is conducted within an action-research approach integrating local stakeholders. The contribution aims to present the original approach and the preliminary results of the ABSTRACT-colurba project and to contribute to continue to define what adaptation to climate change means at local level.

P-4407-08

## Current status and future prospects of community based adaptation: sharing experience of coastal Bangladesh

S. Uddin (1) ; M. Azam (2)

(1) Prodiman, Climate Change Section, Daulatpur, Khulna, France; (2) Prodiman, Climate Change Section/Macquarie University, Daulatpur, Khulna, Bangladesh

This study investigates the impacts of climate change on the two most vulnerable coastal districts of Khulna and Bagerhat in Bangladesh by analysing both current and predicted changes to the coastal environment and livelihood patterns. In particular, it examines the climate change adaptation strategies undertaken at the grassroots level, in order to propose improved strategies for mainstreaming climate change adaptation and mitigation. Although some community based adaptation strategies through livelihood diversification have already been implemented to mitigate the impacts of climate change, but there seems to be a lack of adoption of these initiatives at the local level. Accordingly, this paper examines ways to more effectively implement strategies that will mitigate the impacts of climate change in the affected communities. Our first principal finding is that the coastal region of Bangladesh currently experiences livelihood and food security as a result of the impacts of climate change. In particular, large numbers of people are being
displaced, either through a temporary move to find work during the lean seasons, or a permanent move to another place to avoid the unstable living conditions experienced in these vulnerable coastal districts. Our second finding is that the climate change adaptation initiatives currently implemented in the vulnerable coastal districts of Bangladesh are inadequate to support the huge number of people affected by the impacts of climate change in

# 4408 - Risk and Insurance

## ORAL PRESENTATIONS

### O-4408-01

#### The role of insurance for flood risk reduction in London: An agent based model approach

K. Jenkins (1) ; J. Hall (1) ; S. Surminski (2) ; F. Crick (3) ; I. Nikolic (4) ; J. Dubbelboer (4)

(1) University of Oxford, Environmental Change Institute, Oxford, United Kingdom; (2) Grantham Research Institute on Climate Change and the Environment, London, United Kingdom; (3) Grantham Research Institute on Climate Change and the Environment, London, United Kingdom; (4) Section Energy & Industry, Faculty of Technology, policy and management, Delft University of Technology, Netherlands

Flooding is recognised as one of the most common and costliest natural disasters in England. In London surface water flooding is considered to be the most likely cause of flood events, and probably the greatest short-term climate risk. More than 800,000 properties are estimated to be at risk, and while most drainage systems are designed to cope with a 1/30 year storm event, maintenance is often poor and so parts of the network can perform below these standards.

A particularly interesting aspect of flood management in England is the public-private partnership on flood insurance between the risk government and the insurance industry. Flood insurance is underwritten by the private market, while government commits to flood risk management activities. However, this agreement is currently under review with a new insurance system, Flood Re, proposed. The proposed system, which creates an insurance pool for properties at high risk of flooding, is presented by government and industry as a roadmap to future affordability and availability of flood insurance, with an anticipated run-time of 20 to 25 years. The mechanisms of the new Flood Re scheme are still being negotiated, and to date there is little mention of how the partnership between government and insurers, and the new Flood Re scheme could also promote effective flood risk reduction measures.

In order to investigate this partnership an Agent based Model (ABM) has been developed for Greater London. The ABM characterises five different agents: property owners, insurer, developer, government, and bank, which interact within the environment. The ABM has been designed such that it can investigate the public-private partnership and the specific issue of surface water flood risk, and analyse how the current and future proposals for the partnership could influence London's resilience to surface water flood risk today and in the future under various scenarios of climate change. Important questions it can address include the effect of surface water flood risk and insurance on household wealth; consequences of flood damage and insurance (un)availability for the housing market; and the role of incentives for risk reduction among different partners (including the government, insurers, and developers) to support flood defences, household level flood protection, and more appropriate spatial planning.

Ultimately, the model aims to highlight the potential benefits and limitations of the proposed Flood Re scheme for risk reduction, and test various options for the scheme, such as the inclusion of certain types of properties, and the financial implications of different transitional pathways to risk-based pricing of insurance in the longer-term. The model and research is highly relevant for the ongoing regulatory and political approval process for Flood Re, which have until now not received sufficient attention due to lack of data or analysis.

a way that will ensure the security of their livelihood. Accordingly, we conclude that less overlapping and more effective integrated actions between communities, civil society organisations, NGOs and various local government departments are needed in order to support community based adaptation and build a climate change resilient community at the grass-roots level.

The presentation will provide an overview of the ABM, the modelling of a spatially coherent probabilistic surface water flood event set, and highlight the key findings of the analysis of the current and proposed public-private partnership for risk reduction. It will highlight benefits and limitations of the current and proposed scheme, and provide recommendations for the scheme in order to help promote flood risk reduction and increase resilience in London.

### O-4408-02

#### Implications of risk based insurance premiums for flood preparedness and affordability of coverage

P. Hudson (1) ; W. Botzen (2) ; L. Feyen, (3) ; J. Aerts (4)

(1) IVM, VU University Amsterdam, Amsterdam, Netherlands;

(2) VU University Amsterdam, Institute for environmental studies - ivm, Amsterdam, Netherlands; (3) JRC, Ispra, Italy;

(4) VU University Amsterdam, IVM, Amsterdam, Netherlands

In some countries, such as Germany and France, it has been proposed that a movement towards risk based pricing of natural disaster insurance can stimulate investments in flood risk mitigation measures by policyholders. However, providing financial incentives for risk reduction activities through charging risk based premium may conflict with the affordability of insurance. This study examines the potential trade-off between risk reduction and affordability in a model of risk based public-private flood insurance in France and Germany that includes household flood preparedness decisions. Flood risk preparedness is modelled over time to examine adaptation to changing flood risk caused by climate change. In order to do so a risk flood risk misperception distribution is calibrated from observed survey data in order to provide a baseline estimate for the current employment rate of household flood risk reduction measures in order to judge the additional risk reduction benefits of insurance based financial incentives.

The results show that an insurance scheme offering premium discounts for reducing risk is potentially unaffordable for, at most, 23% of households at risk. Risk based incentives are able to promote the employment of risk reduction measures in both France and Germany. In particular, flood risk can reduce by 13% in Germany and 23% in France by 2040 compared with the current situation in which financial incentives for mitigation are absent. The higher level of flood risk in France results in a strong incentive to reduce risk in the present. Rapid growth of flood risks in Germany results in more effective financial incentives in later periods. The trade-off between affordability and financial incentives can be overcome via a voucher scheme. Providing these vouchers after 2040 is estimated to result in a level of damage reduction that is larger than the cost of the vouchers. A policy recommendation is that there is ample room for these countries to link flood insurance with financial incentives to guide household adaptation to changing flood risk.

### O-4408-03

#### What is the Role of Insurance for Addressing Climate-Driven Extreme Events?

I. Schumacher (1)

(1) IPAG Business School, Paris, France

The insurance of climate-driven extreme events is widely viewed as a potential ex-post means of reducing the damage born by those affected. However, while there are certainly valid arguments that support the use of insurance
when it comes to climate-driven extreme events, it is also clear that insurance cannot be the first-best solution to dealing with this mankind-induced problem.

In this article we discuss under which circumstances insurance may be viewed as a complement to adaptation and mitigation measures, and in particularly we shall focus on the following aspects: 1) when is the insurance of extreme events a desirable alternative to adaptation and mitigation policies; 2) how much value should be placed on the insurance of extreme events relative to adaptation and mitigation policies; 3) how important are the aspects of the insurance industry for these trade-offs, in particular the transparency of the insurance sector when deciding upon its premia; the investment perspective of the insurance industry; the coverage of the insurance industry and its interplay with a social security system.

### O-4408-04

## Weather index insurance in a changing climate

J. Daron (1); D. Stainforth (2)

(1) UK Met Office, Applied Climate Science, Exeter, United Kingdom; (2) London School of Economics, Grantham Research Institute, London, United Kingdom

Insurance and risk transfer products are increasingly being made available to low income households in developing countries to protect livelihoods from extreme weather and climate events. Index insurance products – where premiums and payouts are based on a proxy for loss (e.g. total seasonal rainfall) rather than the actual economic losses suffered – typically have lower administration costs, and therefore premiums, than traditional claims based insurance. Furthermore, payouts are made immediately when the proxy is triggered, thus reducing the time between a loss event and the receipt of an insurance payout. Various proponents, including the United Nations, have therefore supported the widespread dissemination of weather index insurance as a means to reduce vulnerability to weather extremes in low income communities. However, like most lines of climate-related insurance, weather index insurance products are typically designed using historical observed data only. It has not previously been well investigated how climate change might impact the viability of weather index insurance products.

It is with this background that we developed and demonstrated a method for assessing the viability of weather index insurance under altered climate conditions (Daron and Stainforth 2014). We utilise Bayesian Networks, which are graphical networks that propagate probabilities between variables and outcomes of interest. In our study we develop them as a tool for exploration – to help understand sensitivities and support insurers in assessing pricing structures and assumptions with different climate information. We apply the tool to a case study of weather index insurance for the rice crop in Kolhapur, India.

A hypothetical weather index insurance product is used in Bayesian Networks of increasing complexity that include different sources of climate information. We have observational rainfall data in addition to output from the UK Met Office Hadley Centre regional climate model (HadRM3), driven by model reanalysis data (ERA-Interim) and general circulation models from the Hadley Centre (HadCM3) and Max Planck Institute for Meteorology (ECHAM5). We show that the model data significantly underestimates the historical observed data and therefore question the reliability and utility of the climate model output. Furthermore, we discuss how observations can also be subject to errors and uncertainties.

Depending on the choice of input data, and the process of combining different datasets, we determine very different implications for the viability of the weather index insurance product under climate change. Yet the purpose

of the study is not to provide definitive answers of how climate change might impact weather index insurance in the case study region. Rather it is to demonstrate a possible method for combining multiple data sources to inform insurance decisions.

We conclude that without consideration of multiple sources of climate information, and an acknowledgement of the associated biases and errors, insurers are likely to miscalculate and misrepresent the underlying climate hazard risks with potentially adverse implications for policyholders. Used to understand the sensitivities of pricing structures and premiums to different sources of climate data, the Bayesian Network method shows promise as a potential tool to help insurers in making pricing decisions. However, the current generation of climate model output is shown to be of limited value and difficult to use by index insurance practitioners. We therefore caution that in the context of climate change, the absence of reliable, robust, quantitative model projection data means that choices considered optimal based on today's available model information may lead to maladaptation and risk significant losses to insurers in the future.

### References:

Daron, J. D. and D. A. Stainforth (2014) Assessing pricing assumptions for weather index insurance in a changing climate. Climate Risk Management, 1, 76–91

### O-4408-05

## Sharing of Climate Risks across World Regions

J. Emmerling (1)

(1) FEEM, Milano, Italy

Uncertainty is prevalent in the context of climate change impacts. Moreover, the distribution across the globe is not uniform. We analyze how climate risks could be reduced via an insurance scheme at the global scale across regions and quantify the potential welfare gains from such a scheme. Starting from the standard welfare analysis in Integrated Assessment Models (IAMS), which assumes no risk sharing across region, we introduce global risk sharing via a market for state-dependent Arrow-Debreu securities. We show that this allows equalizing relative consumption differences between states of the world across regions. We estimate that such risk sharing scheme of climate risks could lead to welfare gains reducing the global costs of climate change by up to one third, while the amount of transfers required is substantial. This provides arguments for considering risk sharing in IAMS, but also for potentially welfare increasing negotiations about sharing risks of climate change at the global level.

### O-4408-06

## On the cost of climate change for an insurance company

E. Masiello (1); D. Kortschak (2); P. Ribereau (1)

(1) Université Lyon 1, Institut Camille Jordan, Lyon, France;

(2) Institute for Economic and Innovation Research, Joanneum research, Graz, Austria

Climate change is of great concern for insurers because of increasing in frequency and intensity of extreme weather events which may represent some very serious insolvency issues. From a mathematical point of view, we derive asymptotics for the ruin probability of the insurance company in a risk model which has been updated in a way to take into account projected changes in some specific weather-related events like tropical storms for example. In practice, the results obtained so far are used to try to calculate the cost of climate change for an insurance company in a simplified portfolio. Some examples are presented to illustrate the theory.
# 4409a - The «new» climate governance: Driving societal transformations?

## ORAL PRESENTATIONS

### K-4409a-01

#### The Evolving Role of the UNFCCC in Global Climate Governance: From Regulator to Facilitator?

H. Van Asselt (1) ; F. Zelli (2)

(1) Stockholm Environment Institute, Oxford, United Kingdom; (2) Lund University, Lund, Sweden

It is widely acknowledged that the United Nations Framework Convention on Climate Change (UNFCCC) does not operate in isolation in global climate governance. Governance of climate change and options for improving its effectiveness are not properly understood through an exclusive focus on one of its elements (e.g. the UNFCCC process), but require examining how various elements work in conjunction. Such a broadened focus draws attention to the (potential) facilitative and catalytic role of the UNFCCC, an aspect that has been largely overlooked by commentators and has only recently received more attention in the Durban Platform negotiations on a future climate agreement. The paper explores this possible new role for the UNFCCC, in which it can keep track and review the outcomes of other actions, and strengthen them where possible. It explains the rationale for the new role, and highlights opportunities for as well as risks of 'outsourcing' parts of global climate governance to other international and transnational institutions, focusing in particular on the case of short-lived climate pollutants (SLCPs). The case is of high relevance since a variety of intergovernmental and public-private institutions have started to tackle SLCPs, such as black carbon and tropospheric ozone, including intergovernmental agreements such as the Montreal Protocol as well as new public-private partnerships such as the Climate and Clean Air Coalition. The paper concludes that a better understanding of the UNFCCC's facilitative role leads to a more nuanced assessment of the achievements of the UNFCCC in global climate governance.

### K-4409a-02

#### National climate governance. National Climate Policy Activity

D. Huitema (1) ; A. Jordan (2)

(1) YU University Amsterdam, IVM, Amsterdam, Netherlands;

(2) Tyndall Centre, ENV, Norwich, United Kingdom

States have been widely criticized for failing to advance the international climate regime. Many observers now believe that a "new" climate governance is emerging through transnational and/or local forms of action that will eventually plug the resulting governance gaps. Yet states, which remain oddly absent from most discussions of the "new" governance, will remain key players as governance becomes more polycentric. This presentation is based on two special issues (both edited by Andrew Jordan and Dave Huitema) that explore the ability of states to rise to these interconnected challenges through the analytical prism of policy innovation. We reveal that policy innovation is

much more multi-dimensional than is often thought; it encompasses three vital activities: invention (centering on the 'source' of new policy elements), diffusion (that produces different 'patterns' of policy adoption), and the evaluation of the 'effects' that such innovations create in reality. The papers in the special issues, which range from qualitative case studies to large 'n' quantitative studies, offer new insights into the varied roles that states play in relation to all three.

They show, for instance that: the policy activity of states has risen dramatically in the past decade; that state innovation is affected to similar degrees by internal and external factors; and that policies that offer flexibility to target groups on how to meet policy goals are most effective but that voluntary reporting requirements are ineffective. This presentation draws upon these and many other insights to offer a much more nuanced reflection on the future of climate governance: one that deservingly puts states at the front and center of analysis.

### K-4409a-03

#### Transnational Climate Governance: Performance and Future Prospects

M. Betsill (1)

(1) Colorado State Univ, Political Science, Colorado, United States of America

Today, the governance of global climate change takes place in a complex, multi-level and multi-actor landscape through a wide range of mechanisms such as multilateral treaties, carbon markets, certification schemes, urban planning codes, corporate sustainability programs, and so on.

Critical to this transformation is the emergence of transnational governance arrangements which cut across traditional state-based jurisdictions and operate across public-private divides. This talk will present the findings from a recent international research collaboration (Bulkeley et al., Cambridge University Press, 2014) analyzing 60 transnational climate governance arrangements to better understand the emergence, nature and consequences of this phenomenon and consider the broader implications for global climate governance.

### K-4409a-04

#### 'The political economy of contending pathways to de-carbonisation'

P. Newell (1)

(1) University of Suussex, Brighton, United Kingdom

Drawing on recent work on the politics of green transformations, this presentation will apply insights on competing pathways to sustainability to the case of de-carbonising the economy. It will look at a range of state-led, market-led, technocentric and civil society-led transformations, drawing both on contemporary and historical examples, to explore what light they shed on our ability to de-carbonise the contemporary global economy.

# 4409b - Climate Governance: New and emerging challenges after Paris

## ORAL PRESENTATIONS

### K-4409b-01

#### Paris and beyond: strengthening the research-policy interface

A. Sagar (1)

(1) Indian Institute of Technology Delhi, Humanities and

Social sciences, Delhi, India

While there has been some progress in the climate negotiations as well as in the broader climate arena, this still is not commensurate with the magnitude and urgency of the climate challenge. Therefore identifying the key issues underlying major roadblocks in the climate policy arena and then exploring way of realistically overcoming such roadblocks could be of great help. The Global Climate Policy Conference, which will be held in Delhi in April-May 2015 aims to provide an opportunity to research scholars
from around the world, selected through a competitive, rigorous evaluation process, to present their ideas on how to overcome roadblocks in the climate policy arena and also bring together a set of leading international experts to discuss specific key policy issues where research and analysis could contribute to improved climate policy-making. This session will present the best ideas discussed at the conference, along with their anticipated impact on climate policy-making at Paris and beyond.

## K-4409b-02

# Transparency and Accountability in Global Climate Governance

### A. Gupta (1)

(1) Wageningen University, Environmental policy group, Wageningen, Netherlands

In this paper, we review recent scholarship and the state of the art on the nature and consequences of a transparency turn in global climate governance. Transparency, as information disclosure, is being embraced by public and private climate governance arrangements, including, inter alia, the United Nations Framework Convention on Climate Change (UNFCCC) and the Carbon Disclosure Project, as a way to monitor and/or reward various actors' climate mitigation actions and performance. Such "governance by disclosure" is intended to further a variety of goals, including empowering recipients to exercise informed choice or hold disclosers to account for their (non-) performance, and improving sustainability performance. Our review assesses these posted relationships between transparency, accountability and sustainability in climate governance. We conclude by deploying our own "critical transparency studies" perspective, one that views information itself as fundamentally contested political terrain, to assess the transformative potential of transparency and informational governance in the climate realm.

## K-4409b-03

# The Legal Nature of the Paris Agreement: Much Ado About Nothing?

### F. Sindico (1)

(1) Strathclyde Centre for Environmental Law and Governance, 16 richmond street, Glasgow G1 1XQ, Scotland, United Kingdom

In 2009 at the Copenhagen UNFCCC Conference of the Parties protesters had banners stating "We will not leave until we have a fair, ambitious and legally binding agreement". Ever since Copenhagen the international climate change legal regime has experienced a metamorphosis from a top down to a bottom up approach, that does not rely (or does not have to rely) on a legally binding agreement. Nevertheless, the ADP is currently negotiating a protocol, another legal instrument or an agreed outcome with legal force under the Convention applicable to all Parties. Against the backdrop of the increasing debate between legally binding and non- legally binding climate change policy avenues, this presentation will discuss each one of these three options and its relevance post Paris.

In the first part of the presentation the status of the current negotiations will be addressed in order to determine whether a protocol, another legal instrument or an agreed outcome with legal force under the Convention applicable to all Parties has received more traction. Taking as a starting point that the level of ambition embedded in any of the three outcomes will most likely need to be upgraded if the Paris Agreement is to meaningfully deal with climate change in the long term, the second part of the presentation will seek to explain why some countries are still advocating for a legally binding outcome, despite the turn towards a bottom up approach. In the third and last part of the presentation the options that may not fall neatly under the rubric of legally binding will be explored. The rationale and their effectiveness will be presented.

In conclusion, it would not be a surprise if banners appear once again in Paris seeking for a fair and ambitious outcome. Whether or not those banners will also ask for a legally binding agreement is more dubious. The three do not necessarily go hand in hand, and a legally binding agreement can also be unfair and not very ambitious. So, is the debate about the legal form of the Paris outcome much

ado about nothing, or will the legal nature determine (at least partly) not only the success of the outcome, but also its Post-Paris effectiveness?

## K-4409b-04

# Accepting reality: we need new post-Paris governance for effective long term climate transformation

### G. Huppes (1); P. Drummond (2)

(1) Leiden University, CML, Industrial Ecology, Leiden, Netherlands; (2) University College London, Institute for Sustainable Resources, London, United Kingdom

Using the Grubb framework for analyzing climate policy, it seems that current negotiations center around short-term policy approaches in his Domain 1 and 2, while our common future depends on long-term transformations. In the Domain 1, UN discussions assume some central authority to ultimately regulate behavior on this globe, with a Binding Agreement on yearly allowable emission capped per country. This seems not feasible for basic reasons. First, risks are uncertain and are very different for different countries. Next, there is no agreed-upon equity principle, with deeply conflicting justice concepts. Also, under a binding agreement, countries growing faster than others are expected would have to buy permits from lower growth countries. Next, effective implementation is not feasible politically and administratively in many if not most countries. And economically, if a binding cap were implemented through tradable permits, the inherent price instability of a fixed cap could hardly guide long term technology development and implementation. Most basically, the Binding Agreement would not really be binding because there is no global climate change agency. With only partially applied cap-and-trade systems at the national level those getting around the many corners – politically and administratively or through corruption – will earn substantial amounts of money. It seems quite unrealistic to expect such an interventionist type of policy to drive deep societal transformations.

The current move in discussions towards more bottom-up governance mechanisms is an essential step, as it is at that decentralized level that creativity resides. However, bottom-up governance can hardly counter strong market forces in a globalized capitalist system. Cheap coal, oil and gas are available way beyond the 2, 4, and even 6 degrees climate target. Incentive structures will have to be changed in the core institutions of our global capitalist society for the deep transformations required.

For climate effectiveness generic, encompassing emissions pricing therefore is a sine qua non. Expectations on long term cost for non-fossil energy are to be made lower than for fossil energy. When fossils start to get pressed out of the market, their prices can be very low, for a very long time. Coal, always cheap, is joined by cheap oil and gas. At $40 per barrel of oil equivalent, the extreme CO2 emission reductions required for climate stabilization just will not happen, how good intentions may be. Renewables will lose the uphill battle, even if winning some niche fights. So generic table carbon pricing is a must, replacing partially applicable and volatile cap-and-trade systems like the EU-ETS.

The administrative implementation of carbon pricing, through Duties & Excises, is relatively simple. Most countries have hundreds of years of experience. A post- Paris agreement can be based on an equal level of national emission taxes, administered upstream as an excise on primary fossils production and imports, with a refund upon export and CCS, similar to taxing alcoholic drinks. A CO2 emission tax would result.

The post-Paris agreement would have at its core an equal level of the emission tax between Parties, slowly but steadily rising to relevant levels, in the order of maybe $300 per ton of CO2 in 2050. With that level, natural gas would press out oil and coal, unless CCS would become cheap enough. Relative to intermittent renewables natural gas might remain competitive, but then only in large scale applications combined with CCS. The proceeds of the tax would correspond to actual national emissions, also in EU member states. Nobody will pay more than what is due, and tax authorities don't go for less. Such opposed interests are essential for effective implementation.
The agreement does not need to be a global one to start with. Major powers, like China, EU and US, could start as the Climate Block, open to all others to join on equal conditions. Those not joining would be confronted with an excise on their fossil energy products upon export to the Block. This is not an import tax but an upstream emission tax, treating imports the same as national production. Border Tax Adjustments might also be introduced, on imported products with high emissions abroad, not yet taxed there. Joining the Climate Block and adoption of carbon taxing countries would be attractive. This simple international climate agreement seems most feasible politically, administratively and economically. This institutionalist approach seems a most realistic post-Paris option.

## 4409 - POSTER PRESENTATIONS

### P-4409-01

#### Lima Dialogues 2014 & Local Government Climate Roadmap at COP20 (CMP10): Malaysian Position on Climate Targets and Preferences for Emissions Reduction

AQ. Al-Amin (1) ; R. Rasiah (2) ; F. Walter Leal (3) ; C. Eduard (4)

(1) Universiti Teknologi Malaysia, International business school (ibs), Kuala Lumpur, Malaysia; (2) University of Malaya, Faculty of Economics and Administration, Department of development studies, Kuala Lumpur, Malaysia; (3) Hamburg University of Applied Sciences, Faculty of life sciences, =, Hamburg, Lohrbeugger Kirchstraße 65, Germany; (4) San Macros University, Foreign relations, Lima, Peru

This study critically evaluates the Malaysian position on climate targets and preferences in the Lima Dialogues in 2014. To capture the local government climate roadmap and Malaysian emissions reduction agendas at the COP20 (CMP10), an "Empirical Regional Downscaling Dynamic Integrated model of Climate and the Economy" is deployed following the top-down disaggregation strategy. The model takes account of national macroeconomic indicators with various climatic variables, such as a temperature increase limit of 20°C (agenda for COP20), carbon cycle, carbon emission reduction, climatic damage, carbon control, and carbon concentration, adapted from observational records of global warming climatic factors; and predicted climate targets for the years 2010 to 2110. Four scenarios forecasted based on the vision of the Copenhagen agenda, reen intensified in COP20, are analysed and the results are contrasted with the prevailing baseline scenario of the Malaysian climate vision:2040, with Nordhaus and Stern proposing suggestions and calculations. According to the COP20 targets, the findings indicate that the cumulative cost of climatic damage over the period 2010-2110 will amount to MYR40,128.1 billion under the present climatic regime in Malaysia, however, it would fall to MYR5,263.7 billion under the COP regime. Thus, the climate results are tempting in terms of prioritizing emission reduction and climate change mitigation for the future looking at the "local government climate roadmap", but there are a number macroeconomic costs that the national economy needs to take on and these are critical for further action. The critical evaluations from this study would help national policy makers to take a proper climate decision in Malaysia before the COP21, scheduled to be held 2015 in Paris and elsewhere with similar economic environments.

### P-4409-02

#### Citizenship participation in the public policy making processes in Chile: A glance back

G. Araya (1)

(1) Center for Climate and Resilience Research, Human Dimension, Santiago, Chile

The citizenship participation in the environmental issues has been a standing requirement of the legal systems as of the principle 10, established in the Rio Declaration. In line with the above, the international law regime of the United Nations Framework Convention on Climate Change has promoted, in a systemic manner, that climate change governance must be developed and pursued by the States involving to the citizenship in the decision making process.

This article explores the evolution of the citizenship participation in the Chilean climate change governance, mainly expressed during the public policymaking processes, leads by the Environmental Ministry. The different state of proceedings information, the public consultation process, and the answers to the questions raised have been fundamental to monitor the real impacts of the citizenship intervention.

As a global conclusion is possible to observe a slow but sustained and effective increase in the participation levels, contrasting with others on-going process which are being carried out in the region.

### P-4409-03

#### Preferences for Energy Efficiency vs. Renewables: How Much Does a Ton of CO2 Emissions Cost?

A. Bigano (1) ; A. Alberini, (2) ; I. Zverinova, (3) ; M. ŠÁsný, (3)

(1) FEEM/CMCC, Milano, Italy; (2) University of Maryland, Arec, Washington D.C., United States of America; (3) Charles University Prague, Charles university environment center, Prague, Czech Republic

Concerns about climate change are growing, and so is the demand for information about the costs and benefits of mitigating greenhouse gas emissions. This paper seeks to estimate the benefits of climate change mitigation, as measured by the public's willingness to pay for such policies. We investigate the preferences of Italian and Czech households towards climate change mitigation policy options directly related to residential energy use. We use conjoint choice experiments, which are administered in the standards, to compare the preferences of the two countries through computer-assisted web interviews (CAWI).

In our choice experiments, the alternatives are policy packages described by four attributes: i) the goal of the policy, i.e., addressing energy efficiency or promoting renewable energy; ii) the policy mechanism(s) (which may entail one or more of the following: incentives, taxes on fossil fuels, standards or information); iii) the reduction in CO2 emissions per household, and iv) the cost of the policy to the respondent's household. Items (iii) and iv) are expressed as per year for each of 10 years.

The questionnaire was self-administered using CAWI by a total of 1005 respondents. The Italy survey was conducted in July 2014. The Czech Republic survey was similarly structured, and the section of the questionnaire dedicated to the renewables or energy efficiency policies, and the associated discrete choice experiments, was identical to that in the Italy survey instrument (translated into the Czech). The design of the choice experiments was likewise identical across the two surveys. The Czech Republic survey was conducted in August and September 2014 using CAWI and yielded a total of 1385 completed questionnaires.

The responses to the policy choice questions appear reasonable: About 40% of the Italy survey respondents selected program A, 37% program B, and 23% opted for the status quo. The Czech shares are, 33%, 36% and almost 31%. Clearly, the Czech respondents choose the current situation more often than the Italians, implying that their WTP for the policy packages is lower. Responses are stable over the choice exercises, and there is no evidence of anomalies or unusual response patterns. This is the case for both the Italy and the Czech Republic respondents.

We fit the conditional logit models separately for the Italy and Czech Republic samples. The results from the Italy sample are reasonable and suggest that individuals were correctly trading off the attributes of the policies when selecting their most preferred ones. The status quo is the omitted category, and so the positive and significant coefficients on the energy efficiency and renewables dummies indicate that these policies were generally preferred over the status quo. However, the coefficient on the renewable dummy is greater than that on the energy efficiency goal dummy, and a Wald test indicates that they are significantly different from one another at the conventional significance levels. Our survey respondents also have a preference for incentives over other implementation options. The coefficient on fossil fuel taxes is negative and significant, and similar in absolute
magnitude to those on energy efficiency standards and information-based approaches, but the latter two are statistically significant only at the 11% and 5% levels, respectively.

The larger the CO2 emissions reductions delivered by the program, the more likely is a respondent to choose a policy, and the lower the cost, the more attractive the policy seems likely. These effects are strongly statistically significant at the conventional levels. The results from the surveys indicate that respondents prefer policies that promote renewables over policies that target energy efficiency, and, all else the same, they prefer incentive-based policies over standards and information-based approaches. The respondents in the two countries differ sharply in terms of their preferences for fossil fuel taxes. The Italians have a strong dislike for them, but the Czechs are relatively neutral. The willingness to pay per ton of CO2 emissions avoided is €130 from the Italy sample and CzK 1514 from the Czech sample, and implies an income elasticity of willingness to pay equal to one.

P-4409-04

# 'Top Down' AND 'Bottom Up' AND 'Sideways' Climate Governance Solutions: The Realities, Potentials and Perils of a Pluralistic International Institutional Landscape

T. Brewer (1)

(1) ICTSD, Climate Change Global Platform, Geneva, France

The chapter on 'International Cooperation' in volume 3 of the IPCC AR5 documents that the international climate change institutional landscape already consists of a variety of institutional arrangements that include hierarchical ('top down') relationships (as in the multilateral UNFCCC) as well as 'bottom up' initiatives (such as unilateral subnational mitigation and adaptation programs). There are 'sideways' relationships (such as those among cities), and there are also 'sideways' relationships between climate and non-climate regimes. Institutional proliferation along multiple pathways seems likely, including for example 'sideways' linkages among carbon markets. These realities of a pluralistic institutional landscape should be taken into account in order for effective new international institutional arrangements to be devised; ignoring these proliferating tendencies could result in a dysfunctional fragmented 'system'. Each pathway has its own distinctive combination of advantages and disadvantages vis-à-vis standard and normative criteria, effectiveness in promoting climate change mitigation and/or adaptation equity in the distribution of benefits and costs, economic efficiency, political viability and administrative feasibility. Analytic work and diplomatic initiatives are needed to develop pathways that will ensure collaboration and coherence among diverse institutional arrangements.

This presentation explores the implications of these observations for international institutional design. Empirical data and case information are drawn from the energy sector and the international transport sector, which are of course inherently significant in terms of their contributions to greenhouse gas and particulate emissions. The sectors are also significant for international institutional design issues because of their differences and interactions. The international maritime shipping industry is subject to regulation by the International Maritime Organization (IMO), as per provisions of the UNFCCC. The sector's emissions of carbon dioxide, methane and black carbon are thus potentially covered by the IMO. At the same time, the Arctic Council and the Clean Air and Climate Coalition (CACC) also have black carbon and methane on their agendas, and the World Trade Organization has some aspects of international maritime shipping within its purview. There are therefore many potential 'sideways' relationships among them. Yet, the member's memberships of these various international institutions vary from only 8 member states in the Arctic Council to 39 in the CACC to 170 in the IMO, and their decision-making procedures are quite disparate. In short, there is already a complex mixture of sectoral, multilateral, regional and plurilateral institutional arrangements concerning emissions of black carbon, methane and carbon dioxide. Yet, there is not yet an adequate institutional arrangement in place to address these emissions. The issues in the international maritime shipping sector. The presentation thus proposes the negotiation of an Arctic Black Carbon

Agreement (BCA) and an International Maritime Methane Agreement (IMMA). The proposals take into account 'top down' as well as 'bottom up' and 'sideways' institutional relationships.

The presenter is: IPCC Lead Author, 'International Cooperation' chapter, AR5, volume 3; author of articles in the refereed journals Climate Policy and Energy Policy; author of The United States in a Warming World: The Political Economy of Government, Business and Public Responses to Climate Change. Cambridge University Press, 2014; and Senior Fellow, International Centre for Trade and Sustainable Development, Geneva. All views expressed are entirely his own as an independent scholar.

P-4409-05

# Global emissions chains and multinational enterprises: measuring responsibilities following the control criterion

MA. Cadarso (1); L. Lopez (2) ; J. Zafrilla (1) ; G. Arce (3)

(1) University of Castilla-La Mancha, Economic Analysis and Finance, Albacete, Spain; (2) Universidad de Castilla La Mancha, Albacete, Spain; (3) University of Castilla - La Mancha, Albacete, Spain

The Kyoto Protocol framework establishes the Production-based (PR) criterion (IEA, 2001) as the emissions responsibility allocation method. Greenhouse Gases emissions (GHG) are assigned depending on the country where they occur, regardless of the country where the consumption is done. This approach has generated controversy and is the point at which many emerging and large exporting countries base their refusal to sign the emissions reduction international agreements. Emerging countries have not yet been effectively included in a context where production and consumption decisions are increasingly separated in different parts of the world. Moreover, carbon leakage through international trade threatens national reductions achievements at global level. One of the most popular scientific literature on alternative approaches proposes to shift responsibility to the consumer (Peters and Hertwick, 2008 or Davis et al., 2012) but country would be responsible to the emission generated in linkage effects along the production chain. Taking into account the control criterion, the limits of enterprises' responsibility is not determined by the country's borders, this limit is given by the control that the parent companies has on its subsidiaries firms and suppliers too, regardless of geographical location and where are citizens of the world that are consuming the goods produced by these enterprises.

The global nature of climate change requires the establishment of allocation responsibility criteria that allowINVOLVE more parties in the resolution of different countries in the process: governments, consumers, suppliers, workers, investors (Hoekstra and Wiedmann 2014). Taking into account the presented context, in this paper a controlled criterion is proposed, previously presented in López et al. (2014), in order to allocate the responsibility to the firms that take decisions, in many cases, of locating thousands of kilometres away in countries with weaker environmental policies. This criterion assign to those firms all the emissions embodied in linkage effects along the production chain. Taking into account the control criterion, the limits of enterprises' responsibility is not determined by the country's borders, this limit is given by the control that the parent companies has on its subsidiaries firms and suppliers too, regardless of geographical location and where are citizens of the world that are consuming the goods produced by these enterprises.

Therefore it is necessary to find new frameworks that encourage more countries to sign emissions reduction international agreements and also that allow the responsibility transfer to companies and citizens as main actors' in the mitigation of climate change. To shift the focus to the role of companies, instead of nation-states, has some advantages as, for instance, not to deal with the problem of restricting responsibility to territory (PR) or of the inability of governments to act beyond their frontiers (CR). Moreover, recent research states that nearly two-thirds of historic emissions can be attributed to 90 companies (Heede 2014). Companies, and thus consumers, do not become knowledgeable about the environmental impacts of their production networks (O'Rourke, 2014); these firms do not take responsibility for the external costs associated to these impacts. The quantification of these emissions under the control criterion and the allocation responsibility to firms would help to provide positive incentives for the more efficient
management in environmental terms of the global value chains by the companies.

The aim of this paper is to calculate a control-based criterion for China in a multiregional input-output context (MRIO), which allows the assessing of the impact of international trade considering all the emissions associated with the entire global value chains. The Chinese choice is to foreign enterprises operating and exporting in China according to 541 (Feenestrom, 2013) and have a strong potential influence over the global production chains with respect to technology and emission intensities (Skelton, 2013). Estimations will be done using the World Input-Output Database (WIOD) that provides information about 41 regions with a sectorial disaggregation of 35 industries. These data will be combined with information about multinationals operating in China for the year 2009.

## P-4409-06

# Preventive communication and risk preventive policy in Guadeloupe

### V. Charneau (1)

(1) Université des Antilles, Science-Politique, Pointe-à-Pitre, France

Located in an area geographically and geologically unstable, the Caribbean basin, is regularly attacked by natural hazards. Thus, earthquakes, hurricanes, volcanic eruptions and all their consequences are an integral part of the lives of various people and institutions in the Caribbean area. The threats that people must face and that institutions must support the policies of prevention and risk management. Since the recent decades, the focus was on climate change by the scientific community. The result is partly to the increase in the temperature of which one of its consequences is the increase in the frequency and magnitude of natural hazards.

The Guadeloupe is part of the French Departments of America, it has implemented the risk of public policies among them measures relating to the dissemination of preventive information. Because, recently, the effectiveness of natural risk prevention and management plans based on the citizens' information procedures. But public policy risk through natural risk prevention plan does not clearly define the information broadcasts measures. Thus it is clear will to respond to threats that raise natural hazards and of involving people in the management of these, the association «consensus-communication» under the Risk Prevention Plan. Then, reaching to emerge, communication as a «means to mobilize» in the context of preventive actions, and also prevent the risk from climate upheaval.

This study aims to analyze public policies for risk management and dissemination process of preventive information. To do this, it will make a brief review of the history and contributions of the state of the scientific literature in the humanities and social sciences, the concept of risk, highlighting briefly science developments information, communication, and finally, it will analyze synthetically the natural risk prevention plan for the city of Pétit-Bourg in Guadeloupe, especially for highlighting the organization of public consultation required by the plan.

## P-4409-07

# Climate Change and Collective Action: Lessons from Elinor Ostrom and the Blooming School of Political Economy

### D. Cole (1)

(1) Indiana University, School of Law and School of Public & Environmental Affairs, Bloomington, IN, United States of America

Climate change has been largely mischaracterized as a "public good" subject to a Prisoners' Dilemma game, where it is in the individual interest of each country to continue emitting greenhouse gases, even though it is the global interest for each country to curtail its emissions. Given this characterization, the collective action problem posed by anthropogenic climate change is practically insurmountable.

But climate change is, in fact, a different type of good and subject to a different kind of game to which a cooperative solution is available (though not guaranteed). Whereas

prior to the Industrial Revolution it made sense to think of the climate as a "public good" (in its strict sense), the very existence of the climate change problem indicates that the climate is now more in the nature of a "common-pool resource" (CPR) with characteristics similar to many situations Elinor Ostrom studied during her storied career, albeit at a much larger scale. As a "common-pool resource" (CPR) the global climate is subject to the same kinds of analytical frameworks, theories, and methods that Ostrom and her colleagues in the Workshop in Political Theory and Policy Analysis at Indiana University have used over the past 45 years to study other types of CPRs.

Like virtually all other CPRs, the collective action problem posed by climate change really is not in the nature of a Prisoners' Dilemma, but more like an "Assurance Game," as originally defined by Amartya Sen. In contrast to a Prisoners' Dilemma, an Assurance Game has both cooperative and non-cooperative equilibria. Which equilibrium solution is reached depends largely on the level of reciprocal trust among the players. The higher the level of mutual trust, the higher the payoffs from cooperation, relative to non-cooperation.

In a variety of experimental and field settings, Ostrom and her colleagues found that under the right conditions, mutual trust can be fostered over time, raising the perceived returns to cooperation. Among the conditions they found that foster trust are frequent opportunities for communication and interaction. Specifically, Ostrom found that increased communication (1) facilitates development of socially optimal strategies; (2) allows for exchanges of promises; (3) increases mutual trust; (4) adds value to payoffs; (5) reinforces shared norms; and (6) promotes the development of shared or group identities. However, the building of mutual trust does not depend on communication alone but also on the ability to observe and verify that others are acting in a trustworthy fashion. Thus, monitoring and accountability are crucial parts of the puzzle for successful collective action to resolve any kind of CPR problem, including climate change. Trust is not a matter of blind faith; verifiability is part and parcel of trust.

Beyond culling lessons from Ostrom's large corpus of empirical, theoretical, and analytical studies, I will exemplify those lessons by reference to recent trust-building, cooperative ventures on climate policy between the US and China. The regular, bilateral negotiations of the "US-China Climate Change Working Group" already has achieved substantial positive outcomes for climate policy, and more quickly than anyone had imagined possible. Meanwhile, cooperation ongoing at various levels of governance, including the local government level and even in private governance. Thus, climate negotiations are becoming increasingly "polycentric," as Vincent and Elinor Ostrom defined that term.

Far from being a threat to global negotiations under the UNCCC and its protocols, these lower-level negotiations should be perceived as activities in furtherance of goals established in global-level agreements. They are the kinds of interactions that are in fact necessary to build, over time, the kind of mutual trust that is required to make further progress on climate change mitigation at the global level. The increasing bilateral and multilateral communications and agreements we have been witnessing do not guarantee a cooperative outcome to the Assurance Game of climate change, but without them a non-cooperative outcome is almost guaranteed.

## P-4409-08

# Explaining climate bargaining strategies of developing countries

### V. Costantini (1); G. Sforna (1); M. Zoli (2)

(1) Roma Tre University, Department of Economics, Rome, Italy; (2) University Rome Tor Vergata, Rome, Italy

Although the efforts made during the last COPs, Parties are still far from achieving an agreement for the implementation of a new global regime. As demonstrated by the debate about the interpretation of the Common But Differentiated Responsibilities principle, the growing role played by developing countries in negotiations is one of the main causes behind the deadlock. For this reason, attention should be paid to the composition of the negotiating coalitions of developing countries. By applying a cluster analysis, this paper aims at investigating the role played by the heterogeneity in structural features of