Chart: a climate deal with huge economic impact

Philippe Dauba-Pantanacce Senior Economist, Global Geopolitical Strategist

9 Aug 2016

Why the Paris climate deal is particularly good news for emerging markets

The Paris climate deal, expected to become legally binding on 4 November, is historic, going much further than previous agreements.

Pledges include keeping global average temperature increases ‘well below’ 2 degrees Celsius; mobilising USD100 billion per year to finance climate change adaptation; revising emission-reduction targets every five years; and achieving climate neutrality (net zero emissions) by 2050.

The deal means different things to different countries, with richer countries accepting that they will be responsible for most of the efforts in the short term.

Our map shows that the deal is particularly good news for African and South Asian countries. As demonstrated by the ‘Vulnerability and Resilience index’, they are the most vulnerable (generally reflecting their geography) to the negative impact of climate change, and also least ready (financially) to make their economies more resilient to the change. For such countries, the sense of urgency – and cost of inaction – is particularly high.

While the Paris deal is widely acclaimed as a success, its implementation will not be simple. The pledges made by countries may be economically difficult to fulfil, and may not be enough to counter the worst effects of climate change. The impact on numerous economic activities will be vast, with renewable energy targets changing, and home appliances, transportation, tree planting, construction and water management continuing to evolve.

Meanwhile, climate-change sceptics have argued that only rich countries can ‘afford’ risk mitigation and remedies. However, with clean-energy technologies becoming cheaper and more scalable, there is hope that even emerging markets can play a bigger role in combating climate change.

Few believed the Paris deal could come into force within a year of its signing. The deal is ambitious in its objective and will constrain countries, but for those coloured in red or orange in our map, a lot is at stake, and the sense of urgency is a good thing.

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