Guest post: How climate change could reverse progress in global inequality – Carbon Brief

Climate Change and Economic Inequality: A Systematic Review

According to most metrics, economic inequalities across the world have been declining since the late 1980s.

This has been driven by decreasing inequalities between countries – due to rapid economic growth in Asia – and has occurred despite increasing inequalities within a number of countries.

However, this trend could be reversed by the impacts of climate change.

While the repercussions of a warming climate are being felt in all corners of the world, the scale of these impacts on different countries, regions, communities and individuals varies hugely. The degree of economic inequality in the future will largely depend on how well different groups can adapt.

Climate change increases inequalities locally and globally

Our review covers 127 peer-reviewed studies into climate change and inequality.

These research papers cover a wide range of geographies, climate impacts, types of economic inequality measured (such as income disparities, differences in consumption or welfare disparities), methods used (such as econometric models or surveys) and findings.

The vast majority of studies confirm that climate change is exacerbating economic inequalities or hitting the poorest the hardest. This finding holds true across regions, types of physical impacts, sectors, types of inequalities and assessment methods. It is particularly prominent in studies that compare the impact of climate change across countries.

There are only two studies that find that climate change reduces inequality, but they focus on specific local circumstances – that is, flooding in Pakistan or price disparities among fishers and traders in Mexico.

Similarly, four papers find that the wealthy – whether households or countries – are more affected by climate change than the poor. However, these instances are exceptions and mostly limited to specific circumstances. For example, one study shows that the tropical cyclone Bulbul in Bangladesh caused higher losses for richer shrimp farmers, because they had larger farms.

1. Climate change increases inequalities locally and globally
2. Different climate impacts contribute to inequality
3. Tackling climate impacts on inequality

Different climate impacts contribute to inequality

Looking at the breakdown of studies, we found that the percentage of papers pinpointing a particular climate impact as exacerbating inequality or affecting the poor more significantly ranges from 60% for changes in rainfall to 89% for sea level rise.

A majority of studies focus on the impact of rising temperature, with 72% of these concluding that temperature changes worsen economic inequality or affect the poor the most.

Most of the studies that find a reduction in inequality concern extreme weather events. This is often because these studies assess the impact on physical assets, which are predominantly owned by the wealthiest.

There are several channels through which biophysical climate change impacts translate into economic effects. These channels include broad economic effects that influence all sectors, changes in agricultural revenues due to factors such as crop yield declines, impacts on labour productivity, changes to infrastructure and physical assets, shifts in energy demand or water availability.

We found that studies identifying labour productivity or energy as the main channel through which climate change affects economic inequalities overwhelmingly conclude that inequalities increase or that the poor are more impacted.

A decline in labour productivity may indeed increase inequality if it disproportionately affects low-skilled workers, especially those who work outdoors or in non-air-conditioned environments.

Notably, a large proportion of the studies where physical assets are identified as the main channel suggest that inequality actually decreases due to climate change or that the wealthy suffer more. This is because rich individuals tend to face greater losses due to the higher value of their property.

Tackling climate impacts on inequality

Our investigation into the impacts of climate change on economic inequality was motivated by the need to better understand how the climate change impacts are distributed across the world. This provides the other side of the coin to the effects of mitigation policies on inequality, which are often more widely discussed.

The evidence strongly indicates that the impacts of a warming climate are regressive across countries. Tackling the impacts of climate change on economic inequality will demand substantial policy changes and financial resources.

At the national level, policymakers will need to ensure that adaptation finance and loss and damage compensation effectively reach low-income households to reduce their vulnerability and increase their resilience to climate change impacts.

The results of our review underscore the importance of policymakers integrating climate risk management strategies into the design of “climate-proof” social programs in poor regions, which are crucial for achieving climate justice objectives.

Of course, other forms of inequality beyond economic inequality, such as gender inequality, are important and interact with climate change, but this is a topic for another review.

SDGs, Targets, and Indicators

1. No Poverty

• Target 1.2: By 2030, reduce at least by half the proportion of men, women, and children of all ages living in poverty in all its dimensions according to national definitions

5. Gender Equality

• Target 5.5: Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic, and public life

10. Reduced Inequalities

• Target 10.1: By 2030, progressively achieve and sustain income growth of the bottom 40 percent of the population at a rate higher than the national average
• Target 10.2: By 2030, empower and promote the social, economic, and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status
• Target 10.3: Ensure equal opportunity and reduce inequalities of outcome, including by eliminating discriminatory laws, policies, and practices and promoting appropriate legislation, policies, and action in this regard

13. Climate Action

• Target 13.1: Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries
• Target 13.2: Integrate climate change measures into national policies, strategies, and planning
• Target 13.3: Improve education, awareness-raising, and human and institutional capacity on climate change mitigation, adaptation, impact reduction, and early warning

16. Peace, Justice, and Strong Institutions

• Target 16.7: Ensure responsive, inclusive, participatory, and representative decision-making at all levels

Analysis

1. The SDGs addressed or connected to the issues highlighted in the article are No Poverty (SDG 1), Gender Equality (SDG 5), Reduced Inequalities (SDG 10), Climate Action (SDG 13), and Peace, Justice, and Strong Institutions (SDG 16).

2. Specific targets under those SDGs based on the article’s content are:
– Target 1.2: By 2030, reduce at least by half the proportion of men, women, and children of all ages living in poverty in all its dimensions according to national definitions.
– Target 5.5: Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic, and public life.
– Target 10.1: By 2030, progressively achieve and sustain income growth of the bottom 40 percent of the population at a rate higher than the national average.
– Target 10.2: By 2030, empower and promote the social, economic, and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status.
– Target 10.3: Ensure equal opportunity and reduce inequalities of outcome, including by eliminating discriminatory laws, policies, and practices and promoting appropriate legislation, policies, and action in this regard.
– Target 13.1: Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries.
– Target 13.2: Integrate climate change measures into national policies, strategies, and planning.
– Target 13.3: Improve education, awareness-raising, and human and institutional capacity on climate change mitigation, adaptation, impact reduction, and early warning.
– Target 16.7: Ensure responsive, inclusive, participatory, and representative decision-making at all levels.

3. Indicators mentioned or implied in the article that can be used to measure progress towards the identified targets are not explicitly provided. However, indicators related to economic inequality, poverty reduction, gender equality, climate resilience, and inclusive decision-making can be used to measure progress towards the identified targets. These indicators may include income inequality indices, poverty rates, women’s representation in decision-making positions, climate resilience measures, and indicators of inclusive governance.

Table: SDGs, Targets, and Indicators