P.S : This is an old piece I wrote back in 2022, purely out of interest. I am re-uploading a bunch of my older writing to build a better archive and share it. This is part of that effort.
The Climate challenge is undoubtedly complex, and a lot of work has been done on demystifying it and making it more accessible. This post was a part of that attempt. It is a problem framework meant to simplify how we look at climate action and think of its impact. It is by no means a complete work, and I will hopefully keep adding to it over time.
A well known, established fact is that Climate Change does and will impact already vulnerable communities the most. That is to say, communities, individuals, regions and populations that are currently in a vulnerable socio-economic, geographical or climatic condition, do and will suffer the highest impact. At COP25, the Germanwatch institute presented the results of GCRI 2020, and the 5 countries worst affected by climate change in the 21st century are, Puerto Rico, Pakistan, Philippines, Myanmar and Haiti. All developing, underdeveloped or even struggling economies with highly vulnerable populations.
Climate action however is concentrated in very specific parts of the world; most climate positive policy is being developed in Europe, most industrial action is being taken in California and most of the CCUS projects are based out of Europe and the United States. Granted, there is a factor of technological innovation and developed economies having a natural head start here; however this cannot be the only reason directing climate action.
A few distinctions need to be made before we proceed with this examination. Firstly, our discussion here is about directed, pre-planned climate action and not post-disaster or philanthropic action in the form of mitigation funds and capacity building support. Secondly, in the absence of a regulatory environment around climate action; all action in this space is driven purely by the voluntary carbon market. And finally; individual action, while commendable and highly desired, is not the scale pertaining to our discussion. With this cleared, we can proceed.
The challenge around Climate action is three pronged in developing/underdeveloped regions.
The first and most obvious challenge is financing. Climate action is expensive and growing economies do not have the funds to support this either at the state or private investment level. As an example, Bangladesh’s government has climate-related spending tof about $3 billion: or 7% of the government’s overall budget, or 0.73% of the country’s gross domestic product (GDP). (Oxfam analysis: go.nature.com/2yuycvn).
Secondly, the challenge of development itself. In a global economy built on consumption, regions with lower quality of life and per capita incomes have a wide chasm of basic human necessities to cross before they may turn their attention towards addressing climate problems. In developing economies especially, the necessity to maintain growth and address immediate needs trumps concerns related to long-term sustainability and well-being. Referring back to the example of Bangladesh, the same study points out that poor families in rural Bangladesh spend $2 billion a year themselves on preventing climate-related disasters or repairing the damage they cause. These personal funds obviously have an impact on rural economies, livelihoods and ultimately the developmental trajectory of these communities.
And lastly, the third challenge, speed of action. The previous two challenges were not to say that these regions are not cognizant of the threat they face, however any actions they envision or desire are simply not moving at the pace that this pressing crisis demands. Additionally, climate action is a long term endeavour. Projects need planning, on the ground activity, legal compliance and sustained investment to create results over an average time horizon of 5 years.
Interestingly, these three challenges are related in a familiar way. Much like the blockchain scalability trilemma, these three challenges also present a triangular structure.
The Climate Trilemma for the Global South
In the global south, climate action will always happen at one corner of the triangle and at the expense of its opposite edge. Fast climate action with the necessary financing will limit the actions being taken toward assuring quality of life. Necessary financing for climate action while assuring a decent quality of life for citizens will limit the speed of action, and so on. This structure, while not as specific as the Blockchain trilemma, is still a useful resource to understand and locate where capacity weaknesses lie in the systems to fight climate change.
Traditional climate action, (what we’re seeing at the moment) focuses on policy, private investment and initiative; trying to balance the funds allocated with the needs of development, thereby sacrificing speed. Alternative solutions, specifically technology based methods provide faster solutions, however their financing and implementation is challenging in developing economies. And lastly, ReFi solutions; ReFi is currently solving for different parts in the climate problem and is yet to arrive at a solution which addresses the trilemma.
It is also important to note that the means with which we are assessing this entire system is the state apparatus. Since private action in the space is limited (in the global south) and so much is dependent on policy implemented at the state level; it is difficult to divorce the state from this conversation. However, if we do divorce the state and its apparatus, interesting conditions emerge. The trilemma looks at targeted action, implying that it has been measured, reported and verified; and that it has been initiated with climate action intent. However, this does not stand true in all cases. Carbon sinks such as forests, rivers and land have been conserved, stewarded and developed by local communities for several reasons without any MRV attached. While these do not in any way qualify as resilience or adaptation measures; they are still active mitigation measures, with a possibly high amount of carbon removed, reduced, utilised or sequestered.These actions are omnipresent, especially on indigenous lands, wetland regions and marshlands. And those living within or around these ecologies, provide valuable services in their preservation and conservation. This is an established argument, one for the payment of ecosystem services and it has been discussed widely by many experts, thereby limiting the need to delve deeper here. And it does establish the fact that, on their own, many communities are capable of climate action and with technical support, this and other actions could be developed for resilience and adaptation as well.
A point of fracture, is that the existing communities stewarding important action are in fact only stewarding a pre-existing, natural condition and not initiating it themselves. This begs the question, what stops them from doing so. And here we face the trilemma again; if the intent to initiate climate action exists at an individual or community level, they must confront the trilemma, i.e, to initiate necessary action with sufficient financing, they must face an impact on their quality of life (and so on). Considering that these regions (the global south) are already socio-economically vulnerable (for the most part); it is unfair to expect communities to redirect their personal funds, intended for aspirational growth, toward climate action with no immediate impact or (more importantly) remuneration. And while the state may face this challenge and still be able to take some action due to its relatively larger capacity; the individual and the community are not equipped both technically and financially to manage this on their own.
The challenge in this case, is summarised here. The best delivery, sustenance and targeting mechanism for climate action is at the local/hyperlocal level. It provides the most reliable method of stewardship, the most effective on the ground presence and knowledge, and the most impact. However neither the state nor the community themselves are capable of initiating this due the challenges of finance, speed and quality of life (socio-economic conditions). How do we solve the trilemma, to initiate action at the local level with adequate support and speed without compromising community aspirations and well-being.
It is also important to examine the meta-problem here. One of the nature of money itself. The conversations around crypto-economics have always been framed as “changing the nature of money”, while these projects have successfully implemented a technologically impressive basis for this to happen; much of DeFi (Decentralised Finance) is still a better method for moving the same money around, more than “changing the nature of money” itself. No doubt this is a valuable proposition; it does not however address the core challenge of our age. If consumption is the driver for all growth and controlling this consumption is the only means to secure the environment; How do we ensure growth while controlling this consumption ? Especially in a world where much of the population is yet to achieve a good quality of life and the basic consumption levels required for it.
This is where ReFi comes in. If the process of regeneration with positive externalities can be directly related to growth and wealth creation (especially in the developing world), then we would achieve an ideal reset for the global economy.