WEALTH ACCOUNTING IN THE GREENHOUSE 77
Anthropogenic warming could lead to some impacts that are abrupt or irreversible, depending upon the rate and magnitude of the climate change.
The scientific consensus presented by the IPCC is strong and clear, therefore. Below we draw upon the scientific literature to establish baselines for how much of the anthropogenic CO2 that was emitted historically still resides in the atmosphere, and we estimate each country’s share of that stock. Climate change as a development challenge is the central focus of World Development Report (WDR) 2010. A key finding of the report is that up to 80 percent of the damages from climate change will be borne by developing countries. This outcome is largely driven by the high dependence of developing countries on natural resources, particularly agricultural land, as a source of income. Other chapters of this book highlight the dependence of low-income countries, in particular, on natural resources as a share of total wealth. One of the principal policy messages of WDR 2010 is that the development process itself must be transformed in a greenhouse world. High-carbon growth, which has been the historical norm, is no longer an option. While low-income countries have contributed only a little over 1 percent of the anthropogenic stock of CO2, developing countries as a whole are now the largest annual emitters of CO2, and most of the growth in emissions during this century is likely to take place in developing countries.1 This establishes the setting for the analysis in this chapter. Climate change is happening now, is driven by human activities, and will likely accelerate unless action is taken to reduce greenhouse gas emissions very substantially. Its greatest impact will be on countries most dependent upon climate-sensitive sectors of the economy: developing countries characterized by high dependence on natural resources as a share of wealth. Accounting for carbon stocks and flows can contribute to the needed transformation of the development process.
Some Economics of Climate Change In order to account for and value CO2 stocks and flows, it is essential to understand some of the basic economics of this pollutant. Two basic physical properties of CO2 have a profound influence on the economics of climate change: (a) it is a uniformly mixed pollutant, meaning that emissions at one point on the globe will affect the whole globe, and (b) it is a highly persistent pollutant.2 The high persistence of CO2 in the atmosphere is an important element in the economic analysis of climate change. Carbon cycles naturally through the biogeosphere, with stocks held in the atmosphere, in living matter, in soils, and in the ocean. The rate of decay of CO2 from the atmosphere after it has been emitted has been modeled by the United Nations Framework Convention on Climate Change (UNFCCC 2002), and this model has been applied in the Climate Analysis