November 2014: The World Bank Group has published a paper that explores the relationship between climate change and poverty by examining the impact of climate change on: poor people’s livelihoods and wellbeing; the risk for non-poor people to fall into poverty; and the ability of poor people to escape poverty. The document, titled ‘Climate Change and Poverty: An Analytical Framework,’ proposes four “channels” that determine household consumption and through which households may escape from or fall into poverty: prices, assets, productivity and opportunities.

It examines whether and how climate change and policies affect these channels, focusing on exposure, vulnerability and the ability of the poor to adapt. The report also reviews existing literature, and investigates how climate change impacts on poverty reduction depend on a combination of climate and non-climate policies, as well as exogenous economic, social and environmental changes.

The World Bank underlines that despite substantial progress in reducing poverty rates, close to one billion people still live in poverty, while many more “hover just above the poverty line,” and remain vulnerable to shocks that could push them below that line. It stresses that climate change and climate policies will affect poverty reduction efforts both through direct impacts on the poor, such as those caused by natural disasters, and through factors that condition poverty reduction, such as economic growth. The World Bank further notes that while the magnitude of climate change is likely to be relatively limited by 2030, localized impacts may still be important, for instance in already marginal areas or where the intensity of climate-related weather extremes is increasing. It underscores that the goal is not “simply to eliminate poverty by 2030, but to eliminate it once for all.”

The paper concludes that: climate change is likely to represent a major obstacle to a sustained eradication of poverty; climate policies are compatible with poverty reduction provided that poverty concerns are carefully taken into account in their design and that they are accompanied by the appropriate set of social policies, such as carbon taxes or the removal of fossil fuel subsidies; and climate change does not modify how poverty policies should be designed, but rather it creates greater needs and more urgency, due to more frequent and more severe shocks and extreme weather events. [Publication: Climate Change and Poverty: An Analytical Framework]