Climate change talks, one would assume, would be driven mainly by environmental concerns. But going by the buzz at the Lima climate talks here, money seems to be an equally big, if not bigger, driver of the way the climate agreement will be shaped. Some, of course, argue that money is the limiting factor and not the driver.
With huge sums of money involved in the kind of actions that are necessary to be taken to effectively deal with climate change, finance has always been an important and integral part of climate discussions. The order of financial commitments that are talked about is in tens and hundreds of billions of US dollars per year, sometime even trillions of US dollars.
Only on Friday, a new UN report said the current projected financial costs for adapting to climate change might be a gross under-estimate. The Adaptation Gap report by the UN Environment Programme said the adaptation costs can be at least two to three times higher than the current estimates of about $70 to 100 billion per year by 2050 even in the best case scenario. It could even reach $500 billion per year by 2050 if adequate steps on cutting greenhouse gas emissions are not taken.
The costs of reducing emissions can be even higher as it has economy-wide impacts. Estimates put that figure in the range of 1% to 2% of global GDP per year under different scenarios, once again taking the scale of investments required in hundreds of billions of US dollars per year, if not exactly in trillions of dollars. And there are costs associated to a variety of other climate actions as well.
By Amitabh Sinha