ISLAMABAD: The United Nations Conference on Trade and Development (Unctad) has asked the countries dependent on commodities to diversify their economies to survive climate crisis.
The Commodities and Development Report 2019, published by Unctad on Wednesday, highlights how commodity-dependent developing countries will be directly affected by climate change, and indirectly by mitigation and adaptation policies pursued not only by themselves but also by third countries.
Many developing countries are commodity dependent and they derive at least 60 per cent of their merchandise export earnings from this sector. In these countries, economic cycles are synchronised with price cycles, implying that their economies grow faster during commodity price booms but slow down during price slumps.
Economic and export diversification is the best response to the challenges posed by climate change in developing countries that depend on commodities, according to the report.
The diversification could be horizontal, which entails venturing into new goods and sectors to reduce dependence on a narrow range of commodities, or vertical, which involves moving the value chain of a commodity up to increase its worth, says the report entitled “Commodity Dependence, Climate Change and the Paris Agreement”.
According to the report, a successful diversification strategy will likely include a combination of horizontal policies, such as strengthening human capital through investments in education and health, and targeted measures to promote individual sectors.
Although commodity-dependent developing countries contribute only modestly to climate change, the climate crisis puts them at most risk. They are more vulnerable primarily because they are economically dependent on sectors that are highly exposed to extreme weather events, the report states.
The negative effects of climate change on crop and fisheries production are more severe in low-latitude regions, where most commodity-dependent developing countries are located, the report observes.
Equally at risk are high-income, fossil-fuel-dependent countries, such as Brunei Darussalam, Kuwait and Qatar, which have some of the highest levels of greenhouse gas emissions per capita.
They could be profoundly affected by the stranding of their major natural resource as a result of the growing push towards greener sources of energy, the report says.
Published in Dawn, September 12th, 2019