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The economics of low carbon, climate resilient patterns of growth in developing countries: a review of the evidence

This literature review assesses the extent to which developing countries can make the transition towards low or lower patterns of growth. It explores the potential impacts of climate change on economic growth and the investment needs for increasing growth resilience. The paper outlines the challenge of establishing patterns of low carbon growth and discusses the cost of greenhouse gas mitigation. The feasibility of low carbon growth in developing countries is explored, including a review of the evidence, the economic impacts, its limitations and possible next-steps. The literature suggests that significant mitigation levels can be achieved without having a major impact on growth objectives. The paper presents the various aspects of climate resilient growth patterns and how to realise them respectively. Topics covered include a review of the evidence and methods, understanding the political context and the matter of technological deployment.

The paper breaks down its central recommendations for future studies into those relating to both low carbon and resilient patterns of growth. Priorities for low carbon growth studies include:

  • greater use of macroeconomic models in order to enhance understanding of the dynamic feedbacks that result from changes associated with low carbon patterns of growth
  • more sensitivity analysis on discount rates to test cost-effectiveness from the private sector perspective and consumer requirements for faster investment payback
  • longer-term analyses
  • uncertainty assessments to aid understanding of financial trade-offs and optimal levels of compromise
  • increased quantification of co-benefits to policymakers, as well as assessments of socio-economic distributional impacts
  • deeper understanding of the synergies and conflicts between adaptation and mitigation strategies.

Priorities for climate resilient growth patterns include:

  • a systematic review of emerging evidence, repeated as more studies are published
  • guiding evidence on the economics of climate change and adaptation, at multiple scales and locations
  • specifically addressing how to achieve climate resilient patterns of growth.