As the most important environmental conference in more than a decade gets under way in Copenhagen this week, much of the talk, as usual, is on reducing greenhouse-gas emissions.
But there's another issue that needs to be addressed—one that is crucial for reaching an overall agreement, but doesn't get nearly as much attention.
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That issue is adaptation.
Without a deal on how to cope with the possible effects of climate change, there will be no agreement in Copenhagen—or at any future conference, for that matter. That's because developing countries, which likely will suffer some of the worst impact of any significant warming, have made it clear that they will not agree to an emissions-reduction package without substantial help in coping with the increased flooding, drought and disease that many scientists say will result from a warming planet.
Reaching such a deal won't be easy. But the good news is that it's a lot more doable than it was just a few years ago, when just talking about adaptation was thought to mean giving up on reducing emissions. By contrast, a growing number of people now believe that some adaptation is unavoidable.
How much adaptation? That's hard to say. But many scientists doubt we will halt global warming at less than two degrees Celsius (3.6 degress Fahrenheit). That may not sound like much. But just look around to see how fine-tuned our economies are to the current climate. A change of two degrees will potentially affect consumer behavior (where we live, what we wear, where we go on vacation), production decisions (how we produce our food) and the design of our buildings and infrastructure.
More specifically, if temperatures were to rise by two degrees or more, farmers might have to change crops, planting dates, fertilizer and pesticide regimes. Water companies might have to invest in new reservoirs, and maybe build desalination plants to deal with droughts. Hydroelectric-power stations might have to be adapted to accommodate different rainfall patterns. Electricity grids might have to be strengthened to deal with demand surges during heat waves. Coastal infrastructure, including seaports, power stations, roads, tourist beaches, levees and dikes, might have to be redesigned in response to rising sea levels. Settlements in areas prone to storms, floods or forest fires might have to be fortified or moved. Health services might have to prepare for heat waves and (in developing countries) for additional cases of malaria and other vector-borne diseases. And that's just for starters.
I'm not predicting all these things will definitely happen. But if just some of these changes are forced upon us, we're talking about major upheavals—and the need for major resources, especially in poorer countries.
So, how can developed countries and emerging nations reach an agreement on adaptation? I see the need to come together on four key contentious issues.
Framing the Issue
Most developing countries see support for adaptation measures as, in essence, compensation for the damage caused by the emissions of developed countries. You broke it, you fix it. But such a concept is a nonstarter as far as the developed world is concerned. Compensation implies liability, and if the developed world is "responsible" for the damage caused by global warming, then payments to compensate for that damage are likely to be more open-ended, outside their control and potentially subject to litigation. In addition, developed countries say, the relative contributions to global warming are evolving, and developing nations are increasingly doing their part in worsening the problem.
It's a fundamental difference, but one I believe is surmountable. Rather than see adaptation support as compensation for damages, I suggest it is better to consider it as a way to show global solidarity, to fairly deal with a shared challenge. The strong should help out the weak.
This isn't just a matter of semantics. "Solidarity" takes the question of responsibility off the table, making it more likely the developed countries will go along with an agreement and possibly allowing developing countries to get funds more easily. Such an approach may seem like a nuanced difference, but it has the potential to break down some psychological barriers on both sides, and allow all the parties to move forward.
How Much Money?
This issue is the most obvious, and in many ways the most vexing in the long term: How much money do we need to set aside?
We aren't talking a pittance here. An agreement could mean financial transfers totaling tens of billions of dollars a year, so the debate is going to be a fierce one. Clearly, the developing countries are going to be looking for as much as possible, while the industrial countries are going to try to keep the amount of money they have to contribute at what they consider will be a reasonable, and presumably lower, level.
The problem right now is that nobody knows for sure what adaptation will cost. Some rough estimates exist: The World Bank figures adaptation costs might total $75 billion to $100 billion a year by 2030; the United Nations Framework Convention on Climate commissioned a study that came to roughly the same conclusion. But both organizations admit their figures are speculative. And the reality is that adding up the countless measures people may need to take to deal with climate change is pretty much impossible.
So let's not even try at this point. Negotiators in Copenhagen do not need to agree on a final figure. Instead, they should agree on an initial target amount, based on the World Bank and the U.N. figures, and set up a review process to adjust payments as we find out more about our adaptation needs.
What's more, payments can be phased to start with priority needs, such as steps to deal with current climate events—things like storm-warning systems and crop-insurance programs. Many of these initial steps will be relatively cheap.
In a world where so much is uncertain and our understanding is bound to improve, it would be irrational to lock in our spending in advance. It is like the Federal Reserve freezing interest rates for several years ahead; we know there will be developments that require fine-tuning.
Who Makes the Decisions?
The third place where we need agreement in Copenhagen is how adaptation funding should be governed—that is, who makes spending decisions, and how do they decide on spending priorities?
Again, the disagreement is pretty basic: Everybody wants to call the shots. Developed countries believe the traditional institutions, such as the World Bank and the Global Environment Facility, should play the same roles with adaptation funds as they do with development aid: evaluating projects, handing out funds, monitoring their success or failure. After all, developed countries say, they have a responsibility to their taxpayers to make sure adaptation money is well spent.
But developing nations fear these traditional institutions, dominated by developed nations, will be too slow and too stingy. And they argue that adaptation funding is a different animal than development aid. They object to being forced once again into the role of the weak—and presumably grateful—recipients of aid from donor countries, when they believe it was these donor countries that caused the problem in the first place.
Countries reached a breakthrough on the question two years ago in Bali, when they set up a new Adaptation Fund governed by a board made up of representatives from both developed and developing countries.
But so far the truth is that such power sharing exists only in theory. The Adaptation Fund consists of little more than a governing board at this point, and is responsible for a fraction of the money set aside to deal with global warming's impact. Most funds targeting such assistance still come through the traditional institutions.
In the future, developing countries insist, the Adaptation Fund should wield control over more of the funds directed at adaptation spending. Rather than relying on institutions such as the World Bank to identify, appraise, implement and monitor adaptation projects, they say, such oversight should be the province of individual countries.
Complicating matters is how impossible it is to tell whether any particular need is the result of climate change or simply normal climate variability. A drought is a drought, no matter what the underlying cause. And yet for developed nations, the cause determines whether the money should be funded separately from baseline development aid, or as part of it.
One possible solution is to let developing countries write their own development and adaptation plans in consultation with aid agencies. These plans already exist to coordinate development aid, but from now on they should also cover adaptation.
This will only work for countries that have the governance necessary to control such spending. Where that is not the case adaptation spending would have to be overseen by the more traditional aid institutions.
Where the Money Comes From
The fourth issue that needs to be settled in Copenhagen is the actual source of financing.
This has to be one of the worst moment in decades to raise funding for international causes. After bank bailouts and multibillion-dollar economic-stimulus packages, most industrialized countries are facing massive government deficits. They are preparing for painful spending cuts over the medium term. It is an unfortunate moment, clearly, to talk about new funding commitments.
Still, even if times were less dire, the funding discussion would be fraught. The easiest way by far would be for developed countries to simply increase their aid budgets. But developing countries balk at that for two reasons.
First, developed countries have a history of generous pledges on which they don't deliver. Second, even if they did pay up, there is a strong suspicion that part of the payments would simply be relabeled development aid. That is, the money would not be an addition to what is already pledged.
The search is therefore on for new, independent sources of money. This is easier said than done. New sources of finance usually mean giving revenue-raising powers to international organizations such as the United Nations, or curtailing the fiscal sovereignty of national treasuries, or both. Finance ministers will veto any such proposal as a matter of principle. Would the Senate ratify a treaty that allows the U.N. to raise money directly from U.S. corporations? Unlikely.
So, the challenge in Copenhagen is to find a source of money that maintains the sovereignty of national treasuries but gives developing countries confidence that the money will be forthcoming. There is no silver bullet yet, but it is likely that several sources of finance will have to be tapped. They will have different features, appealing to the different constituencies to different degrees. But revenues will almost certainly have to be shared with other climate-change objectives, such as the development and dissemination of new technologies.
Many options have been put forward. One of the most intriguing suggestions is the sale of additional emission rights to countries unable to meet their emission-reduction targets. Another proposal is a tax on international aviation and shipping, two important sources of carbon emissions that are currently outside the Kyoto Protocol, the international treaty to fight global warming.
The main source of support for the Adaptation Fund at the moment is a levy on emission-reduction projects under the international carbon-trading program set up by the Kyoto Protocol. The levy gives 2% of the emission-reduction credits generated by, say, a new wind farm or a reforestation project to the Adaptation Fund, which then can sell the credits on the secondary market. Although it goes against economic logic to tax emission reductions, rather than emissions themselves, the levy could be extended, particularly if Copenhagen leads to the expected reform of the global carbon market.
The outcome of the Copenhagen summit is still in the balance. We can expect that there will be some sort of agreement, but how substantial it will be is very much up in the air. A deal on adaptation would go a long way toward securing a successful Copenhagen outcome.
— Mr. Fankhauser is a principal fellow at the Grantham Research Institute on Climate Change at the London School of Economics. He can be reached at email@example.com.