To support climate action, growth measures should count planetary damages

Tianjin/China-April 12,2020:Smoking chimneys of a power plant, located beside a fishing village.

Most measures of economic performance ignore planetary damages, and thus do little to promote climate action. A notable exception is the United Nations’ Planetary Pressures-Adjusted Human Development Index (PHDI) that adds per person planetary pressures to the existing Human Development Index (HDI). This is a major step forward. To drive global climate action, however, a per person measure of greenhouse gas (GHG) emissions should be complemented by estimates of a country’s total emissions and per $ GDP emissions.

When considering the per person impact, high-income countries—with greater per capita consumption levels—generally get a lower ranking on the PHDI than HDI (see Table 1). For example, Norway falls 15 positions (from the first place among 169 countries in 2019) when planetary pressures per person are added, and the United States falls 45 positions from 16th (within the same 169). This adjustment rightly reflects relative planetary pressures originating across countries, and the need for transformational change in material flows and planetary pressures.

Table 1. Change in HDI Rank when planetary impact is counted

Country Human Development Index Planetary Impact adjustment
Norway 1 -15
Ireland 2 1
Switzerland 2 0
Hong Kong 4 Not available
Iceland 5 26
Germany 6 -1
Sweden 7 1
Australia 8 -72
Netherlands 9 -6
Denmark 10 5
Finland 11 -19
Singapore 11 -92
United Kingdom 13 10
Belgium 14 4
New Zealand 14 6
Canada 16 -40
United States 17 -45
Austria 18 -11
Israel 19 7
Japan 19 2

Source: UNDP Human Development Report 2020, Annex Table A7.1

But because global warming is driven by total GHG emissions, impacts are largely determined by the top emitters, led by China, the United States, India, Russia, and Japan. per capita terms, China’s total carbon emissions—the main component of GHGs—is 242 times more than Norway’s (in 2019). The size of the economy matters also because country policies, or regional policies if they are coordinated, influence large swathes of GDP, energy use, and carbon emissions.

Both the per capita and total estimates of emissions convey important information.  A third complementary approach of looking at emissions per $ GDP or the carbon intensity of GDP would signal the degree of “decoupling” economic activity from carbon emissions, as HDI recognizes. This would put the onus on all economies, but especially the big emitters, to cut pollution. A country can raise its position by innovating and shifting to a low- or no-carbon path. There is vast room for such improvement as reflected by enormous differences in the carbon intensity of GDP across countries.

It is striking that strong progress in human development conflicts greatly with environmental damages. All regions and countries face a conundrum. There is the priority to strengthen human development, which is helped by growing economies.  At the same time there is the imperative to avoid rapid growth hastening climate change.

Asia, for example, has some of the largest emitters in total (China and India) and per capita terms (Republic of Korea and Japan). The region also has among the best and worst performers in human development—Japan and Republic of Korea being on the higher end and India and Pakistan at the lower end. The way forward is to continue investing in human capital, but strictly by employing low- or no-carbon energy sources, such as renewable forms of energy.

Total emissions, by one set of estimates, must fall by half by 2030 and reach net-zero before 2050 to keep global temperature from rising more than 1.5 degrees Celsius. It is encouraging that China has announced carbon neutrality by 2060, and Japan, Republic of Korea, and the United States by 2050. Climate investments should be front-loaded (i.e., make greater efforts in the earlier years) because climate damages and mitigation costs are fast accelerating.

The United States highlights the need for a sharp turnaround in climate policies, for example. reversing the current administration’s dilution of emission standards for power plants and vehicles. With impressive announcements on climate action, the incoming Biden administration will need to push through Congress several policy U-turns from the positions established by the outgoing administration.

Environmental care is a shared agenda across large and small countries, which needs to be better reflected in indexes of country performance. Factoring in per person planetary impacts is a step forward in calling on all countries, especially high-income ones, to change energy and material use patterns—and reduce carbon footprints. To motivate policymakers across the board, the notion of emissions in per capita terms should be complemented by measures total as well as per $ GDP emissions.