Climate compatible productive and decentworkA way out of poverty and the climatetrap in Ethiopia Marek Harsdorff Economist Green Jobs Program - International Labor Organisation AfricaAdaptConferenceAddis 9-11 March 2011
Ethiopia’s challenge in the 21st century Economic Social growth
Ethiopia’s challenge in the 21st century Economic Social Poverty Growth
Economic challenge Agriculture (2.5% of land irrigated) account for 46% of GDP and 60% export earnings
Social challenge Farmers, women & youthbuildeconomic basis whilemostvulnearble and affected by shocks
‘GDP of the Poor’ India Example: 480 Million people earn livelihood in small farming, animal husbandry, informal forestry… Share of ‘nature’/ecosystem services in classical GDP 7.3 % Share of ‘nature’/ecosystem services in “GDP of the Poor” 57 % Source: GIST’s Green Accounting for Indian States Project, 2002-03 data
Integratedapproach to address CC & development = win-win Employment-ledclimate compatible development 5 key areas Environment Social Economic Solution?
‘Hard’ adaptation (water) - Employment intensive insvesment in infrastructure Water harvesting Irrigation Floods control etc. If 20% of needed infrastructure in developing countries labor-based: >100 million jobs can be created
‘Soft’ adaptation in skills training focussing on productive employment Tigray Project
Micro-insurance (weather index) Onlypartly solution not for the poor of the poor
Social protection through public works programs Employmentcreation in climate change adaptation NREGA India 59 m PSNP Ethiopia8 m ‘Work for insurance’?
Economic diversification - renewable energy In SSA 74% do not have access to electricity (561mio) 89% of SSA rely on biomass for cooking Poor spend 12% income on energy, 4x of developed world Out of 34 countries withhighestpotential 17 in Africa
Economic diversification - pro-poor green value chain development in cut-flower 50,000 employed 85% women 300 birr/month (60$) Farm with 400 empl. 10ha Eco-charcoal 200 sacs 25kg/month = 20,000 birr
Economy and social well-being depend on natural environment and climate Natural Environment & Climate Health, Water & Energy stress Drought affects GDP Social Economic Poverty Growth Jobless growth
Environmental challenges Global temperature increase between 1,5-6 degrees by2100 By 2080, an increase of 5 to 8% of arid and semi-arid land in Africa is projected (notably in West Africa: over last 30 years 25% decrease in rainfall) Towards the end of the 21st century, projected sea level rise 15-95 centimetres will affect low-lying coastal areas with large populations (e.g. Mozambique) The economic lost could amount to 20% of global GDP The cost of adaptation could amount to at least 5 to 10% of GDP of Africa (for SSA about $18 billion/year up to 2025)
Economic challenges 1.6% GDP growth in 2009 => down from 4.9% in 2008 average growth over 5% since 6 years but no translation into employment growth. Reason: Growth sustained by natural resource extraction sectors (grew by 10%) but employing only 10% of labor force (as capital intensive), agriculture which employs over 50% of labor force grew only by 2.5% and makes 23% of GDP (down from 27% 1999) As a result: factor accumulation growth no total factor productivity growth (no growth based on human and technological progress) Egypt 4.7%, Eritrea 2%, Ethopia 7.5% (non-aricultural growth in service sector), Kenya 2.1%, Lesotho -1%, Malawi 5%, Namibia -0.7%, Nigeria 5.6%, Sudan 3%, Swaziland 0.4% Africa’s key economic sectors and its current development in 2009: Agriculture: falling commodity prices less demand => low invest e.g in coffee, cocoa, cotton. Extraction Industry/ Natural resources/mining: scaled back production due to slow demand Manufacture /natural resource based industries: reduced capacity (Uganda 15 factories closed in fish, tobacco and coffee industry) Tourism: Decline in tourists
Social Challenges: Employment Agriculture employs 63% in Sub Sahara in 2007 down from 67% in 1998 (33% North Africa down from 36%) (99% working in the informal sector) Extractive industry employs 10% unchanged (23% North up from 20%) => primary commodity production based economy Service 27% up from 22% (44% unchanged North Africa) Informal sector employs 75% in SSA (SA excluded) and 43% in NA 7.9% unemployment in Sub Sahara 2008 unchanged over last 10 years (13%=>10% in North Africa) 77.4% vulnerable unemployment, 66% self reported unemployment 2002 Active population over 60% = 400 million in 2009 up from 230 m in 1990 highest in World: 70% under 30 (of which 17% unemployed in SSA and 34% in North Africa no change over last 10 years) Working poor (those working but earning less than 2$ a day are 82% of working population) in Sub Sahara 2007 (30% in North Africa)
Social Challenges: Health, education… Africa’s population grew by 2,3% in 2009: 1billion today! Strong rural-urban migration (housing, education, health, skills and employment challenge) 51% in Sub Sahara live with less than 1,25$/day (3% in North Africa) the same as 1980! School enrolment in Sub Sahara still low: 74% 2007 (96% in North Africa) Life expectancy at birth is over 70 in North Africa and around 50 in Sub Sahara (Malaria is responsible for 91% of all mortalities in Africa) Access to secure drinking water: Only 60% Access to electricity: Only 26%
Environmental impacts on the Economy Global Loss of Fisheries…
Open Access & Perverse Subsidies are key drivers of the loss of fisheries
Half of wild marine fisheries are fully exploited, with a further quarter already over-exploited
at risk : $ 80-100 billion income from the sector
at risk : Health … over a billion rely on fish as their main or sole source of animal protein, especially in developing countries.
We are fishing down the food web to ever smaller species… Source: Ben ten Brink (MNP) presentation at the Workshop: The Economics of the Global Loss of Biological Diversity 5-6 March 2008, Brussels, Belgium. Original source: Pauly
Environmental challenges have an economic and social dimension! Impact on employment in Agriculture, Tourism, Energy, SMEs, Extractive Industry, Waste, Construction… Health burden increases, by 2030 90 million more people than today will be exposed to malaria (e.g Zimbabwe) The likelihood of civil conflict due to climate change impacts (notably water stress; river borders) could increase by 54% By 2020, 75 - 250 million are projected to be exposed to increased water stress due to climate change. By 2020, in some countries, yields from rain-fed agriculture could be reduced by up to 50% (food security/malnutrition) Unabated climate change: economic cost 6-20% GDP by 2080
Env. Degradation and CC could impede achievement of Development Goals: as key African economic sectors (agriculture, natural commodities and tourism) are highly affected; and as the lowest social class of the poor is hit hardest Is there a way out of the Dilemma?
Win-win-win the concept of Green Jobs Turns Challenges into Opportunities Win for the Environment Sustainable use of resources Win for the poor Win for the Economy Employment intensive growth and benefit from environmental service Growth based on technological progress and efficiency
Green Jobs translate growth into social progress and employment
Prospects for Africa 2010: Growth 3-5%, but highdependent on export of primarycommodities => jobslessgrowth
UNECA 2010: If growthis to besustained and translatedinto social progress and employment: shift growthpolesfrom extractive industries to higheffecientemployment intensive poles: agriculture & agro-industry (e.g. organic-) and service (e.g. renewableenergy)
Increase Total Factor Productivitygrowth (e.g. technologytransfer in renewableenergywhereAfrica has a comparative advantage)
Turn Challenges into Opportunities e.g. Forests 75% of the population in Sub Sahara Africa depend for their livelihoods on non timber forest products Sustainable forest management can: create massive employment, provide for livelihoods, make a significant contribution to the fight against climate change, combat desertification and land degradation.
Natural Conservation creates revenues and job opportunities Balmford et al, 2002, “Economic Reasons for Conserving Wild Nature”, Science 297, estimates Protected Areas could produce goods and services valued at between $ 4,400 billion - $ 5,200 billion per annum Natural Capital : Present Value (PV) of a constant service annuity of $ 5,000 billion per annum, discounted @ 4% per annum Estimate of the number employed directly in the maintenance, protection, and oversight of Protected Areas globally Global Business Sector estimates from Global Markets Centre (“GMC”), Deutsche Bank
Turn Challenges into Opportunities e.g. Infrastructure adaptation Infrastructure to control flash-floods If 20% of needed infrastructure in developing countries in water and roads will be labor-based: >100 m jobs in developing countries created
Economic and labour market impacts on balance Net gain in jobs from active climate and environmental policies Large potential in developing countries Only decent + green jobs help to meet the tripple challenge Environmental Social Economic
EU rational to move to 30% target!What is Africa doing about with the highest renewable potential ? "If we stick to a 20% cut, Europe is likely to lose the race to compete in the low-carbon world to countries such as China, Japan or the US, all of which are looking to create a more attractive environment for low-carbon investment," the France, German and UK ministers wrote in the Financial Times 15 July 2010. And Africa?