World Bank President Jim Yong Kim on Tuesday said climate change was a “fundamental threat” to global economic development as he called for a major new push to reduce extreme poverty over the next 17 years.
The bank is in the middle of an internal debate over how to reshape its role in a world where the major developing nations — the core “customers” for its loans and programs — have become increasingly middle class and where states caught in civil war pose an intractable development problem. At the same time, the impact of climate change disproportionately threatens the African and Asian nations that would find it hardest to cope.
Kim said the bank, a sprawling institution that lends to everything from power plants to local governance projects, would try to tailor its work to focus on the elimination of extreme poverty and on easing inequality in countries that are doing better economically. Finding ways to avoid or lessen potential climate effects, he said, are central to that effort.
“If we do not act to curb climate change immediately, we will leave our children and grandchildren an unrecognizable planet,” Kim said. “It is the poor, those least responsible for climate change and least able to afford adaptation, who would suffer the most.”
His comments are part of an emerging push by the World Bank and the International Monetary Fund to focus on climate change — something that IMF managing director Christine Lagarde on Tuesday said puts global financial stability “clearly at stake.” The IMF last week published a report arguing that fossil fuels are subsidized to the tune of $1.9 trillion annually by governments around the world and should be more heavily taxed. On Tuesday, the IMF and the World Resources Institute hosted a speech by British economist Lord Nicholas Stern, author of a controversial climate report for the British government and an advocate of fast and deep carbon emissions cuts.
“We have to go zero carbon more or less where we can” to meet the goal of limiting planetary warming to 2 degrees Celsius over the next 90 years, Stern said.
The joint effort by the IMF and World Bank to elevate thinking about the economics of climate change has accelerated under Kim and Lagarde, pushed by evidence that the effects of a warming planet are already being felt in agricultural yields in some nations and the severity of weather events around the globe.
Both organizations often tout the power of advocacy and research in shaping countries’ policies, but their more direct influence may relate to their power over loans and financing. In the bank’s case, that power has declined as the flow of private money has increased around the globe.
Still, in his first year as bank president, Kim set a date by which he thinks the world could virtually eliminate extreme poverty: 2030. By then, he said, the number of people living on less than $1.25 per day could be cut from the current estimate of 1.3 billion to perhaps 200 million — a number World Bank officials say could then be addressed through solely local programs.
“Now is the time to commit,” Kim said. With nations such as China and Brazil growing richer and expected to continue growing, “successes of the past decades and an increasingly favorable economic outlook combine to give developing countries a chance — for the first time ever — to end extreme poverty within a generation.”
It is in the nature of the World Bank, perhaps the chief bully pulpit for economic development, that its president talks in far-reaching terms. In his valedictory news conference, longtime World Bank head James Wolfensohn also spoke of a generational effort “to fight poverty, to establish equality and assure peace.”
But World Bank staffers argue that Kim’s statement differs by setting a specific goal — reducing poverty to a minimal or “frictional” level — and a timetable.
It also points to some of Kim’s emerging priorities — and some of the bank’s identified quandaries.
Major bank borrowers such as Mexico, Brazil and China have moved hundreds of millions of their citizens from poverty into the middle class, and while the bank has been involved over the years, that process has been driven by private capital and more-open trade relations with the developed world. Increasingly, bank officials feel they need to confront transnational problems — such as climate change — and face the fact that the world’s poorest may end up concentrated in a few places, particularly failed or conflict states where development is hardest and corruption is a risk to public funds.
In the world the bank is facing, “working in these countries is going to be one of our specialties,” Kim said.