Why development funding shouldn’t take a back seat to climate spending

By Bjorn Lomborg

The world’s development institutions are increasingly turning away from poverty-related ills like hunger, infectious disease and illiteracy—the challenges still facing most people across the planet. An unholy alliance of green activists and climate-anxious politicians has pushed them to divert ever more resources to climate policies, which typically deliver much fewer benefits. Sadly, even the African Development Bank, meeting in Nairobi next week [May 27-31] is putting climate policy ahead of core development issues.

President Akinwumi Adesina recently declared that the African Development Bank had set a target to devote 40 percent of its total financing to climate finance but had exceeded this target consistently for three years, with some 55 percent of funding going to the climate in 2023. That is 55 percent that won’t be spent directly and effectively on poverty. It is the latest proof of what research has already shown: development funding is being raided for climate spending.

Since the African Development Bank does enormous good in many of its development policies this only makes the loss greater when these are replaced by low-efficiency or inefficient climate programs.

A recent report by the “Group of 20” advocated for the African Development Bank, World Bank and other development organizations to push for an additional $3 trillion annual spending, with most of it to be directed toward climate policy. Almost as an afterthought, the G20’s background report suggests that a smaller amount of money should go to everything else important, like schooling, health and food. They have it completely backward.

Across Africa and the low and lower-middle income countries, five million children die each year before their fifth birthday and almost a billion people don’t get enough to eat. More than two billion have to cook and keep warm with polluting fuels such as dung and wood that shorten their lifespans. Although most young kids are in school, education is so dismal that most children in low and lower-middle income countries will remain functionally illiterate.

Opportunity is restricted in particular by a lack of the cheap and plentiful energy that allowed rich nations to develop. In Africa, electricity is so rare that total consumption per person is often less than what one refrigerator uses. This absence of energy access hampers industrialization and growth across sectors. Industrialization and economic growth aren’t possible without it—case in point, where the rich world on average has 530 tractors per 10,000 acres, the poorer parts of Africa have less than one.

Moves by the African Development Bank and other development institutions like the World Bank to divert more spending to climate projects are deeply misguided. Economic research shows that both cutting CO₂ and adaptation deliver low benefits compared to efficient development policies.

Moreover, scenarios from the United Nations’ climate panel of scientists show that the average global income, and especially the average African income, will dramatically improve over the next century—and that progress will not be reversed by climate change.

The UN expects average global incomes to increase 3.5-fold by 2100. The only climate economist to win the Nobel Prize finds that unmitigated climate change means incomes will instead ‘merely’ increase 3.34 times.

Climate activists argue that poverty and climate change are inextricably linked. Yet research repeatedly shows that spending on core development priorities would help much more and much faster per dollar spent than putting funds toward climate.

Prioritized, effective development investment can dramatically change lives for the better right now—and make poorer countries more resilient against challenges that are exacerbated by climate change. By contrast, even drastic emission reductions won’t deliver noticeably different outcomes for a generation or more.

Development institutions should not ignore climate change. But it is a problem that will be solved by a strong investment in research and development to make green energy truly competitive with fossil fuels, at a price point that even poorer countries in Africa can afford. Spending vast sums on climate projects in the meantime is ineffective at best, and virtue signaling at worst.

Since its inception, the African Development Bank has been a powerful and respected voice for the Global South on the world stage. Instead of joining the chorus of elite, wealthy country campaigners that would prioritize climate over development, the Bank could use its voice to speak for those across Africa without influence, and help ensure that more global funds are directed first to the most urgent problems of today.

Bjorn Lomborg is president of the Copenhagen Consensus and a visiting fellow at the Hoover Institution, Stanford University and author of Best Things First: The 12 Most Efficient Solutions for the Wolrd's Poorest And Our Global SDG Promises