Climate compatible productive and decent work

A way out of poverty and the climate trap in Ethiopia

Marek HarsdorffEconomist

Green Jobs Program - International Labor Organisation

Africa Adapt Conference Addis 9-11 March 2011

Economic Social

Ethiopia’s challenge in the 21st century

growth

Poverty

Economic SocialGrowth

Ethiopia’s challenge in the 21st century

Economic challenge Economic Indicators

2004-2010 average

GDP + 11%Inflation 13%Budget deficit as % of GDP

5%

Agriculture (2.5% of land irrigated) account for 46% of GDP and 60% export earnings

2003 draught

-3.5%17.8%8.1%

Social challenge

Farmers, women & youth build economic basis while most vulnearble and affected by shocks

Social indicators 2010Poverty 2$/day 76% PopulationEmployment & livelihoods

80% Agriculture

Population under 15 46% => 25% unempl.Work in informally 92%

India Example: 480 Million people earn livelihood in small farming, animal husbandry, informal forestry…

‘GDP of the Poor’

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

Climate-Economy-Employment link

Nature & climate

Farmers, women &

youth

GDP & Poverty reduction

Economic Basis

Employment MDG1

Environment

SocialEconomic

Integrated approach to address CC & development = win-win

Solution?

Employment-led climate compatible

development

5 key areas

• Water harvesting• Irrigation• Floods control etc.

• If 20% of needed infrastructure in developing countries labor-based:>100 million jobs can be created

‘Hard’ adaptation (water) - Employment intensive insvesment in infrastructure

‘Soft’ adaptation in skills training focussing on productive employment

Tigray Project

• Africa 1.9m organic farms

• rest lack agro-ecological knowledge

• techniques available

Micro-insurance (weather index)

Only partly solution not for the poor of the poor

Social protection through public works programs

NREGA India 59 mPSNP Ethiopia 8 m

Employment creation in climate change adaptation

‘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 with highest potential 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

• 10% salary & employment creation 1-2%• Reduced vulnerability & energy security

Environment

SocialEconomic

Mainstreaming Employment-led

climate compatible growth in developping

planning and policye.g NAPA&GTP

Integrated approach to address CC & development = win-win

Poverty

Economic

Natural Environment

& Climate

Social

Droug

ht aff

ects

GDP

Jobless growth

Health, Water & Energy stress

Economy and social well-being depend on natural environment and climate

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%

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

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 : est. 27 million jobs

at risk : Health … over a billion rely on fish as their main or sole source of animal protein, especially in developing countries.

Environmental impacts on the Economy

We are fishing down the food web to ever smaller species…

Global Loss of Fisheries…

2048 ?

“2048” End of Commercial Fisheries ?

Environmental impacts on Social challenges

• 89% of SSA relies on biomass for cooking

• In rural areas women carry & search wood for up to 5h/dayGULU

KOTIDO

LIRA

MUKONO

KITGUM

APACMASINDI

MBARARA

PADERARUA

MOROTO

HOIMA

BUGIRI

RAKAIKALANGALA

MPIGI

MUBENDE

KAMULI

KUMI

MASAKA

LUWEERO

KATAKWI

MAYUGE

KIBOGAKIBAALE

NEBBI

SOROTI

KASESE

BUSHENYI

KYENJ OJ O

YUMBE

IGANGA

ADJ UMANI

PALLISA

NAKASONGOLA

KABALE

NTUNGAMO

NAKAPIRIPIRIT

WAKISO

MOYO

TORORO

KAMWENGE

MBALE

SEMBABULE

KAYUNGA

KABAROLE

BUNDIBUGYO

RUKUNGIRI

J INJ A

KAPCHORWA

KANUNGU

BUSIA

SIRONKO

KABERAMAIDO

KISORO

KAMPALA

200 0 200 Kilometers

In Tons per Capita0 - 55 - 25Above 25

N

Fuelwood Stock* Availabilty per District in 2005

“2026” End of Fuel Wood in Uganda?

Environmental impacts on Employment

Environmental impacts on Economy and Society as a whole: Mozambique Cyclone Eline

Mozambique 2000: Limpopo Bridge

•Massive destruction of economic and social capital

• 2 million displaced

• 1,5 mio livelihoods impacted

• 350,000 jobs lost

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?

Sustainable use of resources

Employment intensive growth and

benefit from environmental

service

Win for the Economy

Win for theEnvironment

Win for the poor

Growth based on technological progress and

efficiency

Win-win-win the concept of Green Jobs

Turns Challenges into Opportunities

Real GDP at 1990 prices

0

2,000

4,000

6,000

8,000

10,000

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009

U.S

. d

oll

ars

of

19

90

(b

illi

on

s)

Africa

Latin America and the Caribbean

EU15

U.S.

Developed Asia-Pacific economies

Developing Asia-Pacific economies

• Prospects for Africa 2010: Growth 3-5%, but high dependent on export of primary commodities => jobsless growth

• UNECA 2010: If growth is to be sustained and translated into social progress and employment: shift growth poles from extractive industries to high effecient employment intensive poles: agriculture & agro-industry (e.g. organic-) and service (e.g. renewable energy)

• Increase Total Factor Productivity growth (e.g. technology transfer in renewable energy where Africa has a comparative advantage)

Green Jobs translate growth into social progress and employment

Turn Challenges into Opportunities e.g. Fishery

Benefits from Ecological Restoration

• 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.

Turn Challenges into Opportunities e.g. Forests

Natural Conservation creates revenues and job opportunities

Measures

Sectors

Revenues (USD Bio)

Capital Employed (USD Bio)

Direct Employment

Automobiles4 $ 1,882 Bio $2,217 Bio 4.4 Mio

Steel4 $ 530 Bio $ 588 Bio 4.5 Mio

IT Services & Software4

$ 942 Bio $ 179 Bio 5.7 Mio

Protected Area Conservation

$ 4,500 Bio1 $ 125,000 Bio2 1.3 Mio3

1. 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

2. Natural Capital : Present Value (PV) of a constant service annuity of $ 5,000 billion per annum, discounted @ 4% per annum3. Estimate of the number employed directly in the maintenance, protection, and oversight of Protected Areas globally 4. Global Business Sector estimates from Global Markets Centre (“GMC”), Deutsche Bank

• 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

Turn Challenges into Opportunities e.g. Infrastructure adaptation

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 challengeEnvironmental

SocialEconomic

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?