Potential side effects of climate change mitigation on poverty and countermeasures

Abstract

Many countries have set ambitious long-term emissions reduction targets for reaching the goal in alignment with the Paris Agreement. However, large-scale emission reduction efforts may influence poverty by various economic channels. Here, we show the extent to which climate change mitigation, excluding climate change impacts, has the potential to increase poverty, and have identified its factors such as income, price changes, and direct and indirect carbon pricing impacts. We found that the global poverty headcount could increase by 69 million (19%) in 2030 relative to the baseline for climate change mitigation with global uniform carbon prices. Moreover, our decomposition analysis revealed that both price and income change effects were major factors that could increase the poverty headcount, which are 55% and 40%, respectively. This adverse side effect could be mitigated by various measures, such as emission regulations and an enhancement of energy efficiency standards beyond the typical simple carbon tax. Our results imply that global climate change mitigation policy should place more attention on economic development in poor countries.