IPCC Fourth Assessment Report: Climate Change 2007
Climate Change 2007: Working Group III: Mitigation of Climate Change

2.1.5 Development paradigms

Assessment of SD and climate change in the context of this report considers how current development can be made more sustainable. The focus is on how development goals, such as health, education, and energy, food, and water access can be achieved without compromising the global climate.

When applying such a pragmatic approach to the concept of SD it is important to recognize that major conceptual understandings and assumptions rely on the underlying development paradigms and analytical approaches that are used in studies. The understanding of development goals and the tradeoffs between different policy objectives depends on the development paradigm applied, and the following section will provide a number of examples on how policy recommendations about SD and climate change depend on alternative understandings of development as such.

A large number of the models that have been used for mitigation studies are applications of economic paradigms. Studies that are based on economic theory typically include a specification of a number of goals that are considered as important elements in welfare or human wellbeing. Some economic paradigms focus on the welfare function of the economy, assuming efficient resource allocation (such as in neoclassical economics), and do not consider deviations from this state and ways to overcome these. In terms of analyzing development and climate linkages, this approach will see climate change mitigation as an effort that adds a cost to the optimal economic state.[3] However, there is a very rich climate mitigation cost literature that concludes that market imperfections in practice often create a potential for mitigation policies that can help to increase the efficiency of energy markets and thereby generate indirect cost savings that can make mitigation policies economically attractive (IPCC, 1996, Chapters 8 and 9; IPCC, 2001, Chapters 7 and 8). The character of such market imperfections is discussed further in Section 2.4.

Other development paradigms based on institutional economics focus more on how markets and other information-sharing mechanisms establish a framework for economic interactions. Recent development research has included studies on the role of institutions as a critical component in an economy’s capacity to use resources optimally. Institutions are understood here in a broad sense, as being a core allocation mechanism and as the structure of society that organizes markets and other information sharing (Peet and Hartwick, 1999).

In this context, climate policy issues can include considerations about how climate change mitigation can be integrated into the institutional structure of an economy. More specifically, such studies can examine various market and non-market incentives for different actors to undertake mitigation policies and how institutional capacities for these policies can be strengthened. Furthermore, institutional policies in support of climate change mitigation can also be related to governance and political systems – see a more elaborate discussion in Chapter 12, Section 12.2.3.

Weak institutions have a lot of implications for the capacity to adapt or mitigate to climate change, as well as in relation to the implementation of development policies. A review of the social capital literature related to economic aspects and the implications for climate change mitigation policies concludes that, in most cases, successful implementation of GHG emission-reduction options will depend on additional measures to increase the potential market and the number of exchanges. This can involve strengthening the incentives for exchange (prices, capital markets, information efforts etc.), introducing new actors (institutional and human capacity efforts), and reducing the risks of participation (legal framework, information, general policy context of market regulation). All these measures depend on the nature of the formal institutions, the social groups of society, and the interactions between them (Olhoff, 2002). See also Chapter 12 of this report for a more extensive discussion of the political science and sociological literature in this area.

Key theoretical contributions to the economic growth and development debate also include work by A. Sen (1999) and P. Dasgupta (1993) concerning capabilities and human well-being. Dasgupta, in his inquiry into well-being and destitution, concludes that ‘our citizens’ achievements are the wrong things to look at. We should be looking at the extent to which they enjoy the freedom to achieve their ends, no matter what their ends turn out to be. The problem is that the extent of such freedoms depends upon the degree to which citizens make use of income and basic needs’. (Dasgupta, 1993, pp. 54). Following this, Dasgupta recommends studying the distribution of resources, as opposed to outcomes (which, for example, can be measured in terms of welfare). The access to income and basic needs are seen as a fundamental basis for human well-being and these needs include education, food, energy, medical care etc. that individuals can use as inputs to meeting their individual desires. See also Section 2.6, where the equity dimensions of basic needs and well-being approaches are discussed in more detail.

In the context of capabilities and human well-being, climate change policies can then include considerations regarding the extent to which these policies can support the access of individuals to specific resources as well as freedoms.

The capability approaches taken by Sen and Dasgupta have been extended by some authors from focusing on individuals to also covering societies (Ballet et al., 2003; Lehtonen, 2004). It is argued here that, when designing policies, one needs to look at the effects of economic and environmental policies on the social dimension, including individualistic as well as social capabilities, and that these two elements are not always in harmony.

  1. ^  Take the benefits of avoided climate change into consideration.