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The changing climate of poverty

By Opportunity International Australia

How does climate change impact people in poverty?

This World Environment Day, Opportunity's Global Impact Director, Calum Scott, discusses the relationship between climate change and ending poverty.

1. Opportunity International Australia is known as a microfinance organisation. Why the interest in climate change?

Opportunity’s mission is to empower people living in poverty to transform their lives, their children’s futures and their communities. We empower people through providing financial and other services, so that vulnerable families have the means of working themselves out of poverty. But it’s also critical that there is a safe and secure economic and social environment for families to prosper in. Climate change is a threat to the safety, security and economic prospects of families in affected communities, especially those living in developing countries.

Our children’s futures in particular will be impacted by climate change. Anything we can do to mitigate carbon emissions, and help affected communities adapt, will improve the prospects of future generations, particularly for the most vulnerable families and communities.

2. How is climate change affecting Opportunity’s clients/people in poverty?

Climate change already impacts our partners and clients. In 2018, flooding in Kerala, India, left 1 million people homeless and had a major impact on our local microfinance partner ESAF and hundreds of thousands of their clients who suffered through health, water security, agriculture, energy and housing impacts of the floods. A$300M of ESAF’s portfolio was initially affected by the flooding.

The scientific consensus is that severe weather events will increase in scale, severity, and frequency. These events will disproportionately affect developing countries and the communities we serve, while such communities lack the resources to cope with the impact.

The changing climate will also disproportionately impact farmers in developing countries, with rising temperatures reducing the productivity of many crops and making marginal areas more vulnerable to flooding and drought.

3. Is climate change something that NGOs are paying more attention to? Should they be?

Because climate change disproportionately affects developing countries and communities who are least able to absorb its effects, NGOs seeking to end poverty are absolutely affected by climate change issues and can be a part of solving climate change challenges.

In addition to the 760 million people living in extreme poverty, a further 1.3 billion people live on less than US$3.20 per day. This may be enough to afford the most basic essentials of life but is typically not enough for such families to build up the sort of savings or assets that can help them absorb the impacts of climate change.

If we want to move people out of poverty, and help them stay out of poverty, we need to recognise the additional vulnerabilities that climate change exposes our clients to.

Ultimately success in tackling climate change and dealing with its affects will require partnership across NGOs, governments and communities.

NGOs will be an important part of the solution. For example, Opportunity’s work in supporting financial inclusion has led to the development of a network of microfinance institutions that employ over 10,000 staff and serve more than 6 million clients often working in remote areas where there is little other infrastructure to support those communities. This gives Opportunity a network through which additional services could be delivered to those affected by climate change. In fact, our partners have already been the first on the ground to provide support to clients in communities affected by typhoons and flooding.

4. What do you mean by the term ‘Climate Smart’?

Climate change will impact all of our lives, wherever we live, but the effects of climate change on peoples’ health, homes and livelihoods will vary significantly from place to place and from family to family.

The agricultural sector will be particularly affected with rising temperatures, increased drought, intensified rainfall and flooding, causing multiple impacts on farmers in particular. Increased temperatures can actually increase the productivity of some crops, even though the yield on the majority of crops falls.

Climate Smart Agriculture is about promoting crops, farming methods and value-chain models that protect smallholder farmers from the negative impacts of climate change and promote more productive, more sustainable livelihoods. Some specific interventions include:
• Promoting a switch to less thirsty crops in some areas
• Selectively breeding crop varieties for drought-resistance
• Using natural methods to make the best use of rainfall
• Switching to more heat-tolerant livestock – sheep, pigs and goats will replace beef cattle and chickens
• Switching to soybeans, which benefit from increased carbon dioxide levels
• Giving farmers access to transport to take their produce to market
• Greater use of modern technology, such as weather forecasting communications

5. Climate Action is one of the SDGs, but there are many others. How does climate change impact these other SDGs?

As the 2018 IPCC [Intergovernmental Panel on Climate Change] report1 acknowledged, “a large and rapidly growing body of knowledge explores the connections between climate change and poverty. Climatic variability and climate change are widely recognized as factors that may exacerbate poverty, particularly in countries and regions where poverty levels are high. Many vulnerable and poor people are dependent on activities such as agriculture that are highly susceptible to temperature increases and variability in precipitation patterns.”

Even modest changes in rainfall and temperature patterns can push marginalized people into poverty as they lack the means to recover from shocks. According to the UN2, up to 122 million more people worldwide could be living in extreme poverty by 2030 as a result of climate change and its impacts on small-scale farmers’ incomes.

By the same token, measures to address climate change vulnerabilities can be consistent with addressing poverty. For example, farmers with effective livelihood adaptation strategies tend to enjoy higher food security and experience lower levels of poverty.

Engkom, an Indonesian small loan recipient who makes bags out of recycled sweet wrappers, which she sells to earn an income.

6. Is focusing on climate change a completely new way of thinking for an NGO like Opportunity, or is it something that already informs decision making?

Effective responses to climate change will be those that take account of the differences in impacts between communities; and effective solutions will be those that are tailored to local communities and individual household’s needs. Opportunity’s microfinance programs are intended to provide financial and other tools for families in poverty to enable them to plot their own path out of poverty. The same flexibility in approach and focus on sustainability will be needed to address the challenges of climate change.

We can already point to partners who are not simply reactive to climate change events, but actively seek to diminish their impact. For example, ESAF, our largest partner in India, has over one million insurance clients, including agricultural insurance and health insurance, covering extreme weather events.

7. If a donor or supporter questioned Opportunity’s interest in climate change, how would you respond?

There are many unknowns around climate change and forecasting future events, especially in the longer term, is always challenging. We cannot know for sure how our partners and programs, and the families and communities they serve, will be affected. However, that is no justification for inaction – we know enough to be sure that our network and our resources put us in a position to offer support and to ease the cost and pain for communities that will be among those worst affected by climate change.

As a start we need to do all we can to understand the issue and how it will affect our stakeholders. From there, we can develop, pilot and roll-out strategies that are tailored to local need. We will need to be flexible in our thinking, so we can tailor solutions as we learn more over time about the scale and nature of impacts on those we serve.

8. How does Opportunity intend to include climate change in its programs?

In the next year, we will carry out a climate audit to assess vulnerability to climate change across the countries and communities we serve. We will also assess the policies and preparedness of our partners, reviewing existing policies and identifying best practices that we can share across our network.

This assessment will help us identify where there is the greatest need and opportunity to adapt existing services, or provide new services, to address climate change challenges. The solutions we develop will be based on needs identified, but from what we already know, it seems likely that we would be looking to:
• Adapt and expand existing services: providing more flexible financial services, increasing access to insurance, expanding availability of remittances services (which particularly help communities affected by severe weather events), improve access to health services
• Provide new services: supporting livelihood adaptation, helping communities access carbon credits
• Target communities particularly vulnerable to climate change as we expand the services we offer, including providing financial services to refugee communities

9. Where would you like to see us a year from now? Five years? Ten years?

Our strategy will be informed by the climate audit. But in addition to that, I would like to see all of our partners implementing best practices in environment policy – that means understanding the internal impact of their operations on the environment, and acting to minimise that, while also following external policies that promote environmentally sustainable businesses for the clients and communities they support.

In five-years’ time, I would like to see promotion of sustainable livelihoods—including Climate Smart Agriculture—across our network of partners. We will be implementing programs that we are only starting to develop now and using technology to reduce the vulnerability of communities to extreme weather events.

While longer term projections are harder to make, there truly is reason to be optimistic – Opportunity, working together with other stakeholders can tackle the challenges of climate change and poverty together and promote sustainable livelihoods that increase families’ incomes, while reducing vulnerability.

10. Australia’s carbon emissions actually increased in recent years, but emissions from developing countries are falling. Are developing countries particularly receptive to climate smart practices?

I think there’s a misconception that developing countries will only add to the carbon emissions problem as they grow, but that’s far from being necessarily the case. A recent UN report3 showed that renewables now account for more than half the new energy generation in developing countries and stated that “emerging economies are not only leading global renewable energy investment and development, but have slashed their new coal plant build by nearly half”.

I think that’s an important point for some people as it counters the idea that supporting growth in developing countries is just going to make things worse. In fact, we are seeing a flexibility in approach that will enable these countries to take advantage of solutions that involve new technology and ways of working. Climate Smart practices could simultaneously offer a route out of poverty and towards lower emissions.

IPCC Report 2018: Commissioned as part of the Paris agreement to study impact of emissions pathways on warming and how that would impact the environment and communities.
2 The Guardian 
3 Renew Economy

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