Photo: PNUD Peru
This year marks the tenth anniversary of both the Paris Agreement and the Sustainable Development Goals (SDGs). These landmark international instruments for a sustainable planet are equally driving the economies of the future. In effect, local development cannot be separated anymore from climate resilience, decarbonization transitions and environmental sustainability.
As required by the Paris Agreement, countries are currently presenting their third generation of national climate pledges, known as NDCs and reissued every five years with increased policy ambition. But NDCs do not just set decarbonization targets; they offer blueprints for the local economies.
Three development frontiers
When governments prepare their NDCs, they must address three key frontiers for local development: land, energy, and resilience. Each blends climate action, economic goals and sustainability – inseparably. Each requires innovative policy approaches with adequate financial mechanisms.
Land is the foundation of our societies. It is where forests grow – thus regulating carbon and water cycles. It is where food is cultivated, and where rural livelihoods and biodiversity intersect. It is the origin of most global trade. Therefore, sustainable land management is both a climate policy and an economic development strategy – as illustrated by some examples of our international work.
Through its latest NDC, Ecuador is aligning land and forest governance with REDD+ finance under the Paris Agreement, delivering economic incentives to farmers for forest conservation and mobilizing concessional credit from national banks for deforestation-free production. Over the years, the NDC has provided a platform for private sector engagement: in particular, an NDC-linked partnership between the Government of Ecuador, local cooperatives, the Italian coffee company Lavazza and UNDP served to pilot deforestation-free coffee, enacting national regulations and establishing a certification scheme that combines satellite information with farmer data via cellphones. This Coffee for the Planet partnership has led to the first nationally certified deforestation-free coffee in the world, now reaching global markets and recognized by international awards, such as the AGFund and the World Economic Forum.
On the other side of the world, Cambodia has just issued an NDC with land policies that tackle climate change while supporting farmers and Indigenous Peoples. This exemplary NDC envisions financial incentives to rural communities for their role in protecting forests, restoring land and farming sustainably, with support from climate finance mechanisms under the Paris Agreement, such as REDD+.
As forests are the land ecosystem where nature and climate intersect more intensely, we have been supporting the Government of Brazil to set up the Tropical Forest Forever Facility (TFFF), an international blended finance mechanism, led by the Global South and just launched at the UN climate summit in Belém. The TFFF aims to channel up to US$4 billion annually to over 70 countries for their forests and their associated environmental services – climate, biodiversity and water. It has specific provisions to allocate at least 20 percent of payments directly to Indigenous Peoples and local communities, recognizing their crucial roles – often overlooked – in stewarding forests.
In the same vein, at UNDP we are establishing the Forest Guardians Investment Accelerator to facilitate equitable economic partnerships between private companies and Indigenous Peoples to jointly safeguard their forests territories, which sustain both local livelihoods and global environmental commons. In essence, a new generation of financial instruments for forests advances global climate action while channeling finance to local communities and to Indigenous bioeconomic solutions.
The energy transition is another catalyst for climate action and local economic development. Shifting to renewables does not just cut carbon emissions; it also expands economic opportunity. A scenario analysis conducted by UNDP and the Pardee Institute found that combining renewable energy solutions with measures to advance the SDGs could lift 60 million people out of extreme poverty by 2030, and nearly 200 million by 2050. This synergy would bring its largest impact in sub-Saharan Africa, the region where development needs are the most pressing. Investing in renewable energies can expand access to affordable energy, drive new local industries and reduce reliance on fossil-fuel imports, which often drain national economies. From solar mini-grids powering schools and clinics, to wind and micro-hydro systems supporting local enterprises, clean energy investments strengthen resilience, create jobs and accelerate the transition to a low-carbon future. In this way, climate and development are not parallel tracks, but a joint venture.
Resilience is the third development frontier and the one that crosses all sectors of the economy. The scale of climate impacts is accelerating, disrupting societies, undermining economies and threatening to reduce GDP across many nations. Climate change compels us to rethink how we build, how we farm and how we insure. Adaptation measures are now indispensable to governments, businesses, cooperatives and households alike, turning climate resilience into an economic imperative. A new wave of rural investments is key to adapting land management and farming systems to climate changes and risks, from communities restoring mangroves as joint climate and livelihoods endeavors in Kenya, Vietnam and Colombia to women climate champions managing farm and coastal lands in an integrated, ecological way in India. At a larger scale, investments in resilient infrastructure – such as energy, water, transport and telecommunications – are crucial in the era of climate change: the World Bank has estimated that every investment in resilient infrastructure in developing countries yields fourfold returns in socio-economic benefits. Similarly, a recent resilience report by the US Chamber of Commerce states that every $1 not invested in disaster resilience today can cost communities up to $33 in lost future economic activity. Adaptation to climate change is, therefore, not just a set of provisions in the Paris Agreement or a contingency plan: it is a long-term investment in the economic resilience of organizations, communities and entire nations.
Three policy methods
The integration of climate action, economic development and environmental sustainability requires policy innovations. Under the Climate Promise, we propose three policy methods that turn NDCs into economic accelerators:
- Connect: Bring different sectors of government together. The days of siloed policymaking are over. NDCs and SDGs were designed to stimulate integrated policies and blended finances. They require ministries as diverse as finance, energy, agriculture and environment to jointly discuss policy agendas, assess trade-offs, find synergies, build resilient development pathways, and design just economic transitions.
- Include: Engage people in climate planning. NDCs should not only consult the social, economic and territorial stakeholders in every society, but equally leverage their skills and seek to invest in them. For instance, Indigenous Peoples, who are the primary guardians of tropical forests, hold knowledge systems and agroecological practices that secure global environmental services like climate regulation, biodiversity conservation and water flows. Women’s leadership has been proven to expand climate action around the world: in Ecuador, women’s participation in financial incentives enhanced protected forests by 33 percent and expanded sustainable farming areas by 35 percent. Young people, who represent half the world’s population, offer innovative solutions for climate with unprecedented determination for change, as shown by over 2,000 young leaders across the world that recently participated in NDCs discussions supported by the Climate Promise.
- Finance: Align financial actors to climate goals. Climate finance is development finance. To build the economies of the future, countries must coordinate financial actors towards decarbonization and resilience, such as national budget agencies, private banks, chambers of commerce, environmental funds, insurance and philanthropies. This is a fundamental policy exercise: fragmented efforts dilute impact; aligned investments multiply it.
A blueprint for the future
A decade ago, the Paris Agreement gave the world the most important treaty of the century. Today, it provides an international blueprint to propel local economies to a sustainable and resilient future. By transforming land management, energy systems and development finance, we can reinvigorate local economic development, help adapt communities to climate impacts that are no longer avoidable, and make rural territories sustainable.
The Paris Agreement is as much about climate change as it is about local development. Its legacy will only endure through the integrity of our forests, the sustainability of our farms, the decarbonization of our energy and the resilience of our communities.