Climate aid isn’t charity – it’s resilience for all of us

This year, world leaders will set a new climate finance goal called the New Collective Quantified Goal on Climate Finance or NCQG. This new goal will set a benchmark for rich countries to provide financial aid to low- and middle-income countries (LMICs). The financing is intended to support LMICs in mitigating emissions, building resilience and adaptation capacity, and helping cope with losses and damages from severe disasters. 

This type of aid primarily comes in one of two forms – loans or grants. Loans are currently the instrument of choice among rich countries. However, this choice has kept many nations trapped in debt, ultimately slowing climate action and development. Grants come with no repayment structure and, thus, offer viable pathways for LMICs to develop and address climate change. Consequently, how the financing is provided is equally important as how much is delivered. 

Continuing to use debt-based models undermines local resilience, siphoning money away from crucial public services like education, health, and environmental protections in LMICs toward the coffers of wealthy countries. However, what world leaders of wealthy nations too often fail to remember is that undermining rights and well-being anywhere jeopardizes stability everywhere – including in their own backyards.

Human entanglement

When I was in the Peace Corps in Turkmenistan, I lived near the Afghanistan border. At the time, the area was a major corridor for the narcotics trade, specifically opium. In the region where I lived, the drug trade was associated with the Baloch people, who are ethnically distinct from the local Turkmen. 

The Baluch were discriminated against so thoroughly that they often could not find employment, receive medical attention, or even hail a taxi. So, they turned to illicit means of income as communities with few options often do. From that little corner of the world, massive amounts of drugs would flow north through Kazakhstan or east over the Caspian Sea and into Europe, with a small amount making its way to North America. 

After my service, I returned to my small hometown in eastern Wisconsin – the type of town where cows outnumber people and most everyone is related. Within a year, I lost my first friend to an overdose that involved opioids. Sadly, he would not be the last. It's hard for me to count all of them over the years, but in 2023 alone, I lost three more friends under similar circumstances. 

Opioid overdoses are a phenomenon that many Americans have become all too familiar with. There are, of course, many reasons for this epidemic, but my mind often returns to the Baloch when I think of the friends who I have lost – not out of blame, but out of recognition that their plight is, in many ways, connected to the fate of my friends. 

While the chances are very small that the opioids my friends died from came from that same corridor in Turkmenistan, the mere possibility was enough to make clear how globally connected our well-being is. If oppression on the other side of the planet can manifest in the loss of loved ones in my hometown, then certainly climate change and economic disparities exacerbated by debt-based climate finance are already being felt around the world, too.

Climate grants aren't charity

Understanding this interconnectedness can change how we view issues like climate finance. Suppose we recognize that pollution in one region can cause health crises in another, or clearing a forest in one country could induce drought and famine in others, or that unequal social structures anywhere can send waves of misery everywhere. Viewed in this way, allocating financial resources to the most vulnerable people and regions becomes not an act of charity but one of self-preservation.

Some may be reluctant to accept that self-preservation should undergird our approach to global issues like climate change. After all, selfishness caused this mess in the first place, right? However, there is a distinct difference between acting out of selfishness when one sees oneself as separate from others and acting out of self-preservation when one sees oneself as intimately connected to all. With the latter, our notion of "self" expands to encompass the world – and everyone and everything in it.

To put it in financial terms, grant-based financing for planetary and human well-being is an investment in our future. It is not just something rich countries should do in recognition of their disproportionate role in climate change – though it is that, too – it is something they must do to safeguard their own countries. Distributing financial and material resources to the most vulnerable without trapping them into debt is paramount to ensuring we all have the safest and most equitable future possible.

Debt is delaying climate action

Even with the understanding that giving aid to a foreign community will eventually benefit us all, many will still object to giving money directly. Why can't we deploy climate solutions and make money through interest? This thinking isn't necessarily immoral or wrong, but it's really only appropriate for the private sector. In the public realm, governments have a duty to protect the rights and well-being of their citizens. Governments are not meant to be profit-driven; when they are, it typically comes at the expense of ordinary people.

Currently, climate finance is overwhelmingly debt-based. In 2023, Oxfam estimated that over 90% of climate finance from multilateral institutions, such as the World Bank, was in the form of loans. LMICs simply cannot pay off these loans. The International Monetary Fund reported in 2022 that 60% of low-income countries were in or at risk of debt distress.

Despite being unsustainable, debt-based instruments are still the predominant form of giving by rich countries. As a result, LMICs pay an estimated US$232 million per day just to meet their loan obligations. In order to make those payments, LMICs must reallocate resources from health, education, social equity, and other public projects. As I heard one diplomat say at a UN climate finance discussion, they are "being asked to rob Peter to pay Paul." 

Human well-being means planetary well-being

These reallocations are concerning when it comes to stopping climate change since such aspects of society, particularly health and education, are also essential climate solutions. Therefore, rich nations cannot ask LMICs to make sacrifices in those areas in the name of climate finance and expect substantive movement on climate action.

Take clean cooking, for example, on which my colleagues and I recently published a report. Over two billion people have to rely on polluting fuels like wood, charcoal, animal dung, and crop residue to cook daily meals. These fuels cause as many as 3.2 million premature deaths each year from pollution, costing the world US$2.4 trillion in health-related expenses and lost productivity annually. The emissions from these fuels equate to about 2% of global emissions – equivalent to the entire aviation industry.

Moreover, these fuels are also a significant source of black carbon, which is a short-lived but powerful warming agent while it's in the atmosphere. As it falls from the atmosphere, it can accumulate on ice and glaciers, speeding up the melting process which threatens water security and can cause flash floods.

The effects don't stop there, either. Cooking with wood, for instance, requires considerable time to gather the fuel. This task typically falls on women and girls, who can then be exposed to gender-based violence, animal attacks, and even novel diseases as they go further into remote locations to harvest wood. Solid fuels also contribute to forest degradation, impact food security, accelerate biodiversity loss, and cause tensions between displaced communities and local populations.

Encouragingly, many clean fuels and clean burning stoves can address these issues. According to the World Bank, achieving universal access to clean cooking would cost just US$10 billion – less than 0.5% of the costs of inaction. Yes, it actually costs significantly more for governments to do nothing on the issue. 

While policymakers are making some progress on clean cooking, the costs of the transition cannot fall on communities with few resources. Clean cooking demonstrates how climate finance cannot be successful if funding comes at the expense of health and prosperity. If countries are too burdened by debt to invest in the well-being of their people, then more people may be forced to use polluting fuels or technologies as in the case of those who lack access to clean cooking methods. Improving human well-being is climate action, not just a consequence of it.

‘How’ is as important as ‘how much’

This is just one way of viewing grant-based climate finance. Much has been written on the need for rich countries – the primary drivers of climate change – to pay for the damage their consumption has caused. It's a reasonable argument, so naturally, many policymakers resist it. Many do so based on isolationist views or the idea that externalities – harm caused by economic activity – are "priced in" to products and services causing the damage. 

But isolationism has no place in a connected, complex system like our planet, and surely, the externalities caused by our consumption have not been adequately "priced in" as fossil fuel corporations continue to rake in record profits while climate damages mount. 

As world leaders deliberate on and finalize the new climate finance goals throughout this year and at COP29, wealthy nations must commit to delivering on that goal through grants, not debt. If they don’t, they risk a cascading series of consequences that will undermine their own future as much as those they claim to help.

Dan Jasper is a policy advisor at Project Drawdown with a multidisciplinary background in public policy at the intersection of climate change and poverty alleviation.