Developing countries should receive at least US$400 billion a year from rich countries by 2050 to fight climate change

Posted on 16 Mar 2015 in

Developing countries should receive between US$400 billion and US$2 trillion per year from rich countries by 2050 to help them cut greenhouse gas emissions, according to a new paper published today (16 March 2015) by the Grantham Research Institute on Climate Change and the Environment and the ESRC Centre for Climate Change Economics and Policy at London School of Economics and Political Science.

The authors, Dr Alex Bowen, Dr Emanuele Campiglio and Sara Herreras Martinez, used economic models to calculate how much money would need to be transferred between countries if the costs of cutting emissions to avoid dangerous climate change were paid for in an equal way depending on their national income.

While the authors found that substantial amounts of money would need to be transferred from public and private sources, the costs to high income countries would be equivalent to be no more than 2% of GDP per year.

The paper, which has been submitted to Climate Policy journal, states: “The definition of equal effort means that the reforming economies and current oil exporting regions would receive relatively large amounts as a share of GDP. However, transfers never exceed 1-2% of GDP for high-income country regions in any of the model projections. Hence the cost to high-income countries, while substantial, is not likely to be prohibitive.”

Rich countries agreed at the United Nations climate change summit in Cancún in 2010 to provide an additional US$100 billion per year by 2020 from public and private sources to help developing countries to cut greenhouse gas emissions and to adapt to those impacts of climate change that cannot be avoided. A new Green Climate Fund was created to assist the collection and distribution of the money.

However the paper warns: “The climate finance goals to which high-income countries have committed are rather unambitious. For instance, pledges to the Green Climate Fund – supposedly the cornerstone of international action on climate change – represent only a very small proportion of what models show will be needed.”

The paper finds that, although private investors can provide some climate finance, there will likely still be a considerable shortfall each year.

It states: “a review of the main possible sources and channels of climate finance suggests that all of them are currently very far from their potential. The shortcomings of public climate finance appear particularly hard to overcome.”

It adds: “Relying on investors motivated purely by financial returns may underpin international climate finance more effectively than the fluctuating goodwill of policy-makers.”

The study used several sophisticated economic models that calculate how climate finance could be equally distributed, according to a country’s GDP and the cost of cutting greenhouse gas emissions sufficiently to avoid global warming of more than 2°C.

Dr Emanuele Campiglio adds: “Current evidence suggest high income countries are going to have difficulty meeting the target of providing $100bn a year by 2020 to help poor countries fight climate change, let alone $400bn a year by 2050.”


  1. The Grantham Research Institute on Climate Change and the Environment ( was launched at the London School of Economics and Political Science in October 2008. It is funded by The Grantham Foundation for the Protection of the Environment (
  1. The ESRC Centre for Climate Change Economics and Policy ( is hosted by the University of Leeds and the London School of Economics and Political Science. It is funded by the UK Economic and Social Research Council ( The Centre’s mission is to advance public and private action on climate change through rigorous, innovative research.
  1. This research has received funding from the European Union Seventh Framework Programme FP7/2007-2013 under grant agreement n° 282846 (LIMITS).