The Economics of Low Carbon, Climate Resilient Patterns of Growth in Developing Countries

The report finds that significant greenhouse gas mitigation is possible in developing countries at low or negative costs, primarily through energy efficiency and forestry. While macroeconomic analyses for countries like Mexico and South Africa suggest that low-carbon transitions can be net-positive for GDP, the report warns that technical cost curves often omit significant implementation and transaction costs. It emphasizes that low-income countries (LICs) have different drivers, focusing on co-benefits like health and energy security rather than absolute emission cuts. The document also highlights a critical knowledge gap regarding 'climate resilient growth'—how to structure economies to reduce long-term vulnerability—and calls for better integration of adaptation and mitigation strategies to avoid trade-offs.

• Significant mitigation potential exists in developing countries at low costs, with over 60% of potential in most large developing countries costing less than $25/tCO2e.
• Macroeconomic analyses for specific countries indicate that ambitious low-carbon paths do not necessarily undermine growth; in Mexico, GDP could increase by up to 1% or 5% depending on the model used.
• Technical cost curves (MACCs) often underestimate real-world costs by omitting policy and transaction expenses, which can reduce cost-effective opportunities by 10-30% in sectors like buildings.
• For low-income countries (LICs), the primary incentive for low-carbon growth is the realization of co-benefits, such as improved health from cleaner stoves and enhanced energy security.
• Forestry and agriculture are dominant low-cost mitigation sectors in Brazil and Indonesia, with Brazil's deforestation reduction costs estimated at €3.5/tCO2.
• China and India face greater challenges than other developing countries due to rapid emissions growth, making the costs of ambitious targets higher and less certain.
• Climate change is projected to cause severe economic losses in developing countries, with estimates for South-East Asia reaching 7% of GDP by 2100 under a business-as-usual scenario.
• Global adaptation costs for developing countries are estimated between US$78 billion and US$90 billion per year for the 2010–2050 period, dominated by the coastal sector.
• There is a critical lack of evidence on how to achieve 'climate resilient growth'—specifically how to shift economic structures away from climate-sensitive sectors like agriculture.
• Synergies and conflicts exist between mitigation and adaptation; for example, increasing water resources for aridity may increase energy use for desalination, creating a trade-off.
• The transition to low-carbon growth is hindered by institutional barriers, such as the lack of incentive for state-run companies (e.g., CFE in Mexico) to switch from fossil fuels to renewables.

APA

Pye, S., Watkiss, P., Savage, M., & Blyth, W. (2010). The Economics of Low Carbon, Climate Resilient Patterns of Growth in Developing Countries. Stockholm Environment Institute. https://www.sei.org/mediamanager/documents/Publications/Climate/economics_low_carbon_growth_report.pdf

Chicago

Pye, Steve, Paul Watkiss, Matt Savage, and Will Blyth. The Economics of Low Carbon, Climate Resilient Patterns of Growth in Developing Countries. Stockholm Environment Institute, 2010. https://www.sei.org/mediamanager/documents/Publications/Climate/economics_low_carbon_growth_report.pdf.

Wikipedia

{{cite report |last1=Pye |first1=Steve |last2=Watkiss |first2=Paul |last3=Savage |first3=Matt |last4=Blyth |first4=Will |title=The Economics of Low Carbon, Climate Resilient Patterns of Growth in Developing Countries |publisher=Stockholm Environment Institute |date=16 April 2010 |url=https://www.sei.org/mediamanager/documents/Publications/Climate/economics_low_carbon_growth_report.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{pye2010economics, author = {Pye, Steve and Watkiss, Paul and Savage, Matt and Blyth, Will}, title = {{The Economics of Low Carbon, Climate Resilient Patterns of Growth in Developing Countries}}, institution = {Stockholm Environment Institute}, year = {2010}, month = apr, url = {https://www.sei.org/mediamanager/documents/Publications/Climate/economics_low_carbon_growth_report.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }