Climate policy and development: an economic analysis

The research examines the interplay between climate mitigation and economic development using the CRED integrated assessment model. It finds that while climate and development policies are largely independent under extreme assumptions of climate risk (very mild or very serious), they are deeply interconnected under intermediate assumptions. Specifically, the study identifies a threshold where significant resource transfers from high-income to low-income regions are necessary to make emission reductions economically attractive for poorer nations, thereby enabling global climate stabilization.

• Climate and development policy choices are nearly independent if the climate threat is perceived as either very mild or very serious. In the case of a very mild threat, the optimal policy is to do very little, while in the case of a very serious threat, the optimal policy is to do a lot, regardless of development levels.
• Under intermediate assumptions regarding climate risks, development assistance becomes a decisive factor for climate outcomes. In one specific scenario, high levels of development aid determine whether the global climate is successfully stabilized in the long term.
• The CRED model demonstrates a non-linear threshold effect between resource transfers and climate results. For example, under certain intermediate scenarios, transfers up to 3% of output do not affect the climate, but transfers of 6% can achieve complete climate stabilization.
• In scenarios with DICE damages and a low discount rate, resource transfers of 3% of output can actually accelerate temperature rise compared to zero transfers. This occurs because the aid is sufficient to spur economic growth and emissions in low-income regions, but not enough to make mitigation attractive.
• The model indicates that resource transfers from high- and middle-income regions to the poorest regions can significantly improve development outcomes. A 10% transfer limit reduces the consumption per capita ratio between high-income and low-income regions from 20:1 in 2010 to 10:1 by 2100.
• The optimal distribution of resources may involve redistribution among low-income regions themselves. Depending on the transfer limit, the model suggests transfers from China and Southeast Asia to the lowest-income regions.

APA

Ackerman, F., Stanton, E. A., & Bueno, R. (2012). Climate policy and development: an economic analysis. Stockholm Environment Institute. https://www.sei.org/mediamanager/documents/Publications/Climate/SEI-E3-2012-ClimatePolicyDevelopment.pdf

Chicago

Ackerman, Frank, Elizabeth A. Stanton, and Ramòn Bueno. Climate policy and development: an economic analysis. Stockholm Environment Institute, 2012. https://www.sei.org/mediamanager/documents/Publications/Climate/SEI-E3-2012-ClimatePolicyDevelopment.pdf.

Wikipedia

{{cite report |last1=Ackerman |first1=Frank |last2=Stanton |first2=Elizabeth A. |last3=Bueno |first3=Ramòn |title=Climate policy and development: an economic analysis |publisher=Stockholm Environment Institute |date=September 2012 |url=https://www.sei.org/mediamanager/documents/Publications/Climate/SEI-E3-2012-ClimatePolicyDevelopment.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ackerman2012climate, author = {Ackerman, Frank and Stanton, Elizabeth A. and Bueno, Ramòn}, title = {{Climate policy and development: an economic analysis}}, institution = {Stockholm Environment Institute}, year = {2012}, month = sep, url = {https://www.sei.org/mediamanager/documents/Publications/Climate/SEI-E3-2012-ClimatePolicyDevelopment.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }