The first episode of Development Dialogues, our new series with Yale's Economic Growth Center, explores how climate finance can reach those who need it most.
Yale’s Economic Growth Center and VoxDev are collaborating on Development Dialogues, a podcast series that will facilitate direct and honest conversations between policy actors and researchers. This collaboration builds on Voices in Development, a podcast from Yale’s Economic Growth Center exploring issues related to sustainable development and economic justice in low- and middle-income countries, and the VoxDevTalks podcast.
In this collaborative episode with Yale’s Economic Growth Center, host Catherine Cheney is joined by Namrata Kala, Rohini Pande and Catherine Wolfram to explore the challenges and opportunities in climate finance and the role of markets in driving change.
What are the most critical gaps in financing climate adaptation?
"Low-income countries just don't have enough resources" Rohini Pande
Rohini Pande opens by highlighting the importance of research establishing what works in climate adaptation, and estimating the benefits of different strategies. This will enable countries that face competing demands for limited resources to effectively invest in improving climate resilience. Namrata Kala underscores the scale of the fundings gap, and discusses some of the early evidence from economic research in low- and middle-income countries covered in our VoxDevLit on Climate Adaptation.
A moral and practical imperative for the Global North
Catherine Wolfram provides a broader perspective on the global responsibilities surrounding climate change, emphasising the historical role of high-income countries in creating today’s climate challenges.
Not only is there a "moral imperative" for these nations to support adaptation efforts in the Global South, but lower-income countries, where temperatures are already higher, will bear the brunt of climate impacts, often without the financial capacity to cope.
"the ability to insulate yourself from the shocks of climate change... that just gets easier the more income you have" Catherine Wolfram
Can voluntary carbon markets act as sources of adaptation finance?
The conversation shifts to the potential of voluntary carbon markets to fund climate resilience. Rohini Pande sees these markets as a promising "sandbox" to test verification methods for high-quality carbon credits. While voluntary markets are currently plagued by issues of credibility and "adverse selection"—where low-quality projects are funded because they are cheaper—Pande argues that refining these markets could channel significant funds from high-income to low-income countries.
“If we don’t have a supply of high-quality credits... they are just bad news for compliance markets" Rohini Pande
There is a hope that voluntary markets could evolve into compliance markets, which are mandatory and potentially more impactful. Wolfram expresses hope that voluntary markets are a "baby step towards compliance markets" but cautions that they could also serve as a distraction, allowing corporations to "claim net zero by 2050" without genuinely reducing emissions. Kala adds that for voluntary markets to be useful, they must be rigorously verified and held to high standards, a task that empirical economists could help to address by developing robust measurement techniques.
Innovative solutions for climate resilience
This podcast also covers other innovative financial and technological solutions to enhance climate resilience in vulnerable communities. Namrata Kala describes a promising initiative in Bangladesh, where a disaster-linked credit line provides farmers with financial support following floods. This product serves as an implicit form of insurance, enabling farmers to invest more in their farms even before a disaster occurs, helping farmers withstand financial shocks and enhancing their resilience.
Kala also highlights advancements in agricultural technologies that can reduce risks associated with natural disasters.
"Technologies can be super exciting, but they really need to be field-tested in difficult conditions" Namrata Kala
More work is required to ensure that these innovations are both effective and equitable.
Carbon pricing and global cooperation
The episode touches on the role of carbon pricing as both a tool for mitigation and a potential source of adaptation funding. Carbon pricing, Wolfram explains, creates fiscal revenues that governments could allocate to adaptation efforts. However, implementing carbon pricing has proven challenging, particularly in the United States, where political opposition remains strong.
Reflecting on the broader international context, Wolfram advocates for smaller, targeted agreements involving key emitters, which could drive meaningful progress outside the constraints of the annual COP negotiations. This approach could create a model for multilateral cooperation that balances economic development with climate adaptation needs.
Bridging mitigation and adaptation for a more holistic approach to climate policy
The end of this podcast features a discussion of the intersection between mitigation and adaptation policies. Rohini Pande stresses the need to integrate these areas, noting that large-scale mitigation actions—such as preventing deforestation—can directly impact adaptive capacity.
"If there's large-scale deforestation, you might actually be impacting the adaptive capacity of ecosystems" Rohini Pande
This episode of Development Dialogues offers listeners a deep dive into the complex dynamics of climate adaptation finance, the potential of carbon markets, and the urgent need for innovative solutions. Subscribe to VoxDevTalks wherever you get your podcasts to keep up to date with future podcasts in this series.