Financing Climate Change for Economic Development (a Case Study of Nigeria)

FINANCING mode CHANGE FOR ECONOMIC DEVELOPMENT (A CASE STUDY OF NIGERIA) Written By ABORISADE OLUWASOGO OLANREWAJU SUBMITTED TO THE DEPARTMENT OF ACCOUNTING BANKING AND FINANCE OSUN STATE UNIVERSITY OSOGBO, OKUKU SUPERVISED BY MR OLANREWAJU FATOKI hornswoggle mood variety adaptation is increasingly becoming an body politic of gain interest and involvement for me truly developing countries that unfortunately bear the brunt of an all over wake up planet caused by developed or so called advanced countries.The indeterminate powers of a ever-changing modality on Nigerias frugality pose signifi idlert setbacks for meeting development targets a corresponding Nigerias inclination to be among the twenty best per reverberateing economies of the world by the course 2020 Vision 202020 and achievement of the Millennium Development Goals. The f take on that Africas close to populous country runs dangerously on a mono-product parsimoniousness oiled by cheap hydrocarbon deposits, underscores this heavy regardence on congenital re acknowledgments. humor modification-induced losses and the unsustainable use of these invaluable resources appear to be a noxious problem that has elevated itself to a real development challenge in Nigeria. It is non exhausting to see that Nigerias temper security exposure lies predominantly along the coastal, littoral states of the south and the Federal frontline states as a result of a combination of high physical exposure as intimately as low household and community resilience.Poor adaptive responses to suppuration shifts in temperature, rainfall, besets, and sea levels could help fuel violent conflict in some aras of the country due to shortages of resources such as land and urine which breeds negative secondary impacts such as more than than sickness, hunger, and joblessness, which in scrap flings the doors to conflict and social chaos wide open. These problems are further affix by a lack of inceptional, le gislative and fiscal capacity for efficient management of natural resources and stability of the eco system leading to educed fartherm productivity, increased study load particularly on women, and a dislocated rural providence. mitigation and adaptation are twain necessary to alleviate the impacts of a changing spherical modality on our local communities and issue rescue. This research reckon therefore discuses modality convert in Nigeria and ways it could be finance to increase stinting development in Nigeria. INTRODUCTION Climate budge is a term used for alternates in weather condition in the past few years tell to be caused by planetary Warming.Global Warming is increase in the average temperature of planet res publica which is said to be caused by continuous emission of bobbleeous statees that seafarer heat to the earths atmosphere. Climate Change and Global warming are often used interchangeably. In an speed berth part of the atmosphere called the troposp here 10-19km above sea level, certain gases trap heat to the earth to make it warm. Without these gases, the average temperature of the earth get outing be 33OC colder non able to support life for humans and some(prenominal) living things.These heat trapping gases for their action that resembles heat trapping effect to a glass house in Physics are called Green dwelling house Gases (GHG). There are a number of GHG k interchangeable a shotn with some more potent and available than others, these GHG turn out a natural cycle that bear on them balanced and available at certain range in the earths atmosphere for their spot to keep the earth warm. Certain anthropogenic activities like burning of fossil fuels release gaseous products made up of one or more GH gas. Nigerias economy though to a great extent dependent on oil is sustained by horticulture and has gum olibanum become increasingly con pass oned.Both source of receipts for the economy is susceptible to humour change crisis. Sustainable development of these domains of the economy give the bounce only be achieved if processes in use are in favour and harmony with the environment. Although, Nigeria is not a major p stratum in the green house gas emission compared to the western countries, the country has contributed to the depletion of the ozone layer through continuous gas flaring emission by multinational oil corporation in Niger Delta region. Climate change has become a global concern with perverting effects as seasonal cycles are hindered.For example, food production and water supply are adversely affected by the effects of humour change and if care is not taken, it will affect the economy in a drastic way. Nigeria and Climate Change Nigeria is exposed to the dangers of climate change, which is now a global issue. The dangers pose serious threats to existing environmental problems like desertification, wear, flooding, and ecological devastation. Considering the strong connection among climate change and development, Nigeria is exceedingly at risk in the area of food security, poverty reduction, zipper and most substantially, infrastructure and universal economic development.In view of this anyway, Nigerias efforts and actions moldiness be informed by these realities. For example, it is estimated that in the Sudan-Sahel area of Nigeria, mingled with 89,297 and 133,944 lame kilometers of arable land would be at risk. It is estimated that the capital value at risk stands at slightly US$6. 4 billion for the real level of development, (NCCC, 2003). In December 2009, Nigeria like umteen other countries had the probability to tackle its climate change issues at Copenhagen, the capital and largest city in Denmark.However, climate change cannot be successfully addressed by any individual country it trains therefore substantial action and continuous efforts. These actions admit nations investing in programmes and projects aimed at reducing the emissions of gree nhouse gases (GHGs), and contribute to adapting to climatic changes. Nigeria is committing itself to facing the challenges that climate change presents indoors its borders and is acting rapidly to check over that the Copenhagen deal is the best for Nigeria and Africa.This is macrocosm achieved by continuing to form partnerships globally and regionally, and by promoting the development of alternative might sources internally. Nigeria believes that climate change poses important threats to Africa, while equally offering some unique opportunities to generate parvenu receiptss and build more diverse and resilient economies. For example, a policy like the Clean Development Mechanism (CDM) if designed to have an African localize could generate enthronizations worth billions of US dollars every year. Causes of climate changeThe climatologists have ready evidence to suggest that some factors are primarily responsible for most of the past episode of climate change on the earth and which postulate to be addressed urgently. These factors implicate (a. ) Radioactive forcing A process which alters the zip balances of the earth-atmosphere system is kn proclaim as radioactive forcing mechanism (Shine et al, 2010). These whitethorn include degree of difference in the earths orbit about the sun, solar radiation, volcanic application and atmospheric composition. (b. ) Non- radioactive forcingAny change in the climate essential involve some form of energy redistribution indoors the global climate system. Yet there are forcing agents who do not affect directly the energy budget of the atmosphere (the balance between incoming solar radiation and outgoing terrestrial radiation). These are considered to be non- radioactive mechanism of global climate change. Such agents usually exercise over vast time scale of measurements 107 to 109 and mainly include those which affect the climate through their influence over the geometry of the earths surface, such as location and size of mountain ranges and position of the ocean basins. (c. ) External forcingThis office discusses some of the various immaterial forcing mechanisms operating over time a scale of 10 years to 109 years. (i. ) Galactic variations The orbit of the solar system about the centre of the galaxy has been considered as a possible external climate forcing mechanism (Hugget, 1991). During the course of a galactic years now estimates at 303million years variation in the inter stellar medium (William, Isaac and Shoo, 1975) may in like manner suggest that variation in gravitation torque induced by galaxys near neighbors, the small and large megellanic clouds, could have far reaching consequences for the earths climate. ii. ) Orogeny It is the name given to a architectonic process of mountain building and continental uplift. Such mechanisms operate over tens or even hundreds of millions of years. The earths outer surface, a layer know as the lithosphere made up of the crust and the up per section of the mantle, is broken up into 12 different plates which are constantly adjusting their positions relatively to each other and such movements are set by the internal convective kinetics within the earth mantle.When plates collide, one may either be subdued beneath another or both are pushed continually together, forcing upwards any continental land masses, to form long mountain range. (iii. ) Epeirogeny It is a term that describes changes in the global disposal of land masses and like organic process, this changes are driven by internal plate tectonic movements. Continents move around the globe at a rate of several centimeters per year owning to the slowness of the internal dynamics of the earth. However, over tens or hundreds of millions of years, both the size and position of land area can change appreciably. iv. ) Volcanic activity Explosive eruption can inject large quantities of dust and gaseous materials such as sulphur dioxide into the upper atmosphere the str atosphere, where sulphur is rapidly converted into sulphuric acid aerosols. Whereas volcanic pollution of the lower atmosphere is removed within days by the effects of rainfall and gravity, stratospheric pollution may remain there for several years, gradually spreading to cover much of the globe. A volcanic activity has the ability to affect global climate on a septet-day time scale.Over periods of millions or even tens of millions of years, increased volcanic activity can emit enormous volumes of green house gases, with the potential of substantial global warming (Pickering Owen, 2004 Rampino Volk, 2006. However, the global cooling effect of sulphur dioxide emissions will act to counter the green house warming and the resultant climate change remains uncertain. (v. ) Ocean circulation It was identified that the oceans store an immense amount of heat energy, and consequently play a crucial role in the linguistic rule of the global climatic system.In order to explain the observe d hemispheric syncronity of glaciations, condescension periods of directly opposed orbital forcing in the two hemispheres, many researchers have looked to the oceans. Although, in this sense, changes in oceans circulation has traditionally been viewed as internal forcing mechanisms in its own right. Economic implications of Climate change The estimates of economic impact on climate change are typically based on damage function. The estimates cover a variety of climate impacts that are usually group as market impact and non-market impact.Market impacts include effects on climate mass medium sectors such as agriculture, forestry, fisheries and tourism damage to coastal areas from sea level rises changes in energy expenditure (for heating and cooling) and changes in water resources. The non-market impacts cover the effects of climate change on health leisure activities, ecosystem and human settlements. The economic implications of climate change in Nigeria are discussed below (a. ) Agriculture, Forestry and Fisheries McCarl (2007) reported that 70% of the workforce in Nigeria relies on rain-fed agriculture for their livelihood.He famous that agriculture is affected by climate change as a result of reduction in quantity and quality of yields changes in crop practices through changes in water use (irrigation) and cost of unsophisticated foreplays such as herbicides, insecticides and fertilizers Environmental effects particularly due to frequence and intensity of soil damage leading to nitrogen leaching, soil erosion and reduction of crop diversity. Other effects are adaptation of organisms and plants to flood, brininess and temperature, collapse of flourishing profitable investment and a sharp downswing of national economy.According to Okali (2004), droughts usually increase in occurrence, having a huge impact, especially in the dry northwards as a result of desertification. (b. ) touristry and Leisure activities The forest is the abode for wildlife. If the forests disappear, the wildlife goes with it. Sites of tourist attractions in Nigeria are vulnerable to climate change. The waterfalls, the lakes, the river basins, the ocean views, the beaches, the ranches etc. may be nowhere to be found. Due to this, the huge investment of both the disposal and the private sector in tourism and leisure activities may be eroded.Loss of tax and the lay-off of those occupied in this sector of the economy will impose pecuniary strain on the economy. (c. ) Coastal areas and Sea level rises Not less than seven out of the thirty-six states in Nigeria is in the coastal area. Nigerias coastal zone is richly blessed with various natural resources such as crude oil and fish, which are presently being exploited for economic gains. The global climate change and the concomitant sea level rises will have adverse effects on the coastal zone.Nigeria could lose over 18,000 square kilometers of the coastal land and the natural resources contained therein as well as experience disruption in socio-economic activities. This will also increase the salinity of the fresh water, thereby affecting aquatic life. Loss of revenue and GDP and the attendant impact of rendering the inhabitants of the coastal areas, who are pre-dominantly fishermen, unemployed. (d. ) human beings settlement Desert encroachment is becoming a threat from the northern part of Nigeria due to desertification.The inadequate trees in some parts of the North have resulted in unfavourable living condition and displacement of many human settlements. The rising sea level and gully erosion are equally claiming several kilometers in the coastal areas especially the southern part of the country. invaluable resources and infrastructures of the country are found in this area and if the sea claims these places, the economy of the nation will be affected. The Tsunami relative incidence in Japan on 12th March 2011, which claimed thousands of lives and properties worth billions of d ollars, is a warning signal.It is also very important that Nigeria lend a clue from the bitter experience of Japan. (e. ) health Increased temperature in the various regions could result in high incidence of malaria and other diseases that affect humans due to high temperature. The possibility of water-borne diseases as a result of the sea level rises cannot be ruled out. The implication of this is that there would be an increase in the cost of maintaining a bouncing nation. It is note-worthy that this might frustrate the recent effort by government and pertinent world(prenominal) health agencies to halt the scourge of malaria and other diseases. f) Industry and manufacturing The effect of global warming on the climate-vulnerable sectors of the economy (agriculture and the coastal resources) that provide input for the industry and manufacturing is another area of concern. The infant industries and the small and medium scale enterprises could be threatened. This is because only t he outstanding ones will be able to counterbalance the high prices of manufacturing inputs. The GDP will be adversely affected by the inability of the small businesses to operate since they act as catalysts for economic growth and development. g) Financial services sector This sector serves as the intermediary between the deficit sector and the surplus sector of the economy. Owing to the ability of the big companies who are mostly quoted on the stock exchange to weather the storm of the likely downturn, they will force the market into an initial boom, which may not last, only to be followed, subsequent to its effect on the climate sensitive sectors, by a devastating and catastrophic burst because no entity or segment of the economy would be left out.Hence, there is the tendency of experiencing what could be best described as climate induced inflation. Odjugbo (2010) noted that climate has a significant effect on the countrys economy. Climate Change Financing Providing financial su pport to developing countries like Nigeria to help mitigate the effects of climate change and adapt to its impacts will be crucial to achieving agreement at the united Nations Framework radiation pattern on Climate Change (UNFCCC) in Copenhagen in December 2009. This makes financial backing one of the most critical issues in international climate change negotiations.The major issues that study funding in order to address climate change properly are observed to include mitigation, adaptation, technology ship and capacity building of institutions and personnel. descenting must benefit from internal and international sources. The major sources of domestic help resources to finance development in Nigeria have been domestic savings which are channeled into development through various formal and sexual avenues, taxation, domestic borrowing (including borrowing from the banking system and private sector), bond financing, external reserves, surpluses of public enterprises, and ver y importantly, the oil sector.Domestic resources should ideally constitute the major source of financing development and should be the first port of call. It is a cave in long term option in the achievement of any nightlong term development goals. On the other hand, external resources should be seen as providing supplementary finance to domestic resources. External finance has proved difficult to predict and sustain. Indeed, some forms of external finance, for example, ODA, portfolio investment and bank lending that may appear to be important have tended to be highly vaporific and hence potentially risky and problematic for development.Also, there has been skepticism about aid effectiveness such that despite the declared huge spending by donors, there is not much on the ground to specify for it (NPC, 2008). If domestic resources must provide a robust basis for sustainable progress in meeting the climate change challenges, then policies need to be implemented which would increas e domestic saving and raise the revenue (tax and nontax) GDP ratio significantly beyond current levels. As at June 30 2009 there remain few well known sources of domestic financing for climate change adaptation/mitigation, renewable/green energy projects in Nigeria.Whilst we suspect that there are some in-house sources of finance being discussed within various institutions, these are not yet publicly known and are at their primary stage of development where they do exist. With discover to mitigation, a lot of resources are needed particularly in acquiring technology. Nigeria supports the initiative for the establishment of a Multilateral Technology Acquisition Fund to buy Intellectual property Rights (IPR) which is a major constraint to technology transfer.Most of the resources for mitigation have moved to the developed countries over the years. Nigeria supports therefore the review article of this anomaly for equitable distribution. Mitigation resources should also come to develo ping countries so that their developmental efforts do not finally result in injecting more GHG into the atmosphere. Nigeria should squad up with other African countries and the G77 to seek for greater admittanceion to Adaptation specie. Many of the potential adaptation projects which are urgent require considerable capital investment that the Fund can best provide.The meaning of this is that this source of funding is reliable and predictable. Demand notices requiring for settling of counterpart Funds should be sent early enough to facilitate the processing of payment. Nigeria should team up with other countries to ask for the change in the present location in which developed countries alone produce the CEOs of the GEF. In the future, the position should be alternately occupied by candidates from the developed and developing countries to reflect the global character of this institution.Constraints to financing climate change in Nigeria Some of the expect major sources of financi ng climate change in Nigeria encounter a lot of challenges/constraints. Some of these are as follows * The precarious dependence of government revenue on the oil sector. Thus, any shortfalls in oil revenue will adversely affect climate change mitigation/adaptation. communicate government financing of climate change may partly depend on economic growth performance and may not be realized if the growth performance is weak. The need to lay a unattackable foundation for sustainable growth, rely more on domestic sources of financing especially noninflationary sources, and diversify the revenue base away from oil to non oil tax sources. In addition to the above, the following issues have been identified as current constraints that are hampering progress in efforts to tackle climate change activities in the country * escape of a regulatory cloth that should betoken any institutional governance and the activities of climate change have demoralized local lending to renewable energy pro jects, foreign direct investment (FDI), and significant take-off of the CDM market. The lack of an established and working climate change institution has encumbered the drawing up of a broad-based and robust regulatory framework that can, with the assistance of consultants and advisers in this area, ensure world-class practices being put in place in Nigeria as part of the structure. * Absence of definite budgets within the various government ministries, departments, and agencies to incorporate climate change activities in national development within the broader Nigerian auberge. Lack of moral persuasion by the federal government on private enterprise to focus on driving climate change mitigation strategies and business development. * Lack of general educational campaign to advise financial institutions, corporate bodies and civil society on the merits of investing in Green Energy and the CDM market has greatly hampered the take off of all related projects. Lack of knowledge by fina ncial institutions on investment within the new green economy in all its ramifications due to lack of capacity build-up in this area. * Lack of knowledge among most local financial institutions on how to advise clients to access CDM funds for their projects which leads to less revenue being generated from carbon sequestration projects. CONCLUSIONNigeria cannot brook to be left outing the fringes of achieving environmental sustainability, alleviating poverty and reducing original hunger in line with the millennium development goals. The Government of Nigeria must as a matter of expediency treat the problems associated with climate change on the economy with urgency by adhering to international environmental treaties and embarking on massive and aggressive sensitization of the citizens on the problems associated with global warming and the locomote that can be taken to address the concern.The government needs to change Nigerians on the need to be more environmental friendly, evolv e a change in consumer behaviour and ensure effective utilization of financial resources to mitigate the effects of climate change. REFERENCE Odjugo, P. A. O. (2010). Regional evidence of climate change in Nigeria. Journal of Geography and Regional Planning, 3(6), pp. 142-150 United Nations Organization. (2010). Climate Change Conference in Cancun leads to agreements Sass.R. 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