Tuesday, 10 December 2007, Bali, Indonesia: At the UN Climate meeting this week in Bali, ‘development’ NGOs, international agencies and some poor countries have claimed that government money in the form of ‘foreign aid’ channelled from wealthy countries to poor countries is the best way to create ‘adaptation’ to combat the effects of climate change.

Today, members of the Civil Society Coalition on Climate Change (CSCCC) disputed this idea and called on governments to reform their policies so as to stop inhibiting the poor from adapting.

Barun Mitra of India’s Liberty Institute, one of the 42 CSCCC members, admonished the proponents of climate aid, saying:

“ ‘Development’ charities from rich countries rely heavily on taxpayer-funded aid given by their governments to poor countries. Selling poverty may be a very successful business model for these charities, but it also prolongs poverty. After all, the ‘end of poverty’ will put these charities out of business.”
It appears that industrialised countries are attempting to pay off government officials in poor countries in exchange for a post-2012 climate agreement. And it is no surprise that this is happening in Indonesia, which was recently rated 144^th on the Transparency International Corruption Perceptions Index.

Mitra continued:

“The world’s poor countries are being tempted to bite the foreign aid carrot in exchange for cutting greenhouse gas emissions after 2012.

But cash for climate will fuel corruption, prolong inefficiencies, aggravate emissions, and perpetuate poverty, all in the name of ‘climate control’.”

Data published in the Civil Society Report on Climate Change (December 2007)* show clearly that foreign aid has been largely unsuccessful in stimulating economic growth or adaptation:

• From 1975 to 2002, foreign aid on average made no net contribution to the economic development of recipient countries.
• Since 1960, foreign aid has, on average, had no perceptible impact on life expectancy.

Essentially, foreign aid is a substitute for taxation. It alienates governments from their electorate, by undermining their incentive to respond to the needs of their people. It reduces the need for governments to promote economic development.
Clearly, foreign aid is the wrong solution to climate change. Members of the Civil Society Coalition on Climate Change suggest that governments must stop inhibiting the poor from adapting. Specifically as this relates to climate change:

• Governments should enable people to own their property, so that the poor will be able to invest in robust buildings and technologies that insulate their exposure to climate.
• Governments should eliminate artificial barriers to entrepreneurship (such as licensing systems); i.e. it should allow entrepreneurs to supply insurance and infrastructure such as roads and bridges.

Government should eliminate restrictions that prevent people from accessing clean water, sewerage, and sanitation services. For instance, monopolies in services such as water and electricity should, at the very least, be subjected to competition from private entrepreneurs.

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