Most people now realize the cost of inaction to deal with climate change is far higher than the cost of action. The challenge is mustering the political will to make smart policy choices.

A new report by the Global Commission on the Economy and Climate, of which I am a member, shows climate action delivers local development benefits as well as emissions reductions. In fact, smart policy choices can deliver economic, health and climate benefits for developed and developing countries alike.

Multilateral Development Banks like the World Bank Group can play a crucial role in helping countries follow a transition to low carbon growth by using scarce government resources smartly and leveraging much larger, long-term private investments.

The report makes key recommendations for turning hurdles to reduce greenhouse gas emissions into areas of growth. Among them:

  • Focus on cities: Urban areas should implement low-carbon strategies by 2020 and prioritize better planning and investment in public transport, building efficiency, and better waste management.
  • Protect forests and increase agricultural productivity: Bring together forest countries, developed economies and the private sector to halt deforestation by 2030 and restore degraded farmland. This would enhance agricultural resilience, strengthen food security, and improve livelihoods for agrarian and forest communities.
  • Invest in clean energy: We can only provide clean energy for all if we reduce the cost, and we need to use energy more efficiently.

Not all recommendations will work for all countries. Policy options should suit each country’s specific needs, under a comprehensive strategy. And implementing these actions will come with challenges, including large up-front costs and long-term financing of 15 to 25 years.

Clearly, the opportunities and benefits, including for future generations, outweigh the downside.

The report finds, for example, that comprehensive investments into low-carbon urban developments could save around US$17 trillion globally by 2050. And investments in energy efficiency could boost cumulative economic output globally by US$18 trillion by 2035. The report also finds that businesses are already driving a growing US$5.5 trillion global market for low-carbon goods and services.

Most importantly, if implemented, the recommendations could achieve almost all emission reductions that are needed to keep global temperatures from rising less than the critical 2°C by 2030.

But the key to success is cooperation between governments, cities, communities, development banks and the private sector. We need to leverage existing partnerships and resources, whether domestic or multilateral.

There is a lot of international momentum for climate action leading up to COP 21, the critical climate talks in Paris end of this year. At the UN Climate Summit in 2014, more than 73 countries and 1,000 companies and investors signaled their support for action through pricing carbon  to drive investments in a cleaner economy. In June the G7 recognized the need for deep emission cuts. Multilateral banks can play a key role in achieving policy changes and shifting resources to low-carbon investments.

A new joint report shows that over the last four years, the six multilateral banks have provided over $100 billion in climate finance. In 2014 alone they committed a combined $28 billion, the largest one-year total so far.

The World Bank Group is the largest provider of climate finance of the six multilateral development banks, accounting for more than one-third of the total. The World Bank Group alone provided US$11.8 billion. More than 20% of the World Bank Group’s total finance involved climate finance that year.

So at the Bank we are already acting. We are helping our client countries assess the risks, access finance and build resilience.

For example, for more than a year we have screened all country strategies and operations in the poorest countries for disaster and climate risk. These actions are key to achieving our goals of ending poverty and increasing shared prosperity. We are therefore fully aligned with the recommendations of the Global Commission on the Economy and Climate.

The need to avoid a 2°C warmer world and eventually achieve carbon neutrality in the global economy guides our efforts in five key areas: building low-carbon, climate resilient cities; moving forward on climate smart agriculture and nurturing forest landscapes; accelerating energy efficiency and investment in renewable energy, including hydropower; supporting work on ending fossil fuel subsidies and developing carbon pricing to get prices right for emissions.

There is no such thing as economic growth without climate action and we have the evidence to prove it.

 

This post first appeared on the World Bank’s Voices Blog. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Sri Mulyani Indrawati is Managing Director and Chief Operating Officer at the World Bank.

 Image: A wind turbine is seen near the village of Piansano, 90 km (60 miles) north of Rome, April 16, 2012. REUTERS/Max Rossi