1

South India Model United

Nations’
The Economic and Financial
Committee
GA II
1
 1

Message from the E.B

Delegates of the UNEP, we hope you will be well prepared for 4 days of
intense debate and deliberation. We have worked on this Background Guide,
keeping in mind the wide spectrum of the agenda and its intricacies. We
encourage all the delegates to read through the Background Guide well and feel
free to get in touch with any EB member for any clarifications. In specific we’d
like your solutions to be economically feasible and viable, at the same time we
expect you to explain how it is viable.
Below you will find only brief mentions of the sub-topics that are of
paramount importance to the agenda and we urge everyone to delve deep into
the consequences of any of the policies being suggested. This Background
Guide should serve as the first step in your research and the EB strongly urges
everyone to go well and beyond this background guide in terms of both research
as well as topics of discussion. It is also important for delegates to understand
that this guide will only touch on the necessary facets of the agenda and expects
the delegates to understand the basics about the agenda. Also, delegates take
note that the regions in focus for this particular agenda would be Africa,
primarily due to its prevalent agro-sector.
Lastly, we hope for 4 days of excellent debating on clear-cut problems
and solutions that will yield fruitful for the global community.
Regards,
The Executive Board.
1
 1

Agenda: The Economic Cost of

Climate Change
Mandate of the ECOFIN
As the name implies the primary aim of ECOFIN is the promotion of
economic development. ECOFIN was created with the purpose to “promote
international co-operation in the economic field,” as outlined in Article 13 of
the United Nations. Charter of 26 June 1945. According to its mandate,
ECOFIN aims to discuss “macroeconomics policy questions like financing for
development, globalization and eradication of poverty.’’ In the past ECOFIN
has addressed issues of financial sustainability and economic cooperation
between countries. From general to specific groups of countries, the committee
has laid great stress upon the issue of Least Developed Countries and
Landlocked Developing Countries.
Moreover, discusses a variety of International Measures for preventing
financial crisis. ECOFIN is engaged in improving the quality of debate and the
impact of the decisions made. The committee has also worked in collaboration
with IMF and The World Bank in order to promote welfare and economic
stability, and also is responsible to promote economic development but in a
sustainable manner as where environmental sustainability must not be ignored.
It plays a unique role within the United Nations as a primary organ tasked with
discussing crosscutting issues related to development, cooperation financial
stability. In addressing these issues, ECOFIN may make recommendations,
initiate studies and submit draft conventions to the General Assembly. Through
policy dialogue and oversight for specialized agencies, functional commissions,
and regional commissions, ECOFIN’s mandate allows for the responsibility to
address problems with comprehensive approaches. It is important that delegates
are aware of the mandate of the ECOFIN and work in accordance to this
mandate to propose solutions that can be countered within the purview of this
committee.
 1

Basics of Climate Science

Multiple gases contribute to the greenhouse effect that sets Earth’s
temperature over geologic time. Small changes in the atmospheric concentration
of these gases can lead to changes in temperature that make the difference
between ice ages when mastodons roamed the Earth, and the sweltering heat in
which the dinosaurs lived.
Two characteristics of atmospheric gases determine the strength of their
greenhouse effect.
The first is the Global Warming Potential (GWP), a measure of the
radiative effect of each unit of gas over a specified period of time, expressed
relative to the radiative effect of carbon dioxide (CO2). An amount of gas with
high GWP will warm the Earth more than the same amount of CO2.
The second is the atmospheric lifetime, which measures how long the gas
stays in the atmosphere before natural processes (e.g., chemical reaction)
remove it. A gas with a long lifetime can exert more warming influence than a
gas with a short lifetime (assuming the GWPs are equal).
The table below presents values for these two characteristics for major
greenhouse gases. The GWP and atmospheric lifetime values are periodically
updated by the scientific community as new research refines estimates of
radiative properties and atmospheric removal mechanisms (sinks) for each gas.
These values are from the Fourth IPCC Assessment Report (AR4) released in
2007, which are commonly used in international reporting, despite the Fifth
Assessment Report updating them in 2014.
1
1
 1

Here, we need to understand the implications of greenhouse emissions

and it’s long term effects. Assuming that every delegate is familiar with the
basics of the Greenhouse Effect and Global Warming, we’ll move on to
understanding the economic cost impacts.

Economic Assessment of Climate

Change and its Uncertainty
A subset of climate change risks and impacts are often measured using
aggregate economic indicators, such as gross domestic product (GDP) or
aggregate income. Estimates, however, are partial and affected by important
conceptual and empirical limitations. These incomplete estimates of global
annual economic losses for temperature increases of ~2.5°C above pre-
industrial levels are between 0.2 and 2.0% of income (medium evidence,
medium agreement). Losses are more likely than not to be greater, rather than
smaller, than this range (limited evidence, high agreement). Estimates of the
incremental aggregate economic impact of emitting one more tonne of carbon
dioxide (the social cost of carbon) are derived from these studies and lie
between a few dollars and several hundreds of dollars per tonne of carbon in
2000 to 2015 (robust evidence, medium agreement). These impact estimates are
incomplete and depend on a large number of assumptions, many of which are
disputable. Many estimates do not account for the possibility of large-scale
singular events and irreversibility, tipping points and other important factors,
especially those that are difficult to monetize, such as loss of biodiversity.
Estimates of aggregate costs mask significant differences in impacts across
sectors, regions, countries and communities, and they therefore depend on
ethical considerations, especially on the aggregation of losses across and within
countries (high confidence). Estimates of global aggregate economic losses
exist only for limited warming levels. These levels are exceeded in scenarios for
the 21st century unless additional mitigation action is implemented, leading to
additional economic costs. The total economic effects at different temperature
levels would include mitigation costs, co-benefits of mitigation, adverse side
effects of mitigation, adaptation costs and climate damages. As a result,
mitigation cost and climate damage estimates at any given temperature level
cannot be compared to evaluate the costs and benefits of mitigation. Very little
is known about the economic cost of warming above 3°C relative to the current
temperature level.
 1

Accurately estimating climate change risks (and thus the benefits of

mitigation) takes into account the full range of possible impacts of climate
change, including those with high consequences but a low probability of
occurrence. The benefits of mitigation may otherwise be underestimated (high
confidence). Some limitations of current estimates may be unavoidable, even
with more knowledge, such as issues with aggregating impacts over time and
across individuals when values are heterogeneous. An ideal approach to
assessing costs of climate change might be to study how climate change affects
human welfare through health and nature in each area around the world, but a
series of “primary valuation” studies of this kind would be expensive and time-
consuming. Thus, for enumerative studies, the monetisation of non-market
climate change impacts relies on benefit transfer, in which epidemiology papers
are used to estimate effects on health or the environment, and then economic
values are applied from studies of the valuation of mortality risks in other
contexts than climate change.
In each region the size of the agricultural sector, the climate impacts, the
technology and the input mix vary. Consequently, the agricultural sector in the
regions will be affected to different degrees by climate change. However, since
agricultural goods are traded internationally, the isolated effects in one region
will also affect other regions through trade. Essentially, different climate
impacts will change the regional structure of comparative advantage of the
agricultural sector. In summary, climate change impacts will first of all change
the productivity of land. This direct effect will lead to a reallocation of
resources within the agricultural sector and a change in the price of agricultural
commodities. These adjustments on the input and output structure and the
accompanying price changes will – as a secondary effect – change the sectoral
allocation. Finally, in an open economy trade will balance the price effects in
different world regions by changing the comparative advantage and thus the
trade structure. The welfare effects of climate change will directly depend on
the just described effect on the productivity of land, i.e. the resource
endowments of the economics are effectively reduced. However, the
reallocation of resources may reduce, or enhance, these effects.
 1

Case Study: The United States of

America
To estimate the energy costs associated with climate change, we
examined the projected relationship between energy consumption and
temperature in 20 regions of the United States.25 Monthly demand for
residential, commercial, and industrial electricity; residential and commercial
natural gas26; and residential fuel oil deliveries were tracked for 2005 and
compared with average monthly temperatures in the largest metropolitan area
(by population) in each region.27 In addition, we include a secondary set of
costs for the purchase of new air conditioning systems, following the current
national distribution of air conditioning. Although we include both the energy
costs of decreases in heating and increases in cooling, the two are not
symmetrical in their impacts on equipment costs: those who enjoy decreased
heating requirements cannot sell part of their existing furnaces (at best, there
will be gradual decreases in heating system costs in new structures); on the
other hand, those who have an increased need for cooling will buy additional air
conditioners at once. In the business-as-usual case, increasing average
temperatures drive up the costs of electricity above population and per-capita
increases. Not surprisingly, electricity demand rises most rapidly in the
Southeast and Southwest, as those regions experience more uncomfortably hot
days. By the same token, while the Northeast and Midwest also have rising air-
conditioning costs, those costs are largely offset by reduced natural gas and
heating oil expenditures.
 1

Overall, we estimate that by 2100 in the business-asusual case, climate

change will increase the retail cost of electricity by $167 billion, and will lead to
$31 billion more in annual purchases of air-conditioning units. At the same
time, warmer conditions will lead to a reduction of $57 billion in natural gas
and heating oil expenditures. Overall costs in the energy sector in the business-
as-usual case add up to $141 billion more in 2100 due to climate change alone,
or 0.14 percent of projected U.S. GDP in 2100.
 1

Adaptation and Mitigation

In general, there are two different strategies when it comes to dealing with
climate change. We can try to stop future warming (mitigation of climate
change) or we can find ways to live in our warming world (adaptation to
climate change).
 Adaptation involves developing ways to protect people and places by
reducing their vulnerability to climate impacts. For example, to protect
against sea level rise and increased flooding, communities might build
seawalls or relocate buildings to higher ground.
 Mitigation involves attempts to slow the process of global climate
change, usually by lowering the level of greenhouse gases in the
atmosphere. Planting trees that absorb CO2 from the air and store it is an
example of one such strategy.
While climate change is a global issue, it is felt on a local scale. Cities and
municipalities are therefore at the frontline of adaptation. In the absence of
national or international climate policy direction, cities and local communities
around the world have been focusing on solving their own climate problems.
They are working to build flood defences, plan for heatwaves and higher
temperatures, install water-permeable pavements to better deal with floods and
stormwater and improve water storage and use.
According to the 2014 report on Climate Change Impacts, Adaptation and
Vulnerability (page 8) from the United Nations Intergovernmental Panel on
Climate Change, governments at various levels are also getting better at
adaptation. Climate change is starting to be factored into a variety of
development plans: how to manage the increasingly extreme disasters we are
seeing and their associated risks, how to protect coastlines and deal with sea-
level encroachment, how to best manage land and forests, how to deal with and
plan for reduced water availability, how to develop resilient crop varieties and
how to protect energy and public infrastructure.

Transition to a Green Economy

The green economy is defined as economy that aims at making issues of
reducing environmental risks and ecological scarcities, and that aims for
sustainable development without degrading the environment. It is closely
related with ecological economics, but has a more politically applied focus. The
2011 UNEP Green Economy Report argues "that to be green, an economy must
 1

not only be efficient, but also fair. Fairness implies recognizing global and
country level equity dimensions, particularly in assuring a just transition to an
economy that is low-carbon, resource efficient, and socially inclusive."
It is claimed that this move would cost trillions of dollars by depressing
economic growth, particularly in certain economic sectors that large
communities of blue collar workers depend. Although it is upto the world
community in aiding the smooth, more egalitarian and well managed transition
to a greener economy, economists claim that environmental sustainability and
family incomes are directly proportional.
Economic Growth
Critics of a concerted effort to transition to a green economy typically warn that
such a transition would dampen economic activity, thus reducing income per
capita.
 1

While it is generally argued such a change would nonetheless occur, the effects
to the poor and downtrodden would be horrific as they are more vulnerable to
economic fluctuations. There is no denying that sectors within industries that
depend on the usage of non-renewable resources to generate energy such as the
coal industries would particularly suffer in African countries. Taking the
example of the US, it currently employs 9.8 million people in the coal
industries. With adverse effects on particular job markets, it can certainly result
in a painful readjustment period. New green technologies tend to produce
significantly more jobs than the legacy industries they replace. Investment in the
renewable energy industry produces 113% more jobs per dollar than investment
in fossil fuel industries (South Africa). However to enable this type of
development, large scale infrastructure as well as the development of supply
chains and other supporting industries through their development phase are
required.
Artificial Prices
Detractors of policies that support the transition to a green economy also claim
that current economic equilibriums offer the greatest efficiency. This ignores
three important factors:
1) This claim does not factor in the cost of the externalities that these production
cycles emit.
2) Unsustainably produced goods and services across the world, particularly in
conventional energy and agriculture industries are subsidized by local
governments.
3) While the US coal industry has suffered due to environmental regulations,
the main cause behind the industry’s sudden collapse has been the rapidly
decreasing cost of renewable and low carbon emission fuel.

Case Study: Green Economy in

Rwanda
Rwanda green growth strategy in what is called vision 2020, aims to
transform the country into a better economic society. The strategic project
“Vision 2020” envisions Rwanda as a developed country.
The steps Rwanda has taken includes integrated soil fertility management and
Geothermal Power Generation:
 1

1. Integrated soil fertility management: By reducing demand for inorganic

fertilizers through the application of agro-ecology, resource recovery and reuse
and fertilizer enriched composts, a reduction in oil dependency will occur as
indirectly the usage of inorganic fertilisers’ demand will decrease. This
approach has ensured sustainable food security and climate resilient agricultural
ecosystems. Although such policies may seem less impactful, for economies
such as Rwanda where agriculture accounts for about 63% of export earnings, it
is of great relevance.
2. Geothermal power generation: The application of a clean, renewable and
large-scale resource coupled with several other renewable energy sources
provides security by reducing the energy costs and vulnerability to external
economic shocks arising from practices such as electricity importation.

Technology Development and

Transfer
It was recognised that technology transfer is required beyond the
commercial arena and a proactive role of national and international public
policy is needed for developing countries to have access to technology. There is
a specific need for environmentally sound technologies in developing countries.
These are less polluting, utilises resources in a sustainable manner and handles
residual wastes smartly. Considering that this is crucial to the agenda as a
whole, it remains a dispute among developed and developing countries to patent
these technologies. The UNFCCC (Framework Convention on Climate Change)
also recognises technology development and transfer in several provisions.
However, there has been in fact little transfer of climate-friendly technology. It
was agreed under the Bali Action Plan that developed countries would provide
technology support to developing countries in a verifiable manner. A central
aspect of technology development and transfer is the building of local capacity
to design and make technologies. The IPCC report (2000) calls on OECD
countries to influence the flow of such technology directly through their
influence on the private sector that receive funding from government to be more
active in transferring technologies to develop countries. It cites Agenda
21(Chapter 34) that “governments and international organisations should
promote the formulation of policies and programmes for the effective transfer of
environmentally sound technologies that arepublicly owned or in the public
domain”.
 1

Some developing countries had proposed at the WTO that countries be

allowed not to patent environmentally sound technologies so that its transfer
and use can be facilitated. The relaxation of the TRIPS rules in the case of
climate related technologies had also been proposed by the developing countries
in the UNFCCC, however this was opposed by major developed countries.

Role of Regional Agencies

1. African Development Bank: Within the framework of its medium term
strategy, the bank has provided high-impact, well-focused integrated support to
Africa’s development. It has also put in place the Green Growth Strategy. At the
national level, the bank promotes the integration of the three pillars of
sustainable development by taking into account these considerations during the
designing and implementation phases of its projects.
2. UNDP: The UNDP is the development network of the UN. It is present in
some 45 African countries and focuses mainly on 4 areas including environment
and energy, poverty reduction and so on.
3. UNECA: The United Nations Economic Commission for Africa has been
specifically mandated by the WSSD and the UNGA to integrate sustainable
development in its own work programme and assist African states, regional and
sub-regional organisations to integrate the three dimensions of sustainable
development in a balanced manner.
4. NCSD: The National Councils for Sustainable Development almost mirror
the Commission on Sustainable Development at the national level. They
monitor the state of affairs in national sustainable development efforts; keep
sustainability as a key national priority; enable broad-based partnerships
towards sustainable development and so on. They play a key role in the pursuit
of the goals of Rio+20, but however there are problems present in the current
framework. There are several other Funds and Agencies that you may refer to,
these are just a few examples.
 1

AN IMPORTANT NOTE
It is imperative for delegates to keep in mind the various intricacies of
theirs and others foreign policies in mind while coming up with efficient
solutions. Such intricacies include the various agreements and protocols such as
the Paris Climate Agreement and Kyoto Protocol that have been undertaken by
the International Community to set certain obligations for each Member State to
be taken into consideration.

Questions A Resolution Must Answer

(QARMA)
1. How can nations efficiently transition into greener policies that boost
green growth ?
2. What kind of indicators can be used to effectively measure the economic
costs of climate change ?
3. How can the existing mechanisms such as the Green Growth Strategies
pitched by Development Banks and Funds be used to aid Africa and other
Developing countries to develop greener policies ?
4. How can the constraints of technology transfer be solved such that new
technology can be utilised by other Member States to transition to other
sources of energy ?
5. How can nations be persuaded to meet their climate change targets as
stipulated in the numerous legal instruments promulgated by the
international community ?
1
1