Economic and export diversification is the best response to the challenges posed by climate change in developing countries that depend on commodities, according to UNCTAD’s Commodities and Development Report 2019.
“The climate crisis poses an existential threat to commodity-dependent developing countries and will result in the collapse of some economies if decisive action is not taken now,” the report warns quoting UNCTAD Secretary-General Mukhisa Kituyi.
The diversification could be horizontal, which entails venturing into new goods and sectors to reduce dependence on a narrow range of commodities, or vertical, which involves moving the value chain of a commodity up to increase its worth.
A successful diversification strategy will likely include a combination of horizontal policies, such as strengthening human capital through investments in education and health, and targeted measures to promote individual sectors, the report added.
According to UNCTAD’s release, UNCTAD Secretary-General Mukhisa Kituyi said, “the developing countries need to assess their diversification potential and reduce their commodity dependence, which for decades has kept them exposed to volatile markets and climate change, more than ever before.”
As climate crisis causes shocks to various commodity sectors and poses dire economic risks, the countries need financial and technical support to implement their stated climate action plans, it was pointed out.
Besides, the report stated that developed countries need to meet their commitment under the Paris Agreement to transfer environmentally friendly technologies to developing countries to help them effectively participate in global efforts to mitigate and adapt to the climate crisis.