Every dollar invested in prevention and sustainability saves four dollars in crisis response
Individual countries can do little on their own to tackle climate change, biodiversity loss and pandemics. The effects of these crises do not stop at the borders of countries, so the global community must address these issues together. This costs money and this is where the World Bank comes in. It is also the largest development financing organization in the world and therefore exerts a significant influence on the release of capital to combat the climate crisis and other global challenges. Faced with these, the World Bank must adapt its current business model. It must support countries to adopt more sustainable ways of living, producing and consuming. The goal is also to be better prepared for climate risks, future pandemics and other crises, because growth at all costs is not an option. A clean environment, a stable climate, peace and global health are global public goods necessary for all of us to survive. Providing or protecting global public goods in the global South will cost around $2.4 trillion. USD annually by 2030. This number may sound rather alarming.
But, as the World Bank rightly points out, this is a small cost compared to the costs of our complete inaction, because the sooner the global community addresses these challenges, the lower the negative consequences and costs. Studies show that every dollar invested in prevention and sustainability saves four dollars in crisis response in the long run. But how can the World Bank access the necessary funds? Modifying its structures and modes of operation is the answer, and especially by leveraging more private capital. It would also help change lending criteria and offer, for example, more favorable loans to protect public goods.
The five institutions of the World Bank group need to work more closely together. So far, these institutions have focused either on the public or the private sector, while there is a lack of cooperation between them. And yet, we need a coordinated public and private sector approach.
Investing in renewable energy sources is worth it because they are increasingly becoming the cheapest and, at least in theory, the best financial option. The concept of the single World Bank/One World Bank Group, which I support, means that all institutions provide the borrowing countries with coordinated support, based on common or complementary analyses. For example, new private sector analyzes and country reports focusing on climate and development challenges would be consulted. Also, they should activate their respective tools to complement each other where there are gaps. Finally, such an approach would help the World Bank to better identify obstacles to private investment and deal with them effectively.
* Mrs. Swenja Schulze is Germany's Minister for Economic Cooperation and Development. The article is published on the website of the Friedrich Ebert Institute (https://www.ips-journal.eu/).
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