The Poverty Cost of Greenhouse Gas Emissions

Economic growth is the key driver of poverty reduction. At the same time, economic growth still increases greenhouse gas emissions, which are expected to increase poverty in the future. To quantify the combined effect of these two mechanisms, this paper introduces emissions-adjusted poverty, a new measure that sums a country’s poverty with the future global poverty that the country’s emissions will create. The measure reaches zero when poverty is eliminated within a country and its emissions hit net-zero. Its key parameter is a human-centric analogue to the social cost of carbon, quantifying how current emissions raise future global poverty. The paper estimates that each kiloton of carbon dioxide emitted today adds two person-years of extreme poverty globally between now and 2100. Despite large uncertainties, the paper identifies two robust insights. For poor countries, poverty reduction from economic growth outweighs future global poverty added from the emissions associated with this growth, even with historical carbon intensities. In contrast, for many rich countries, the climate-related cost of growth outweighs the benefits unless the carbon intensity of growth falls. In all countries, the poverty gains from economic growth are larger with lower carbon intensities.