This month saw Greta Thunberg receive both TIME magazine’s award for Person of the Year and a hefty dose of bespoke bullying from the Climate Denier in Chief, Donald Trump. Much to the chagrin of the haters, climate change isn’t going to go away anytime soon, no matter how much one buries ones’ head in the proverbial sand. It is estimated that 120m people may be pushed into poverty and over 300m into living in drought conditions if action is not taken by 2030. Others suggest that climate refugees will number in the hundreds of millions and that we will collectively lose USD 320bn to climate-related events. Many models predict that poor countries and poor people will be disproportionately affected by the impacts of climate change, through the destruction of economic and social infrastructure, vulnerability to resurging and emerging illnesses, or risks to economic output through reduced labour productivity and destruction of crops and income-generating assets.
But it is not all doom and gloom. Investing in greener development could generate 65m low carbon jobs, USD3tn in carbon price revenues, and avert millions of deaths from pollution and illness. That, and contribute to the small issue of maintaining a liveable planet.
Over ten years ago, the Perspectives on the Making Markets Work for the Poor Approach – the “Green Book” – already identified the potential for applying the approach to the challenges created by climate change. To paraphrase from the Green Book, although climate change is not a specific system, it is an environmental phenomenon that encompasses many other systems and is ever increasing in its importance to governments and development agencies. At the time, it highlighted specific opportunities in making carbon financial markets more effective, developing the market system for more energy-efficient and environmentally-friendly technologies, and consumer markets.
Ten years on, there have been multiple programmes that have been scoped, designed, and implemented that have shown market systems development (MSD) can be used to tackle some of the complex issues posed by climate change, or what the seminal Stern report called, “the greatest and widest ranging market failure ever seen.”
Mitigation and adaptation in MSD
A handful of programmes have operationalised the idea that systemic problems require systemic solutions and have defined their overall strategic goals as environmental targets – nothing to do with jobs or incomes. For example, the Energy Efficiency in Brickmaking in Latin America (EELA) programme demonstrated that by applying the key principles of market systems approach – diagnosing and prioritising actionable constraints and opportunities, coupled with a pragmatic assessment of which actors have clear incentives to do something about reducing greenhouse gas emissions – a positive environmental impact can be catalysed. After a first phase of testing the business model of cleaner production technologies in brick making, Swisscontact Peru applied the MSD approach to amplify its impact tenfold by working with technology and financial service providers, industry associations, and local and national authorities. Estimated to have reduced greenhouse gas emissions by one million tonnes, the equivalent to 10% of sector emissions, EELA is an example from which to learn.
Across the pond (across which Greta just sailed), USAID and Mercy Corps Jordan have been wrestling with how to apply the approach to water conservation technologies and practices. This is another example of a programme in which the high-level strategic goal is not income-related; rather this programme is exploring how systems change can contribute to water conservation. Whereas the EELA example sought to address a mitigation challenge, the Water Innovations in Technology programme is more of an adaptation approach to climate change. Still in its early days of implementation, the programme is currently working with a wide range of private suppliers and community-based organisations to persuade households and farmers to adopt water saving devices and practices.
Do-it-yourself climate smart MSD
Feeling inspired by Greta or any of the programmes putting the environment at the heart of their MSD programmes? Have a New Year’s Resolution to be more climate smart in your MSD programmes? Key to applying MSD to climate change issues are many of the good practice principles applied in other sectors:
- Climate criteria for sector selection: we’ve been involved in multiple programmes over the past year that have included an explicit climate rationale in their sector selection. From renewable energy in Uganda, to solid waste management in Tanzania, the depth and breadth of donors and implementers taking climate more seriously in their sector selection continues to grow.
- Clarity over complexity: it is simple to become overwhelmed by the task of saving the planet, one degree at a time. MSD offers a way to understand and prioritise actionable constraints and opportunities.
- Functions first: whether you’re working on greener production technologies or smarter regulation, focusing on functions first enables a systemic approach to a deeply systematic problem. Function (what) has to come before form (who).
- Identify incentives: who has an incentive to do something about climate change? Mapping out who this is and, critically, what their incentive may be – financial, social, environmental, political, or religious – will help guide interventions and partner selection.
Watch this space over the next year to see what else we learn from our work and that of others applying MSD to climate change. Right now, I think I will take Trump’s advice to Greta and chill after a long, productive 2019.