Countries already under pressure from the economic fall-out of the COVID-19 pandemic, risk seeing the same economic turmoil and human misery as Sri Lanka, with the war in Ukraine dragging on, unless the international community agrees to radical financial measures to help countries saddled with debt, the UN said on Thursday.
“We’re witnessing a tragic series of events that are unfolding in Sri Lanka right now that should be a warning to anyone who thinks that, you know, it is up to countries themselves to figure out how to deal with this crisis,” said Achim Steiner, Administrator of the UN Development Programme (UNDP), in reference to the South Asian nation’s debt default last month – the first in its history.
“That default essentially means the country is no longer able to pay – or not only service – its debt, but actually to import fundamental parts of what keeps an economy alive, whether it is petrol or it is diesel, whether it is fuel, whether it is medicines,” Mr. Steiner added.
The warning came as new data from the UN Food and Agriculture Organization (FAO) indicated that the number of people affected by hunger globally rose to 828 million in 2021, an increase of about 46 million since 2020, and 150 million since the outbreak of coronavirus.
‘Shock after shock’
Speaking at a virtual briefing at UN Geneva to flag a series of policy recommendations that countries could follow to withstand the global food, fuel and finance crisis, UNDP Senior Economist George Gray Molina noted that many countries had faced 36 months of “shock after shock after shock”: first COVID-19, then Russia’s invasion of Ukraine on 24 February, the latter in particular shaking global food and energy supplies and sparking an inflationary surge.
“With COVID, what we saw is effects that worked through labour markets, lockdowns, and income, that was slowly cumulative but had a strong impact over time,” said Mr Molina. “Official estimates are about 125 million people falling into poverty over about 18 months…what we found right now is that three months of inflation have drawn about 71 million people into poverty.”
Failure to take decisive and radical action by governments risked sparking widespread unrest, UNDP chief Steiner suggested.
Pain on the streets
“Very quickly, we might see also with the troubling economic outlook a situation where for many countries the patience and the ability of people to cope with this reality runs out. And as I’ve often said, when politics moves out of our parliaments, out of government, onto the streets, we are in a fundamentally different situation. We are very vulnerable at this moment to see these kinds of developments happen in many more countries.”
Outlining some of the finance policy recommendations that are detailed in the new UNDP report – Tackling The Cost-Of-Living Crisis: Policy Responses to Mitigate Poverty and Vulnerability around the World – Mr. Steiner insisted that it might be possible for some countries to tackle runaway inflation without resorting to the “blunt instrument” of raising interest rates.
“There is potential through the multilateral investment banks for example by paying in more capital, to allow them to provide through targeted lending and crisis-response measures,” he said, adding that the International Monetary Fund (IMF) could also be involved in this process.
There were “ways and means by which countries can address more specifically their needs”, the UNDP Administrator continued, that did “not necessarily have to be in contradiction to the inflationary pressure measures” now being put in place by central banks.
According to the UNDP report, the impact of the global food, fuel and finance crisis on global poverty has been “drastically faster” than the shock of the COVID-19 pandemic.
Analysis of 159 developing countries globally indicated that price spikes in key commodities were already having “immediate and devastating impacts on the poorest households.
Clear hotspots have emerged in the Balkans, the Caspian Sea region and Sub-Saharan Africa (in particular the Sahel region), according to UNDP.
Global Crisis Response Group
This report also zooms in on the insights provided by the two briefs of the UN Secretary-General’s Global Crisis Response Group on the ripple effects of the war in Ukraine.
Key to the global recovery will be the recognition that it is in everyone’s interest to help countries that are grappling with depleted fiscal reserves and high levels of sovereign debt, as well as rising interest rates on global financial markets, Mr. Steiner insisted.
“Unprecedented price surges mean that for many people across the world, the food that they could afford yesterday is no longer attainable today,” says UNDP Administrator, Achim Steiner. “This cost-of-living crisis is tipping millions of people into poverty and even starvation at breathtaking speed and with that, the threat of increased social unrest grows by the day.”
Among the UNDP report’s strongest takeaways is the warning that “entire developing countries” risk decoupling from the global economy permanently.
Internationally-agreed measures “can take the wind out of this vicious economic cycle” and save lives and livelihoods, insisted Mr. Steiner, whose agency also recommended “targeted cash transfers” as being more equitable and cost-effective than blanket energy subsidies, which “disproportionately benefit wealthier people”.
But seismic shifts in the international financial system will also be necessary to ensure that low and middle-income countries can recover, the UNDP Administrator suggested. “You also have to be smarter about it and the IMF originally put together some of the responses to COVID; most developing countries at the end of the day did not dare to borrow against those measures because immediately the rating agencies would downgrade them.”
As the climate dries the American west faces power and water shortages, experts warn
Two of the largest reservoirs in America, which provide water and electricity to millions, are in danger of reaching ‘dead pool status.’ A result of the climate crisis and overconsumption of water, experts say.
Lake Mead, in Nevada and Arizona, and Lake Powell, in Utah and Arizona, are currently at their lowest levels ever. ‘Dead pool’ status would mean the water level in the dams was so low it could no longer flow downstream and power the hydroelectric power stations.
The Lake Mead reservoir, which is the largest artificial body of water in America, was created in the 1930s by the construction of the Hoover Dam, an engineering masterpiece. Lake Powell, the second largest, was created in the 1960s, with the construction of the Glen Canyon Dam.
“The conditions in the American west, which we’re seeing around the Colorado River basin, have been so dry for more than 20 years that we’re no longer speaking of a drought,” said Lis Mullin Bernhardt, an ecosystems expert at the United Nations Environment Programme (UNEP), “We refer to it as “aridification” – a new very dry normal.”
Lake Mead and Lake Powell, which is created by the Glen Canyon Dam, not only provide water and electricity to tens of millions in Nevada, Arizona, California, Wyoming, Colorado, New Mexico and Mexico, but they also provide irrigation water for agriculture. Experts warn that as the crisis deepens, water cuts will need to be introduced, but this may not be enough.
“While regulating and managing water supply and demand are essential in both the short and long term, climate change is at the heart of this issue,” said Maria Morgado, UNEP’s Ecosystems Officer in North America. “In the long term we need to address the root causes of climate change as well as water demands.”
Over the last 20 years, 90 per cent of major disasters were caused by floods, droughts and other water-related events. With more frequent droughts, people in water-scarce areas will increasingly depend on groundwater because of its buffer capacity and resilience to climate variability.
Increases in water demand due to growing populations and irrigation for agriculture have been compounded by climate change impacts such as reductions in precipitation and temperature rises. A rise in temperature leads to increased evaporation of surface water and baking of the earth, decreasing soil moisture.
“These conditions are alarming, and particularly in the Lake Powell and Lake Mead region, it is the perfect storm.”
This is part of a wider trend affecting hundreds of millions of people across the planet. As climate change wreaks havoc on the Earth’s interconnected natural systems, drought and desertification are swiftly becoming the new normal, everywhere from the United States to Europe and Africa.
Drought in Numbers, a 2022 report from the UN Convention to Combat Desertification, found that since 1970 weather, climate and water hazards have accounted for 50 per cent of all disasters and impact 55 million people globally every year. The report also found that 2.3 billion people face water stress annually.
Drought is also one of several factors that impacts land degradation, with between 20 and 40 per cent of the world’s land being classed as degraded, affecting half the world’s population and impacting croplands, drylands, wetlands, forests and grasslands.
The UN Decade on Ecosystem Restoration, of which UNEP is one of the leading members, was set up to halt and restore ecosystems around the world. The Decade runs until 2030, the same timeline as the Sustainable Development Goals, and aims to counteract climate change and halt biodiversity collapse through restoring ecosystems.
WFP: First Ukrainian humanitarian grain shipment leaves for Horn of Africa
The first vessel transporting Ukrainian wheat grain to support humanitarian operations run by the World Food Programme (WFP) has left the port of Yuzhny, also known as Pivdennyi, the UN agency reported on Tuesday.
This is the first shipment of humanitarian food assistance under the Black Sea Grain Initiative signed by Ukraine, Russia, Türkiye and the UN in July.
Feeding the world’s hungry
It marks another important milestone in efforts to get much-needed Ukrainian grain out of the war-torn country and back into global markets, to reach people worst affected by the global food crisis.
“Getting the Black Sea Ports open is the single most important thing we can do right now to help the world’s hungry,” said WFP Executive Director David Beasley.
“It will take more than grain ships out of Ukraine to stop world hunger, but with Ukrainian grain back on global markets we have a chance to stop this global food crisis from spiraling even further.”
WFP will use the wheat grain shipment to scale-up its efforts in southern and south-eastern Ethiopia, supporting more than 1.5 million people affected by drought.
Globally, a record 345 million people in more than 80 countries are currently facing acute food insecurity, while up to 50 million people in 45 countries are at risk of being pushed into famine without humanitarian support.
The current hunger crisis is being driven by several factors including conflict, climate impacts, and the COVID-19 pandemic.
The war in Ukraine is another catalyst as the country is a major grain exporter. Ukraine was exporting up to six million tonnes of grain a month prior to the start of the conflict in February, but volumes now are at an average of one million tonnes per month.
More action needed
WFP said that with commercial and humanitarian maritime traffic now resuming in and out of Ukraine’s Black Sea Port, some global supply disruptions will ease, which will bring relief to countries facing the worst of the global food crisis.
Crucially, Ukraine will also be able to empty its grain storage silos ahead of the summer season harvest, the agency added.
However, despite these developments, the unprecedented food crisis continues.
WFP stressed the need for immediate action that brings together the humanitarian community, governments, and the private sector to save lives and invest in long term solutions, warning that “failure will see people around the world slip into devastating famines with destabilizing impacts felt by us all.”
New WEF ESG initiative looks to improve socioeconomic conditions in Northern Central America
The World Economic Forum announced a new initiative in three Central American countries that will support the private sector apply Stakeholder Capitalism Metrics and better environmental, social and governance (ESG) reporting to improve local socioeconomic conditions and environmental resilience.
The announcement was made at events convened by the Forum with CentraRSE in Guatemala, COHEP in Honduras and Fundemas in El Salvador. These were attended by leaders from the public and private sector, civil society and international organizations who discussed the benefits and opportunities of implementing structured ESG reporting metrics, practices and global corporate trends. National and regional efforts and best practices were also showcased.
The Measuring Stakeholder Capitalism initiative has identified a set of 21 core and 34 expanded universal metrics and disclosures drawn from existing standards. The metrics and disclosure seek to improve how companies measure and demonstrate their performance against environmental, social and governance indicators and consistently track their positive contributions towards achieving the UN Sustainable Development Goals (SDGs).
Strengthening sustainability credentials and building the capacity to report this information will represent a significant advantage for businesses and the economy as a whole, particularly to attract foreign investment and integrate into regional and global value chains.
“Amid an increasingly challenging context confronted with overlapping global crises, public-private collaboration and the decisive action of local leadership are even more necessary to improve economic, social, environmental and governance conditions. All sectors must work together to build a prosperous and resilient ecosystem, offering hope and real opportunities for people in the region to develop their potential at home,” said Marisol Argueta, Head of Latin America at the World Economic Forum.
The initiative is a response The initiative is a response to US Vice President Kamala Harris’s Call to Action, which calls on businesses and social enterprises to promote economic opportunities for people in the region as part of a comprehensive strategy to address the root causes of migration. Vice President Harris has announced a total of more than $3.2 billion in new commitments to the region in coordination with the Partnership for Central America since the effort was launched in May 2022.
“As we look to multi-sector approaches to solve the social challenges facing our communities globally, the World Economic Forum’s ESG framework provides a structure for businesses to drive greater economic development. Working with public and private sector partners, this can translate into quality jobs, environmental protections and better lives for families,” said Jonathan Fantini-Porter, Executive Director of the Partnership for Central America.
The areas of focus, led by the Partnership for Central America (PCA), intend to support the region’s long-term development through digital and financial inclusion, food security and climate-smart agriculture; climate adaptation and clean energy; education and workforce development; and public health access. The planned ESG metrics and corporate reporting activities also aim to motivate local leaders to take measurable action on their contributions to enhancing socioeconomic conditions and environmental resilience in the region.
Based on existing standards, this framework provides a set of metrics that can be reported by all companies, regardless of industry or region. These metrics also offer comparability, which is particularly important for creating a systemic and globally accepted set of common standards for reporting corporate sustainability performance.
As part of the activities carried out in Central America, the Guatemalan company, Grupo Mariposa announced the adoption of the global metrics framework promoted by the World Economic Forum (Stakeholder Capitalism Metrics) and declared its commitment to include them in future reporting cycles. Grupo Mariposa is the first company in Central America to incorporate the metrics in its reports.
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