Can Africa expand its trade in the face of climate change?

3 November 2014

Specific adaptation strategies, coupled with smart trade policies, could play a role in helping African economies ensure future climate-proof development pathways. 

Africa’s share of global trade has increased steadily from 2.3 percent in 2001 – equal to roughly US$277 billion – to 4.6 percent in 2011 weighing in at around US$1 trillion. This amounts to a doubling over 10 years. However, while the continent as a whole makes up 20 percent of the world’s land, African economies currently account for less than five percent of global trade. The region clearly still has a long way to go to integrate into the global economy. Meanwhile, the ominous threat of climate change looms, a factor that could seriously stunt any future potential growth.

One of the clearest climate change impacts on trade will be on infrastructure and trade routes. Across the African continent, coastal sea level rise is expected to be 10 percent higher than in the rest of the world, and studies have shown that major port cities stand to undergo substantial damages to infrastructure. The port in Dar es Salaam, Tanzania – one the largest in East Africa – could experience asset losses of up to 10 percent of the country’s GDP or US$10 billion. Agriculture is another sector where climate change will take its toll. This will have significant implications for trade in foodstuffs worldwide. In sub-Saharan Africa alone crop yields could be reduced by up to 20 percent by 2050 under a two degree Celsius warming scenario.

Africa lost its status as a net exporter of agricultural products in the early 1980s when prices of raw commodities fell and production stagnated. Since then, agricultural imports have grown faster than exports, reaching a record high of US$47 billion in 2007. A brief glance at the continent’s natural resource and landscape statistics suggests that this should not be the case. Africa holds about 60 percent of the world’s uncultivated land and 65 percent of its workforce is engaged in the agriculture sector. Meanwhile, many countries in the region rely on natural resources as an engine for economic growth. But will African economies be able to make more of these endowments in the future when faced with the predicted grave consequences of climate change? The answer is yes. For lasting success, many African nations must pursue development plans that foster structural transformation, industrial productivity, as well as ecological resilience. Fortunately, some examples exist where countries demonstrate how food systems can be adapted to climate change and coastal zones safeguarded against further erosion.

At a time when the global economy needs to make a critical shift towards a low-carbon and energy-efficient development pathway, Africa could forge ahead in this respect, and simultaneously shore up some of its climate vulnerabilities. Based on an approach called ecosystem-based adaptation (EBA), the continent could generate ecosystem goods and services, with future climate-proof sustainable production and trade in mind. Examples of ecosystem goods include food – meat, fish, and vegetables – water, fuels, and timber. Climate boosting services range from clean air, clean water, the natural recycling of waste, to soil formation and pollination. EBA uses biodiversity and ecosystem services as part of an overall adaptation strategy to help people and communities cope with the negative effects of climate change. Unlocking the potential of this approach, however, will require various regulatory and governance changes at local, national, regional, and global levels.

Increasing trade in Africa through use of ecosystems goods and services

Can African countries use their ecosystems to protect the continent’s productive sectors from the negative impacts of climate change? Without sufficient adaptation and preparation for climate impacts, African economies could face damages equal to around seven percent of the continent’s total GDP, according to a 2013 Africa Adaptation Gap report. Beyond the exchange of goods, trade can also have unintended or unaccounted environmental impacts, which under certain scenarios can exacerbate the climate challenge. For example, increasing food production can lead to deforestation, resulting in less carbon sequestration. Such trade-offs may seem economically viable in the short term but are likely to be costly further down the line. This is where various governance mechanisms and global trade system come into play and there are ways to create win-win scenarios.

Natural resources such as Shea trees provide a range of ecosystem services such as carbon mitigation, soil stabilisation, and the production of non-timber forest products such as Shea butter. Burkina Faso’s second highest export product after cotton is the Shea nut. Issues related to the production of quality Shea butter, however, prevent the sector from securing even more gains from international markets. Consequently, in one national project 120 female workers were trained in high quality Shea butter production techniques. The training was a success; the women are now able to generate higher profits and each brings home around US$18 a month from Shea butter sales. The increase moves these individuals much closer to the average national monthly income of US$47 for a family of six. At the same time the participants are incentivised to protect five hectares of Shea trees and the associated ecosystem from destruction.

In Mozambique, ecosystem-based adaptation was used to reduce environmental damage along the coastline, which was largely caused by the felling of mangroves. Found mostly in developing countries, mangroves provide ecosystem goods ranging from food to timber and perform essential ecological functions. Mangrove degradation poses a serious challenge worldwide, however, with estimates suggesting these important ecosystems are currently being destroyed at a rate three to five times higher than average deforestation rates and resulting in economic damages of between US$6 and US$42 billion annually.

Key hotspots of mangrove loss are in Mozambique and Western Africa, where the coastal forests have been impacted by agriculture, dam construction, pollution, and tourism. In certain instances, however, the EBA approach in Mozambique helped to diversify livelihoods away from practices that resulted in environmental degradation. Communities were able to develop crab and fish farming businesses while also rehabilitating mangroves. In addition to stabilising the coastline, the restored mangrove habitat had the added benefit of reviving fish populations, providing another income from wild fish catches.

An “ecosystem-based adaptation for food security” is a subset of the EBA approach, and entails the harnessing of ecosystems services to enhance the productivity of ecosystems, address climate change, and build resilient food systems. An ecosystem-based adaptation strategy for food security can increase agricultural volumes through higher crop yields generating the potential for more sustainable trade and promotes ecosystem resilience in the face of climate change. In Zambia these approaches have resulted in surplus increases of up to 60 percent per household.

The ecosystem-based approach and the subsequent trade in ecosystem goods offers the opportunity to sustainably increase trade volumes. This is particularly true for African least developed countries (LDCs) where the bulk of people’s livelihoods is directly based on their natural environment. By working to scale up ecosystem goods and services African economies can simultaneously move towards sustainable development and climate resilience. To this end, good international policies that help to properly protect and market these ecosystem goods and services and international trade policies that recognise their value globally, will be important.

What needs to be done to boost sustainable African trade?

In addition to removing barriers to trade in various tradable ecosystem goods and services, there are a number of additional ways to boost sustainable trade on the continent, all the while addressing climate challenges. Potential actions would include granting reciprocal preferences and incentives for trade-relevant ecosystem goods and services in Economic Partnership Agreements (EPAs) currently under discussion with the EU. Strong preferences for goods derived from an EBA approach could also help to allay some of the concerns regarding unfair competitive advantages enjoyed by large European firms once such trade agreements are sealed.

It will also be important to ensure the inclusion of climate change assessments in all trade negotiations. Although many developed countries now require environmental assessments as part of any trade agreement that they enter into, these assessments tend to focus on national, rather than cross-border or global environmental impacts. In order to move to a more modern approach, which takes account of the reality of global value chains, various platforms such as the UN climate talks, the sustainable development goals (SDGs), or the multilateral trade community could offer support in this area. In particular, certain developing economies would need assistance in building the capacity to conduct such assessments. Completing country trade-climate assessments in developing nations would also be a useful exercise to understand the interaction between trade expansion and climate change impacts. For example, if a country’s comparative advantage is found to be in a low-carbon production system, then it could perhaps seek to establish trade preferences based on this finding. This would likely require additional capacity building that could be facilitated through existing international commitments around technology transfer and capacity building.

Evaluating the “demand pull” and “supply push” international incentives for tradable ecosystem goods and services will also be important. “Demand pull” mechanisms are measures that target changes in consumer behaviour. “Supply push” mechanisms work in the opposite direction, in other words, they provide subsidies or other benefits to encourage the production of goods in an environmentally friendly way. The ideal combination of incentives may vary by product or country. African countries should examine the potential benefits and drawbacks of each approach from global, regional, and national perspectives.

Another option would be to explore possibilities for endorsement of ecological production methods. Ecosystem-based adaptation or climate resilience production certification schemes could take place between trading partners either at a bilateral, regional, or international level. Granted, however, the bilateral level may prove to be an easier first step although this raises the question of generating a complex panoply of labelling schemes. African countries could also consider including “like product” verification schemes in trade agreements that do not harm national and local producers and at the same time ensure environmental accountability.

Climate change poses a significant threat to development objectives. As evinced by the latest warnings from UN climate scientists, no society or landscape will remain untouched from its effects, and colossal damages are foreseen for some of the poorest on this planet. There are ways to both limit further impacts and cope with consequences that are already locked in. Africa, with its vast natural resources and potential to leap frog over out-dated technologies and approaches, is well positioned to expand its trade through products derived from EBA strategies. As the world gears up to clinch both a post-2015 development agenda and a global emissions-cutting deal next year, it is worth investing in such strategies, which could help the continent achieve both sustainable development and climate policy objectives.

Richard Munang, Coordinator, Africa Regional Climate Change Programme, United Nations Environment Programme (UNEP)

Jessica Andrews, Ecosystem Adaptation Officer, UNEP Regional Office for Africa

The views expressed here are those of the authors and do not necessarily represent those of the institution with which they are affiliated. Join the conversation by following Richard on Twitter @MTingem.

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