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

28 October 2014

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 potential future growth in the region.

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 (AAGR, 2013). The port in Dar es Salaam, Tanzania – one the largest in East Africa – could experience asset losses of up to 10 percent of GDP or US$10 billion (Kebede and Nicholls 2011). Agriculture is another sector where climate change will take its toll. This will have significant implications for trade in foodstuffs worldwide. Africa stands to be particularly affected in this respect given that food imports already exceed exports by US$22 billion (FAOSTAT, 2011). In sub-Saharan Africa crop yields could be reduced by up to 20 percent by 2050 in 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 (FAO, 2012).

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 (On our doorstep: The African growth story 2012) and 65 percent of its workforce is engaged in agriculture (Realising Africa Potential Report, 2013). Additionally many economies rely on natural resources as an engine for economic  growth. But can African economies make more of these endowments faced with potential grave climate impacts? 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. And the good news is that examples exist where some African countries have  demonstrated how food systems can be adapted to climate change and coastal zones can be safeguarded against further erosion (KTAAA, 2014).

At a time when the global population 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 at local, national, regional, and global levels. Unlocking the potential of this approach, however, will require various regulatory and governance changes at all 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. 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. This increase brings 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. Scaling up such practices would significantly benefit rural dwellers who account for the bulk of Africa’s one billion citizens. But securing both development and climate gains will also require a shift in global trade preferences towards sustainable production.

In Mozambique, ecosystem-based adaptation was used to reduce environmental damage in the form of coastal erosion, which had previously resulted from the destruction 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, serving to provide 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 and services 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 the value of 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 value, protect, and market these ecosystem goods and services and, where possible, 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 trade agreements are sealed.

To this end 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 in-country trade-climate assessments would also be a useful exercise around understanding the interaction between trade expansions 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 producers to produce in an environmentally friendly way. The ideal 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 does of course raise the question of generating a complex plethora 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 boosting such strategies, which could help the continent achieve both sustainable development and climate objectives.

 

The views expressed here are those of the authors and do not necessarily represent those of the institution with which they are affiliated.

Authors:
- Richard Munang is the Coordinator of the Africa Regional Climate Change Programme at the United Nations Environment Programme (UNEP). Join the conversation by following Richard on Twitter @MTingem.
 - Jessica Andrews is the Ecosystem Adaptation Officer in the UNEP Regional Office for Africa.

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