State and Trends of Carbon Pricing 2023

STORY HIGHLIGHTSyemen-fscpp

  • Food insecurity is among the most pressing challenges in Yemen and over half of the population is food insecure.
  • Yemen has suffered from a series of food crises and climate change increases the risk of further crises.
  • A food security crisis preparedness plan has been developed to mitigate the impact of future food crises.

Hunger, food insecurity and malnutrition are among the most pressing challenges in Yemen, exacerbated by protracted conflict in the country. A series of civil wars – the latest of which is now in its eight year – distorting and misaligned national and local agricultural policies, major pest outbreaks such as desert locusts, and more frequent droughts and floods have steadily eroded the country’s agricultural assets.

An estimated 17 million people or around 60% of the population are facing crisis level or acute food insecurity conditions as of March 2023. Currently, Yemen’s agriculture sector supplies only 15-20% of its staple food needs despite the sector being the backbone of Yemeni livelihoods. Agriculture still has much more to offer to help escape the vicious cycle of repeated crises and chronic poverty that can help move the country toward a path of long-term resilience.

Investment in agriculture is one key area of the World Bank’s support to the Yemeni people. The Bank has recently provided financing to address food insecurity by supporting the country’s agriculture and domestic food production. In particular, the Bank supports food and nutrition security in Yemen by focusing on agricultural production and climate-resilient restoration of productive assets to protect livelihoods; scaling-up household-level food production as well as domestic food distribution using a combination of short- and medium-term interventions, and prioritizing areas where food insecurity and malnutrition are chronic.

Climate change poses additional risks in Yemen, particularly for the most vulnerable. Over recent years, heavy rains led to flash floods, causing deaths and large-scale damage to homes, infrastructure, and crops. Water shortages, combined with unpredictable heavy rainfall have damaged an already deficient critical infrastructure contributing to increased vulnerabilities for rural populations. Outdated farming techniques and agricultural practices are no longer sufficient to ensure crop resilience, hence affecting food and income security for rural populations. Most vulnerable populations, namely internally displaced people, have been disproportionately affected.Preparing to mitigate the impacts of future food crises
To better prepare countries to tackle future food and nutrition security crises, the World Bank as part of the Global Alliance for Food Security is working with countries to develop and operationalize Food Security Crisis Preparedness Plans. These plans are developed in close collaboration with the Food and Agriculture Organization (FAO) of the United Nations (UN), the UN Office for the Coordination of Humanitarian Affairs (OCHA), the UN Children’s Fund (UNICEF), the UN Development Programme (UNDP), the World Food Program (WFP), the Global Network Against Food Crises (GNAFC), and the UN Famine Prevention and Response Coordinator.

The Yemen context requires close coordination with donors and development partners, who are providing food and nutrition security assistance and humanitarian relief. Among its other efforts, the Yemen food security crisis preparedness plan supports the development of a joint monitoring report –pooling information from various sources to track and recognize early slow onset food security crises.

This monitoring effort is considered a breakthrough, as it is not often to have humanitarian and development organizations being involved in a joint and live analysis. These efforts will collect existing data such as hunger levels, climate related indicators, and changes in food prices which are usually obtained from various organizations. The new Joint Monitoring Report (JMR) will help ensure that organizations working on food security in Yemen can act based on the same data. Moving to more collective approaches is particularly important in a country like Yemen where data will be used across various initiatives including by the United Nations agencies, humanitarian organizations and donors.

Food security data will be updated quarterly instead of just once a year, ensuring that stakeholders have access to the latest information. To make the data more accessible, it will be integrated into the online Food and Nutrition Security Dashboard managed by the Global Alliance for Food Security. Having better data, which is agreed upon by various organizations, will promote trust in the preparedness plan.

In addition to risk monitoring efforts, the preparedness plan also establishes a dedicated decision-making mechanism comprising of officials from various organizations to promote collective recognition and scaled up responses across humanitarian and development partners when a crisis emerges. The structure that is put in place under the preparedness plan will act as foundation for building government ownership over time and when the conflict situation permits. It will also complement longer-term investments to strengthen the resilience of the country’s food systems.

With these systems put in place, the people in Yemen will benefit from the country having a more holistic response across the humanitarian and development communities, also be less exposed to the impacts of future food crises.

 

Carbon markets and mechanisms have steadily evolved since the first State and Trends report was published 10 years ago. The share of global emissions covered by carbon taxes and emissions trading systems (ETSs) has grown from 7% to around 23%.  Jurisdictions continue to introduce new carbon pricing instruments, such as Indonesia’s ETS this year, and cover new emission sources, such as aviation. Government revenues from carbon taxes and ETSs have grown nearly five-fold as policies have evolved and diversified to reflect increased ambition.  And voluntary action around carbon markets has proliferated as corporations have become the biggest source of demand for carbon credits. 

“Over the decade, State and Trends and the Carbon Pricing Dashboard have provided objective and up-to-date information on direct carbon pricing.”

Over the decade, State and Trends and the Carbon Pricing Dashboard have provided objective and up-to-date information on direct carbon pricing. They have guided policymakers, supported academic and analytical work, and informed the private sector and nongovernmental organizations alike. 

This year’s report shows that governments are prioritizing direct carbon pricing policies to reduce emissions, even in difficult economic times. The economic turmoil and geopolitical instability of this past year threatened to divert attention from the pressing need to act on climate. Despite these pressures, ETSs and carbon taxes have proven resilient; several jurisdictions either delivered on existing plans for new ETSs or taxes, increased their ambition, or announced further proposals for developing new initiatives in the coming years. Recent developments on Article 6 suggest a pathway for international carbon markets, though more work is needed to build the administrative capacity for countries to engage further. 

“This year’s report shows that governments are prioritizing direct carbon pricing policies to reduce emissions, even in difficult economic times.”

Governments, the private sector, and others are thinking about carbon markets and pricing in increasingly sophisticated ways.  Direct carbon pricing is being viewed through a broader lens, not only as a key mitigation policy, but also as a tool to raise revenue, drive innovation, and help deliver on broader sustainability and development goals. The World Bank’s pioneering new diagnostic, the Country Change and Development Report (CCDR), has emphasized the potential for direct carbon pricing policies to support countries on their development journeys. 

There is still a long path ahead even as the need for more progress intensifies. Climate-related natural disasters in 2022 cost lives, caused billions of dollars of damage, and displaced millions, particularly in the developing world. The Intergovernmental Panel on Climate Change’s Sixth Assessment Report laid bare the increasingly dangerous and irreversible risks of failing to act. But the report also offered hope that we can still prevent the worst effects if we act now to transition to a low-carbon future.

“Carbon pricing must continue to grow, both in terms of coverage and price, to drive the transformational change needed to meet the Paris temperature goals.”

Introducing a price signal for climate mitigation is critical to driving investment and behavior change to lower emissions. Carbon pricing must continue to grow, both in terms of coverage and price, to drive the transformational change needed to meet the Paris temperature goals.  However, governments need to consider trade-offs when deciding which carbon pricing approach to use: ETSs, carbon taxes and carbon crediting, and international carbon markets each have their place. The World Bank is supporting many countries to engage with the full range of carbon pricing policies — including through the Partnership for Market Implementation (PMI) program providing technical assistance for domestic carbon pricing and operationalizing Article 6 of the Paris Agreement.

State and Trends takes stock of progress and reiterates the World Bank’s commitment to work with governments and stakeholders to put a price on carbon to accelerate climate action.  

Download the report: State and Trends of Carbon Pricing 2023