Note to accompany poverty projections

Transcription

1 Note to accompany poverty projections Prepared by Amanda Lenhardt, ODI This background note details projections produced using the International Futures model to explore possible future outcomes of poverty, nutrition, adult literacy and carbon emissions and the potential impact of a series of policy interventions. The note begins with an overview of the model, followed by a description of the scenarios constructed, and concludes with a presentation of the results. A table is provided at the end of this note to show how the IFs results compare to other well- known poverty projections. Model background The International Futures (IFs) model is a large- scale, long- term data- modelling system developed at the Frederick S. Pardee Center for International Futures at the University of Denver. The model has been adopted by a number of forward looking research and reporting agencies, including the fourth Global Environmental Outlook at the United Nations Environment Programme, the 211 Human Development Report, the New Economy project sponsored by the European Commission, and the 3rd Chronic Poverty Report produced by the Chronic Poverty Advisory Network. The IFs model contains and regularly updates internationally representative data sources on demographic, economic, environmental and socio- political for 183 countries. The system facilitates the development of scenarios based on user- generated assumptions about the drivers of a future condition. The database is composed of over 15 variables, and continues to expand. The model is composed of a number of sub- modules which interact to allow the exploration of different combinations of policy interventions and how these might be expected to affect various elements of future systems. Future outcomes and scenario development In order to explore possible alternative futures, three scenarios were considered for this note. An optimistic scenario is constructed where key policies are introduced to the model with intended positive impacts on welfare, a corresponding pessimistic scenario is constructed where these same policies experience a decline, and both of these scenarios are compared to the IFs baseline model which projects future outcomes based on historical trends. In the optimistic scenario, the following changes are introduced to the model: Government spending: a 2% increase in public spending on health, education, infrastructure and welfare transfers in all countries Aid: all OCED countries meeting their longstanding target to allocate.7%/gdp to foreign aid. Environment: a carbon tax is implemented across all countries at a rate of $163/ton (the 214 rate in Sweden, the highest tax observed) Inequality: domestic gini coefficients reduce by 1% Economic growth: total factor productivity increases by.1 across countries In the pessimistic scenario, the following changes are introduced to the model:

2 Government spending: a 2% decrease in public spending on health, education infrastructure and welfare transfers in all countries Aid: OCED countries allocating.1%/gdp to foreign aid. Environment: No carbon tax is implemented by any country Economic growth: total factor productivity decreases by.1 across countries Inequality: domestic gini coefficients increase by 1%. The outcomes examined are: Results $1.25/day poverty (world headcount and proportion) $2/day poverty (world headcount and proportion) Malnourished population (world headcount and proportion) Literate population over 15 years of age (world proportion) Global annual carbon emissions As the optimistic scenario shows, if concerted actions are taken to increase spending on public services and efforts made to reduce inequality, with action being taken on climate change and favourable economic growth, extreme poverty could be reduced from over a billion people today to around 36 million in 23, or from 18% to 4% of the projected world population. On the other hand, under a pessimistic scenario, if inequality continues to rise, no serious response is made to climate change, poverty investments decrease as growth slows marginally, the world could reach 23 with 1.2 billion extremely poor people, around 15% of the world s projected population. Around 2.3 billion people could be expected to be living on less than $2/day in this scenario, nearly 3% of the world population. $1.25/day poverty (headcount) World popula`on below $1.25/day Op`mistc Base Pessimis`c

3 $1.25/day poverty (propor`on) World popula`on below $1.25/day $2/day poverty (headcount) World popula`on below $2/day $2/day poverty (propor`on) World popula`on below $2/day

4 Malnourished people (headcount) World popula`on malnourished Malnourished people (propor`on) World popula`on malnourished Op`mis`c Base Working Literate popula`on (over 15 years) World popula`on literate

5 Global annual carbon emissions Global annual carbon emissions (billion tons) Annex Comparison of IFs results (from the 3 rd Chronic Poverty Report) to other studies