Oh Well!!! Adjusting For Inflation, Financial Pledges At CRAP29 Will Fall Will Below Grudging Targeted Totals
A failure to factor in inflation means the $300bn (£240bn) climate finance deal agreed at Cop29 is not the tripling of pledges that has been claimed, economists have said. The international talks in Baku were pulled back from the brink of collapse early on Sunday morning when negotiators struck an agreement in which rich countries promised to raise $300bn a year by 2035. On paper, this is a tripling of the previous climate finance target of $100bn a year by 2020, and has been trumpeted as such by the UN and others.
But the text makes no mention of inflation, missing an important recommendation from leading economists upon which the target is loosely based. It means the world’s poorest countries will receive a sum they already consider inadequate for their needs, but that it will in effect be billions of dollars lower still as the money will lose its value over time, according to Guardian analysis.
Money pledged today is likely to have lost about 20% of its value by 2035, assuming the average US inflation rate of the past 15 years (2.38%) continues into the future, according to Guardian calculations. If interest rates are higher, the value could be even lower.
The target of $100bn by 2020 was set in 2009 and did not include inflation adjustments. If it had done, the target would have become $145bn in today’s money to reach the same value. Even taking 2020 as the baseline for the $100bn figure, due to high inflation rates in recent years current contributions would need to be about $120.5bn to reach the equivalent value.
EDIT
https://www.theguardian.com/environment/2024/nov/25/cop29-deal-fails-consider-inflation-not-tripling-target-economists