How does a country deal with climate disasters when it’s drowning in debt? Not very well, it turns out. Especially not when a global pandemic clobbers its economy.
Take Belize, Fiji and Mozambique. Vastly different countries, they are among dozens of nations at the crossroads of two mounting global crises that are drawing the attention of international financial institutions: climate change and debt.
They owe staggering amounts of money to various foreign lenders. They face staggering climate risks, too. And now, with the coronavirus pandemic pummeling their economies, there is a growing recognition that their debt obligations stand in the way of meeting the immediate needs of their people — not to mention the investments required to protect them from climate disasters.
The combination of debt, climate change and environmental degradation “represents a systemic risk to the global economy that may trigger a cycle that depresses revenues, increases spending and exacerbates climate and nature vulnerabilities,” according to a new assessment by the World Bank, International Monetary Fund and others, which was seen by The Times. It comes after months of pressure from academics and advocates for lenders to address this problem.
downgraded its creditworthiness, making it tougher to get loans on the private market. The International Monetary Fund calls its debt levels “unsustainable.”
nearly $600 billion in debt service payments over the next five years. Both the World Bank and the International Monetary Fund are important lenders, but so are rich countries, as well as private banks and bondholders. The global financial system would face a huge problem if countries faced with shrinking economies defaulted on their debts.s
“We cannot walk head on, eyes wide open, into a debt crisis that is foreseeable and preventable,” the United Nations Secretary General, António Guterres, said last week as he called for debt relief for a broad range of countries. “Many developing countries face financing constraints that mean they cannot invest in recovery and resilience.”
The Biden administration, in an executive order on climate change, said it would use its voice in international financial institutions, like the World Bank, to align debt relief with the goals of the Paris climate agreement, though it hasn’t yet detailed what that means.
flurry of proposals from economists, advocates and others to address the problem. The details vary. But they all call, in one way or another, for rich countries and private creditors to offer debt relief, so countries can use those funds to transition away from fossil fuels, adapt to the effects of climate change, or obtain financial reward for the natural assets they already protect, like forests and wetlands. One widely circulated proposal calls on the Group of 20 (the world’s 20 biggest economies) to require lenders to offer relief “in exchange for a commitment to use some of the newfound fiscal space for a green and inclusive recovery.”
debts soared, including to China, and the country, whose very existence is threatened by sea level rise, pared back planned climate projects, according to research by the World Resources Institute.
The authors proposed what they called a climate-health-debt swap, where bilateral creditors, namely China, would forgive some of the debt in exchange for climate and health care investments. (China has said nothing publicly about the idea of debt swaps.)
sinking under huge debts, including secret loans that the government had not disclosed, when, in 2019, came back-to-back cyclones. They killed 1,000 people and left physical damages costing more than $870 million. Mozambique took on more loans to cope. Then came the pandemic. The I.M.F. says the country is in debt distress.
Six countries on the continent are in debt distress, and many more have seen their credit ratings downgraded by private ratings agencies. In March, finance ministers from across Africa said that many of their countries had spent a sizable chunk of their budgets already to deal with extreme weather events like droughts and floods, and some countries were spending a tenth of their budgets on climate adaptation efforts. “Our fiscal buffers are now truly depleted,” they wrote.
In developing countries, the share of government revenues that go into paying foreign debts nearly tripled to 17.4 percent between 2011 and 2020, an analysis by Eurodad, a debt relief advocacy group found.
Research suggests that climate risks have already made it more expensive for developing countries to borrow money. The problem is projected to get worse. A recent paper found climate change will raise the cost of borrowing for many more countries as early as 2030 unless efforts are made to sharply reduce greenhouse gas emissions.
Ten years after a devastating earthquake and tsunami led to a nuclear meltdown in northern Japan, residents are readjusting to places that feel familiar and hostile at once.
FUKUSHIMA, Japan — After an earthquake and tsunami pummeled a nuclear plant about 12 miles from their home, Tomoko Kobayashi and her husband joined the evacuation and left their Dalmatian behind, expecting they would return home in a few days.
It ended up being five years. Even now — a decade after those deadly natural disasters on March 11, 2011, set off a catastrophic nuclear meltdown — the Japanese government has not fully reopened villages and towns within the original 12-mile evacuation zone around the Fukushima Daiichi nuclear plant. And even if it did, many former residents have no plans to return.
Some of those who did return figured that coming home was worth the residual radiation risk. Others, like Ms. Kobayashi, 68, had businesses to restart.
“We had reasons to come back and the means to do so,” said Ms. Kobayashi, who manages a guesthouse. “It made sense — to an extent.”
one million tons of contaminated water into the sea has riled local fishermen, and cases against the government and the plant operator are winding through the country’s highest courts. The issue of nuclear power remains highly fraught.
And for miles around the plant, there are physical reminders of an accident that forced the exodus of about 164,000 people.
crashed ashore, flooding his auto body shop in the industrial city of Koriyama.
It can feel that way in the town of Namie, where bags of radioactive waste have piled up.
new schools, roads, public housing and other infrastructure in an effort to lure former residents back.
Some residents in their 60s and beyond see the appeal. It can be hard for them to imagine living anywhere else.
“They want to be in their hometown,” said Tsunao Kato, 71, who reopened his third-generation barbershop even before its running water had been restored. “They want to die here.”
One upside is that the threat of lingering radiation feels less immediate than that of the coronavirus, said Mr. Kato, whose shop is in the city of Minami Soma. In that sense, living amid the reminders of nuclear disaster — in towns where streetlights illuminate empty intersections — is a welcome sort of social distancing.
At a Futaba nursery school, umbrellas have sat untouched for a decade, protecting no one from the rain.
Nearby, a collapsed house is still waiting for a demolition crew.
Mr. Kato said that while he was happy to be back, he struggled to balance a desire to stay with the knowledge that living somewhere else would probably be safer.
“Logic and emotion can’t mesh,” he said, “like oil and water.”
Like Mr. Kato, Ms. Kobayashi had been running a family business, in her case a guesthouse, when the magnitude-9 earthquake struck. The guesthouse in Minami Soma has been in her family for generations, and she took it over in 2001 when her mother retired.
The guesthouse sustained significant water damage from the tsunami. But Ms. Kobayashi’s family restored and reopened it. (Their Dalmatian, who survived the nuclear accident, died just before the renovation was completed.)
They did not expect a surge of tourists, she said, but hoped to serve people who wanted to return to the area and had nowhere to stay.
“There’s no town left,” she said. “If you come back, you have to rebuild.”
Hikari Hida reported from Tokyo, and Mike Ives from Hong Kong.