Monday, May 17, 2021

Botswana gets ‘AA’ climate change rating from S&P

Botswana has emerged as the 32nd least vulnerable to climate change among 116 nations and the least vulnerable in Africa according to the first-ever climate change rankings by Standard & Poor’s (S&P) credit ratings agency.

There is currently no single best statistical tool to measure the degree to which various economies are exposed to climate change risks. That being the case, S&P used a composite of three different variables to capture different facets of potential vulnerability and arrive at a crude ranking.

The first variable measures the share of the population living in coastal areas below five meters of altitude. S&P says that the livelihood and economic production of that population may be at risk should sea levels rise in the course of global warming. The second variable is share of agriculture in national GDP which measures the risk to the sector, which is typically most dependent on climatic conditions. The third is the vulnerability index compiled by Notre Dame University Global Adaptation Index (ND-GAIN) which measures the degree to which a system is susceptible to, and unable to cope with adverse effects of climate change. ND-GAIN includes three components: exposure, sensitivity and adaptive capacity.

A rank of 1 indicates lowest vulnerability while a rank of 116 indicates the highest. Finally, S&P assigns an overall rank of vulnerability which is derived by ranking the sum of the three ranks for each of the three indicators.

The overall ranking of Botswana is 32 which places it two places above Russia, seven above South Africa, eight above Netherlands, 22 above Japan, 24 above Brazil and 44 above Zambia. With an overall ranking of 112, Mozambique is the fifth most vulnerable sovereign after Cambodia, Vietnam, Bangladesh and Senegal. All of the sovereigns in the Top-20 most vulnerable nations are emerging markets, and almost all of them are in Africa or Asia. In contrast, in the Bottom-20, least vulnerable advanced economies dominate, with Luxembourg, Switzerland, and Austria the least vulnerable in the whole sample.

The average vulnerability rank of ‘AAA’-rated sovereigns is 18; that of the ‘B’-rated sovereigns 84. Botswana is rated ‘AA’. S&P says that the order indicates that over a long time horizon, climate change could contribute to diverging ratings. “Sovereign ratings could diverge further if the lowest-rated sovereigns do in fact experience the greatest impact from changing weather patterns and rising sea levels. The more vulnerable sovereigns also tend to be poorer, which makes it especially challenging for them to invest in mitigation measures that would help them to adapt to changing climate patterns,” the ratings agency says.

It adds that upcoming negotiations under the United Nations framework could alter the picture for global action on climate change. The process starts in two months with a leaders’ summit in New York which will be followed by a conference scheduled for the end of 2015 in Paris. The latter is aimed at achieving a legally binding and universal agreement.

“It’s too early to say whether these forums will produce a clearer consensus on global policy or significant changes to emissions targets. Either way, we expect the significance of this mega-trend in assessing sovereign risk to only increase over coming decades, as evidence of the economic implications of climate change and extreme weather events becomes ever more visible”, S&P says.

While climate change has become as serious as to warrant the full attention of credible international credit ratings agency, here at home the issue is still in the back burner. In their election manifestoes, the major political parties don’t pay any substantive attention to it, with the ruling Botswana Democratic Party being the only one that even mentions it. That notwithstanding, the manifestoes uniformly make grand promises on agriculture and tourism whose delivery would first have to reckon with the reality of climate change.

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