Paper short abstract:

The paper addresses the need to achieve poverty eradication in the global South within global environmental limits. It empirically shows that the current development path is unsustainable, underlining the need for structural transformations and targeted policies in National Development Plans.

Paper long abstract:

Poverty eradication and environmental issues are at the core of the Sustainable Development Goals. This paper suggests that countries in the Global South should focus on structural changes and inequality reduction to achieve poverty eradication within environmental boundaries. In recent decades, economic growth has been accompanied by rising inequality in many developing countries. In such contexts, not only has poverty not decreased fast enough, but emissions have grown significantly. This is especially true in some of the more populous middle-income countries, which now represent the largest contributors to both global poverty and global emissions. A different development path is therefore needed. Moreover many counties have made commitments both in terms of emissions levels and poverty reduction, which are integral parts of their development plans.

The paper explores these issues through an empirical analysis of the national trade-offs between poverty and emissions levels, and the role of economic growth and inequality in shaping them. The econometric analysis identifies turning points in income levels after which further economic growth has a negative effect on the trade-offs considered. By contrast, inequality reduction is shown to unambiguously reduce both poverty and emission levels. Given that climate change is a global public good, the paper also indicates possible solutions to achieve global poverty eradication within environmental limits. One solution is a stronger focus on inequality reduction. By decreasing both poverty and emission levels, inequality reduction has a double positive effect. This might be achieved in middle-income countries through redistributive and progressive policies. A second solution is structural transformation in the form of green growth. However the effects of green growth on poverty are uncertain. Finally, this paper underlines the potential importance of welfare and environmental states in addressing poverty and sustainable development.