L41018792

Eshan Ahuja et al Int. Journal of Engineering Research and Applications
ISSN : 2248-9622, Vol. 4, Issue 1( Version 1), January 2014, pp.87-92

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RESEARCH ARTICLE

OPEN ACCESS

Economic Stability to Papua New Guinea by Contribution in
Reducing Carbon Emissions through Support of DC
Eshan Ahuja*, Sidharth Ahuja **, Dr. Navin Kumar Kohli ***
*(Department of Mechanical Engineering, Australian National University, Canberra, Australia,)
** (BE, Electrical Engineering. India)
*** DGM, MP Power Management Co. Ltd., India)
ABSTRACT
Papua New Guinea is said to be PNG which is one of the most adversely affected small country by the impacts
of climate change. Climate Change is one of the biggest challenges facing by them today, its devastation is
widespread and intense. This issue has been discussed to evolve a method to support the nation in achieving the
goal of emission reduction. The affects include those on Agriculture, Fisheries, Forestry and Tourism which
have major contribution towards GDP of the PNG. PNG has a very low economic growth rate according to
several economic and social indicators, the performance of the PNG economy since independence has been
disappointing. Thus, there is need of taking special attention & responsibilities by giving cooperation by the
nations. This is to be done by especially developed ones so as to support the small island nations in adaptation to
the impacts of climate change through financial support. Through this act, the Least Developed Countries will
achieve economic stability as well as imparting in reduction of carbon emissions. This paper discusses to find a
path and sort out the issue. The paper also discusses various negotiating points so as to achieve the said goal
mutually and amicably.
Keywords - PNG, Climate Change, Least Developed Countries and negotiating points
higher frequency of natural disasters as well as
impacts on bio diversity. The Canberra Accord
I.
INTRODUCTION
Papua New Guinea is said to be PNG is one
convention is an opportunity for PNG to assure the
of the most adversely effected by the impacts of
world that their opinions are heard with respect to
climate change. Climate Change is one of the biggest
the climate change issue.
& greatest challenges facing by them today, its
devastation is widespread and intense. It is a major
and lasting change in spatial weather patterns in the
II.
PNG ECONOMY AND ITS STATUS
earth’s climate system. Key findings and reports
According to the Australian Government
indicate that anthropogenic activities have and are
Department of Foreign Trade and Affairs, Papua
resulting in increased concentrations of CO2 in the
New Guinea country brief, [2] PNG is a small island
atmosphere which are destabilizing the environment.
nation with an area of about 463,000 square
Based on empirical modeling, [1] estimated that
kilometres twice the size of UK, home to the world’s
mean sea level is projected to continue to rise during
third-largest tropical forest and one of the greatest
the 21st century, with increases of up to +140 cm
concentrations of biological diversity has a
projected for 2100.Moreover as by United Nations
population of about 6.7 million which is estimated to
Framework Convention on Climate Change,
be growing at a rate of 2.8 percent per annum .The
vulnerability and adaptation to Climate Change in
country has more than 800 known languages out of
SIDS there might be an increase in the intensity of
which English, Hiri Motu and Tok Pisin are the
Cyclones in PNG and other areas of Pacific in the
official languages spoken by the natives who are
upcoming future. A sad reality of climate change
mostly Melanesian.
impacts is that the countries least equipped to deal
The nation has a Dual economy comprising
with the issue are the ones most affected by it. It has
of a corporate based sector & the informal sector.
been estimated that maximum of the climate change
The informal sector includes agriculture, forestry and
related deaths have resulted in the LDC countries.
fisheries while corporate sector includes industries,
The PNG is another such country which has been
manufacturing, and public sector service. Among
suffering from adverse impacts of climate change.
these, the predominant economic sectors of PNG
These changes have affected the agriculture, forestry
include Mining, Agriculture, Tourism and Fisheries.
and tourism sectors the worst. Other impacts include
As per Australian Government [2] more than 2/3rd
degradation of land, health and welfare of citizens,
of the population is dependent and engaged in the
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informal sector which generates more than 1/3rd of
the country’s GDP. PNG has a very low economic
growth rate according to several economic and social
indicators, the performance of the PNG economy
since independence has been disappointing.
It remains one of the least developed nations on earth
and according to United Nations Development
Programme.
Papua
New
Guinea,
Human
Development Index rank of the nation is 156th of
187 countries surveyed, lower than any other country
in the Pacific. On the basis of Australian
Government [2], the nation’s GDP growth rate was
above 9 per cent in 2012.This growth rate is
supported by improved mining productivity as well
as the construction activity in relation to PNG’s
Liquefied Natural Gas Project.
Economy of PNG faces risks such as
impacts from growth in the mineral sector, fisheries
and the LNG project. Some of the obstacles to the
economic development are Policy instability, Poor
Infrastructure, Inflation, Foreign Currency & Trade
regulations also PNG government revenues remain
vulnerable to volatility in global prices for gold,
copper and oil. According to New Agriculturist,
PNG is a major exporter to Australia, Japan and
China and amongst all the exported products
agriculture based products contribute to about 1/5th
of the overall exports moreover the nation is
amongst the top exporters of tropical hardwood all
over the world. Major exports include gold, copper
ore, logs, coffee, cocoa, fishes & prawns.

III.

CLIMATE CHANGE IMPACTS ON PNG

According to the World Bank, World
Development Indicators [3],[4] PNG’s net energy
consumption rose more than 30 % from 1990-2011,
moreover there is a two-fold increase in total carbon
dioxide emissions of the nation in a time span of 20
years initiating from 1990. Pokana wrote out of all
the carbon emitting sources of the nation Land use,
land use change and forestry (LULUCF) contributes
to more than 3/4th of total emissions by the main
drivers of emissions to be Logging and Subsistence
agriculture. [5] As by UFCCC, commercial logging
is fairly widespread throughout the regions of the
nation with more than 1 million hectares already
logged, other than logging the other contributors to
the emissions in PNG are Agriculture Leases and
Commercial Agriculture etc. The climate change
impact on PNG is much worse compared to other
small island nations as a result of its geographical
location. Majority population of the nation
especially, rural, have natural resources as the only
source of Income. Over recent times, Droughts,
floods increased frequency of tropical cyclones e.g.
El Nino case have affected thousands of people
every year causing billions worth damages in
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addition to loss of lives and property. There are
various most affected aspects which are most
vulnerable to climate change which account for more
than 3/4th of the nation’s GDP and more than 80 %
of the population relies on them as the major source
of food and income. [6][7]
i. Agriculture is the most important sector on the
basis of the economic conditions of the nation as
it consists of a wide variety of crops which are
exported to other countries. According to Bell,
increase of extreme weather events due to
climate change affects the livelihood & the
business of the rural people by causing damage
to agriculture crops. [1] This was evident by a
decreased production of crops like Taro,
Cassava, Sugarcane & some major commercial
crops such as coffee, cocoa due to extreme
variations in the rainfall patterns.[8] As per
PNG, crops such as coconuts, mango, betel nut
and breadfruit are now observed in higher
altitudes than before.[9] Thus as by worldwide
fund for nature in PNG, overall the livelihood,
employment and food security of the people of
PNG are affected by the impacts of climate
change on the agricultural sector. As this sector
supports the unstable economy of the nation
thus, there is a dire need of attention to it so as
to strengthen the economy as well as to improve
the standard of living of the people of PNG.[3]
ii. PNG on the basis of New Agriculturist,
comprises of one of the largest fisheries zone in
the Pacific and has extensive and valuable
fisheries resources ranging from inland river
fisheries, and aquaculture to large-scale deep
water tuna fisheries.[10] The increase in Coastal
Erosion and Saltwater intrusion as a result of
Sea level rise in low lying coastal areas result in
increased fishing pressure on coastal habitats.
Moreover, the decline in the saturation level
considered adequate for coral growth due to
Ocean Acidification is contributing in the
destruction of ocean life especially fishes like
Tuna which are amongst the highest contributors
in exports so such conditions if left unseen can
impact the economy of the nation.
iii. The tourism potential in PNG is far ahead of
that of other tourism based nations and its group
members of small island nations yet it is
underdeveloped. One of the reasons behind this
is improper organisation and less priority been
given to tourism by the government of PNG
moreover according to Institute of National
Affairs (INA). Research of economic growth in
PNG majority of the rural parts of the nation
remains untouched by modern industry and has
archaeological and geological landscapes such
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as grand sierras and majestic canyons still at
present, the annual tourism income is about 20
million US dollars, and recently evidence of
some of the earliest agricultural people on earth
is found in PNG. Thus, as by UNFCC,
vulnerability and adaptation to climate change in
SIDS.[12] Tourisms is one of the major
economic sectors in PNG but due to impacts of
climate change such as Sea-level rise,
accelerated beach erosion, degradation of coral
reefs (including bleaching), and the loss of
cultural heritage on the coasts through
inundation and flooding, the attractiveness of
the nation is affected. Increase in the frequency
or intensity of hurricanes and cyclones also
strongly affects the tourism industry.
iv. Nation’s reliance on Oil & gas sector shows its
importance and even justifies the money
invested on the production side. According to
World Bank Group in PNG, PNG economic
briefing, the impacts of climate change is
affecting the economic growth of this sector as
seen in the recent year case i.e. wetter than usual
weather was one of the major factors which
hampered the Oil & Gas production especially
in the first half of the year 2012.[13]
v. Frequent precipitation events and flooding due
to sea level rise is affecting the land use at a
much higher level. As per Climate Frontlines,
Climate Change in PNG, the impact of flooding
in the case of Carteret Island in PNG resulted in
resettlement of the people to other areas in
Bougainville, there are other low lying attols too
such as Tuvalu, Tokelau, Kiribati etc. which are
experiencing the same issues. Furthermore,
United Nations Framework Convention on
Climate Change (UNFCC), vulnerability and
adaptation to climate change in SIDS wrote
inappropriate land use practices due to
intensified farming systems accelerate the land
degradation (e.g. soil erosion, siltation, and loss
of soil fertility), especially the indigenous
population of PNG. As they have connected
cultural values with their land so the land loss
can affect them psychologically as well as
sociologically. [14]

IV.

KEY NATIONAL INTERESTS

Today, PNG suffers from numerous climate
change impacts these include short term and long
term, irreversible and impacts of tremendous
magnitude. The economy of the country is highly
dependent on its agriculture, marine eco systems,
mining and tourism sector. Needless to say, climate
change threatens their economy as well as the lives
of people and stands in the way of our path towards
security and sustainability. Based on the above
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mentioned future impacts, there is a constitution of
independent state of PNG. The PNG government has
the following key national interests:
i. To achieve Development Primarily through the
use of Papua New Guinean forms of social ,
political and economic organization
ii. Stability of economy
iii. Reducing Emissions from deforestation and
forest degradation
iv. Sustainable management of forest and
enhancement of Forest Carbon Stocks
v. Protection of coastal marine and land
ecosystems
Highlighting the importance of coastal
marine ecosystems such as mangroves, tidal salt
marshes and sea grass meadows to adaptation and
mitigation to climate change and looking forward to
continue work on this under Subsidiary Body for
Scientific and Technological Advice (SBSTA).

V.

UNFCC APPROACH

In the Rainforest Politics & the CarbonCredit Trade in PNG, one of the previous approaches
of the nation is its activeness with regards to
deforestation. It has been a founding member of the
rainforest coalition alongside Costa Rica. Its interests
in deforestation were shown initially in the Montreal
conference of 2005. PNG out of all the small island
nations has got recognition as one of the leaders in
promotion of International level of discussions on
Reduced Emissions from Deforestation and Forest
Degradation (REDD) moreover PNG’s role in
encouraging the carbon trading is globally
appreciated. [15] Majority of population is
dependent on the forest products as their source of
livelihood. One of the significant initiatives by PNG
for improving their livelihood is evident from the
PNG-Australia Forest Carbon Partnership (PNGAFCP) which further aims to protect the biodiversity.
Overall, PNG has shown great interest in forest
conservation and has been a prominent player in the
climate regime in the context to deforestation. Some
of the Current Funds to PNG and other small island
nations so as to deal with the devastating effects of
climate change are discussed below.
Global Climate Change Alliance (GCCA),
funded by the European Commission Development
that aims to increase capacities to adapt to the effects
of climate change. Global Facility for Disaster
Reduction and Recovery (GFDRR) funded by the
World Bank provides technical and financial
assistance to mainstream disaster risk reduction into
the national plans. International Development
Association (IDA) funds projects supporting
adaptation to climate change, including improved
access to clean energy, and transition to low carbon
development. MDG Achievement Fund by the
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Spanish Govt. is in environment and climate change
related activities.
Small Activities Scheme (SAS) funded by
Australia's Aid Program (AUSAID) provides funds
for community generated climate change adaptation
projects. The negotiating points as discussed below
considering the national interests of PNG and the
previous approaches under UNFCC.
5.1 Negotiating Point No 1-(Financial Assistance
and Adaptation Fund)
According to Canberra Accord,[16] parties
agree to establish the Financial Assistance and
Adaptation Fund (FAAF) to facilitate the mandatory
contribution of funds to those are adversely affected
by climate change and the transition to clean
technology.
i.
In order for full transparency and fairness the
FAAF board will be composed equally and
answerable to the COP.
ii.
Funded by a global tax on international
currency transfers of less than 0.1%.
iii.
o qualify FAAF grant, the receiving party
must demonstrate co-operation to advance
free trade agreements between parties.
iv.
Funding will be assigned towards a science
based ecological accounting system.
v.
Takes note that recipients of FAAF assistance
shall be subject to a midterm review.
vi.
Funding shall be arranged on the condition
that fund will allow open talk on trade
agreements.
The previous negotiation had a similar
objective but didn’t considered such a broad
spectrum and was lacking a scope of efficient and
strategic applications because it doesn’t included the
an approach of funds as per the global tax on
international currency transfers which ensures proper
regulation, implementation as well as commitments
from the parties. Final decisions related to funding
on that gets how much. Economic conditions of the
government of PNG don’t allow the allocation of a
monetary fund for the Ecological Accounting
Systems (EAS) in order to assess its ecological
assets worth. Moreover, economic status of PNG
also results in very low market exchange rates, in
times of transfer of technology the net benefit
received is very low the global tax on currency
transfer being administered by World Bank ensures
maximised benefits for LDC’S Developing the
ability to resist sustain and mitigate impacts of
climate change requires grants and funding which
aim to develop clean and resistive technologies
towards climate change. The distribution of funds
from a central body with a specific objective of
assisting most effected poor nation would ensure an

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equitable distribution and swift achievement of
objectives.
5.2 Negotiating Point No 2- Ensuring the
effectiveness of the REDD+ mechanism
i. Parties agree to establish REDD+ as an
international mechanism by including it in
the LULUCF agreement currently included
under the UNFCCC.
ii. REDD+ will create incentives for forest
conservation and preservation for all
countries through carbon credits and offsets.
iii. The current United Nations Collaborative
Programme on reducing emissions from
deforestation and forest degradation will
incorporate LULUCF.
The poor economic conditions of PNG is in a dire
need of an economic incentive , with forest as our
biggest natural asset the initiatives of their carbon
credits for their conservation would allow a steady
inflow of funds. According to INA, research of
economic growth in PNG, only 50% of the
population in PNG receives primary education and
the numbers are even worse in the rural areas, the
reason for high rate of deforestation apart from lack
of alternatives is the lack of knowledge. Educating
this segment of population is expected to drastically
reduce these rates ultimately leading to decreased
GHG emissions from PNG. Thus, for dealing with
the devastating effects of climate change REDD+
effectiveness is a must.
5.3 Negotiating Point No 3- establishment of an
Insurance Fund
On the basis of Canberra Accord, parties agree to
establish an insurance fund to aid non-Annex
countries in combating future unforseen or
unpredictable climate change impacts and
emergencies including, but not limited to, natural
disasters (i.e. droughts, floods, storms) and the
spread of infectious diseases. Funding priority will
be given to countries with higher indexes of
vulnerability to the impacts of climate change. This
fund would be contributed annually by all countries
on 1% of their GDP, and on a voluntary basis by all
the other parties as all countries are eligible for
funding.
PNG is aware of the economic and social
impacts of the natural disasters. The risks as well as
the costs related to these disasters are increasing with
respect to the continuous changes in the climate.
Events such as the Western Highlands floods where
smallholder coffee plantations were washed away
are one such investment as these types of calamities
effects people’s financial security. This agreement
will ensure the government and its poor citizens do
not have to pay for such calamities in the future.
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Historically, malaria was limited to coastal regions,
but a warming climate is enabling mosquitoes to
survive in the highlands, endangering the lives of 2
million people who were previously not at risk.
Thus, there is a need for disaster risk management
(DRM) not only to address current risks, but also
risks heightened through climate change , and this
insurance fund will ensure Security to the people of
PNG and will help reduce migration of the nation’s
population to other countries .

VI.

CONCLUSION

According to UNFCC, vulnerability and
adaptation to climate change in SIDS amongst the
members of AOSIS and SIDS, PNG is one of the
most adversely affected by the impacts of climate
change. There is a need of mutual understanding of
responsibilities and cooperation amongst the nations
especially developed ones so as to support the small
island nations in adaptation to the impacts of climate
change by contributing some percentage of their
GDP as a financial aid on the basis of respective
needs of the LDC as well transfer of technological
expertise with the latter going towards adaptation
strategies. This will act as an opportunity for the
Least Developed Countries to achieve economic
stability as well as contribute in reducing carbon
emissions thereby achieving the emission reduction
goals on a large scale. Thus, according to the basic
requirements of the above mentioned goals the
negotiating points are being framed.
As PNG contributes to climate change
mainly via deforestation and the Clean Development
Mechanism is such that afforestation and
reforestation are the only carbon sequestration
activities allowed. Thus ensuring the continuity of
REDD as a market based system by including in
LULUCF is reasonable and appropriately justified.
Overall, we appreciate that the entire negotiations
occurred making use of science and equity, as
discussed above and resulted in a win-win solution
for all the countries.

VII.

ACKNOWLEDGEMENTS

Eshan Ahuja is BE (Mech. Engg.) and has
experience in energy efficiency consulting firm. He
has published six papers in the past on energy and
climate change. He is completing Master of Energy
Change from the Australian National University,
Canberra. He acknowledges with thanks for the
support provided by the Australian National
University, in completing the present paper.

iv.
v.
vi.
vii.
viii.
ix.
x.
xi.
xii.
xiii.
xiv.
xv.
xvi.
xvii.

i.
ii.
iii.

ABBREVIATIONS

Australia's Aid Program –AUSAID
Developed Country- DC
Disaster risk management - DRM

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Ecological Accounting Systems –EAS
Financial Assistance and Adaptation Fund –
FAAF
Global Climate Change Alliance –GCCA
Global Facility for Disaster Reduction and
Recovery -GFDRR
Institute of National Affairs – INA
International Development Association IDA
Land use, land use change and forestryLULUCF
Least Developed Country- LDC
Papua New Guinea- PNG
Papua New Guinea-Australia Forest Carbon
Partnership - PNGA-FCP
Reduced Emissions from Deforestation and
Forest Degradation – REDD
Small Activities Scheme -SAS
Subsidiary Body for Scientific and
Technological Advice –SBSTA
Climate Change- UNFCC

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