By Rob Starr, Content Manager, Big4.com
The Bridging the gap report, based on the analysis of environmental spending in relation to climate change across 10 major economies during 2011, extrapolates public sector spending levels to forecast the impact of current austerity measures over the next five years.The fallout from any Eurozone break-up could potentially create a US$51b gap in climate change funding by 2016 according to a study released by Ernst & Young.
When compared to 2010, environmental spending in relation to climate change in 2011, as a percentage share of total government expenditure, was down in six countries (Germany, Spain, Italy, Japan, Australia and South Korea), virtually unchanged in France, and up in three countries (UK, US and South Africa). The changes were typically marginal, with the largest differences occurring in Germany (-0.19%) and Australia (-0.12%) cancelling out any increases in share of expenditure within larger economies, such as the US.
The study also calculated the funding gap under a “worst case” scenario in which multiple countries exit from the Eurozone and multiple sovereign defaults trigger a renewed credit crunch in Europe, with activity depressed around the world as a result of trade and financial linkages. Under this outcome, the cumulative funding gap widens to a total of US$51.0b in aggregate. In this scenario, the US would face the biggest climate change funding gap in absolute terms of US$9.9b; with Germany, France and the UK facing a gap of more than US$7.0b.