Analysis of future scenarios

In the ‘Green Transition’ scenario, a process of political integration between the 11 SEMCs and the EU would take place in some form of EU–MED union, most likely as an extension of the EU to the 11 SEMCs (Figure 2). As is required by EU treaties, the latter countries would need to adopt many features of the European legal system on human rights, labour, environmental and health protection law. Internal inequalities may be reduced and improved social cohesion would be a step towards stronger resilience to climate shocks. Newcomers would have full access to EU funding and the possibility to use a number of resources that directly and indirectly facilitate adaptation policies and investment. Less developed regions would largely benefit from such financial support and avoid lagging behind in the implementation of effective adaptation measures. Moreover, the level of procedural justice could be improved because both sides of the Mediterranean Sea could discuss and negotiate all possible cooperation actions for adaptation in a fully legitimate and equal environment – European institutions.

Under this scenario, strong economic growth in the entire region would provide resources for governments to spend on adaptation measures and the increase in per-capita income would strengthen households’ resources for adaptation. Economic growth would drive the diffusion of innovation and stimulate the local production of advanced technologies, reducing dependency on sources from abroad. Even if equity issues over the spread of adaptation costs remain unchanged, an increase in the total wealth of the 11 SEMCs would reduce concerns about resources for adaptation.

Apart from Israel and Turkey, the SEMCs are likely to remain middle-income economies in the next decades (for a detailed analysis, see Coutinho, 2012) and their adaptation projects will depend on some type of technical, financial or organisational assistance from their northern neighbours. Foreign aid is a more volatile and hence uncertain source of funding compared with internal resources.¹⁴ The higher the level of integration between the two regions, the higher is the level of commitment to cooperation projects. For either EU–MED projects or collaboration among the SEMCs, greater political commitment is a factor that would positively influence adaptation projects in terms of reducing uncertainty about the provision of funding and technical assistance.

14 Plenty of studies seek to explain the effects of foreign aid volatility on the recipient economies (for some data about annual changes, see Desai and Kharas, 2010).

Under this scenario, there would be a clear and transparent assignation of governmental and private tasks that facilitates economic efficiency, fairness and ecological sustainability in adaptation.

Moreover, there would be a high chance that the globally optimal mix of adaptation and mitigation investments is jointly determined and pursued because of the strong political integration with Europe, one of the major players in climate policy. This includes the location of each mitigation and adaptation project in the country where efficiency is the highest for the respective project. In this first-best world, the costs of climate change, consisting of mitigation, adaptation and residual damage costs, are minimised at the global level. Adaptation and mitigation projects are co-funded by external partners if they show positive externalities. Synergies are exploited and conflicts between adaptation and mitigation are identified and possibly reduced. The current Clean Development Mechanism (CDM) already goes in this direction (Fujiwara et al., 2012), giving the 11 SEMCs the benefits of an efficient allocation of resources and the transfer of technologies from the European area. The system is developed for mitigation purposes, but it can potentially exploit all the synergies between adaptation and mitigation through joint projects between local and foreign investors. Indeed, while EU emitters are interested in mitigation, local firms and authorities have a higher incentive to invest in adaptation.

Figure 2. Grid of four indicative scenarios defined by two dimensions: Cooperation and Sustainable Development scenarios

Source: Ayadi and Sessa (2011).

The transition to the most positive scenario for adaptation may be triggered by a global agreement on legally binding and effective mitigation targets, along with sufficient (also external) funding for adaptation projects all over the world. For the success of Euro-Mediterranean integration, it would be even more conducive if this agreement were achieved by common and joint efforts on both shores of the Mediterranean in order to encourage other world regions to join this alliance.

7.3.2 Blue Transition (Q III)

The ‘Blue Transition’ scenario is instead characterised by loose collaboration and spontaneous agreements between the 11 SEMCs and EU countries amid economic prosperity. Divergence in country economic, social and political patterns as well as the absence of a strong connection between the EU and the 11 SEMCs distinguish this scenario from the Green Transition one. Here, the 11 SEMCs are not necessarily worse off. The SEMCs would be characterised by different policies and being somewhat politically fragmented. Instead of full cooperation by the entire region, only some sub-regional associations would arise and some degree of internal conflict would persist. Additionally, each country would autonomously build up partnerships worldwide (e.g. with the rest of the Arab world, Far East Asia, Africa and Latin America). With no dominant role played by the EU, the US, Russia or China, regional country groups like the Maghreb would be more influential in driving the outcomes of national policies.

In this scenario, concerns about procedural justice would be more severe than those about distributive justice. Abundant economic resources may reduce poverty and increase the countries’ ability to invest in adaptation, given sufficiently high tax revenues for national and regional governments, but the weak political integration may isolate some local communities and weaker countries from interregional cooperation on adaptation projects. The lack of a political alliance is likely to weaken lobbying power in diverting international funding to the region, even if good economic conditions make these countries rather influential players in the diplomatic game. Yet with respect to mitigation and adaptation policies, the UNFCCC framework would help the SEMCs to obtain assistance from developed countries and make their diplomatic influence stronger because of the good level of procedural justice in the UNFCCC’s institutional design.

Even if the SEMCs cannot benefit from participation in EU institutions and the strength of regional mutual support, cooperation with other major partners may eventually guarantee a comparable level of financial and technological support in pursuing adaptation plans. Adaptation goods are highly capital- and technology-intensive, and the degree of trade and investment openness is crucial to facilitating sufficient action by the private sector (i.e. households, farmers and other firms). Currently, the 11 SEMCs are quite heterogeneous in that regard (Sekkat, 2012; Ghoneim et al., 2012) and the situation is likely to remain unchanged under this scenario unless all 11 SEMCs join international trade agreements under the framework of the World Trade Organization.

7.3.3 Red Transition (Q IV)

In a downside scenario (quadrant IV), there is no effective cooperation between the EU and the 11 SEMCs, neither concerning mitigation nor adaptation topics. Thus, as mitigation targets are more difficult to achieve and climate change goes on, adaptation may be pursued more intensively for two reasons: first, for some decision-makers it serves as a substitute for effective mitigation and gains relevance in light of the failure of mitigation negotiations. Second, adaptation may be used by some countries strategically in order to commit credibly to unambitious efforts at domestic mitigation, thereby encouraging their international partners to increase their own mitigation efforts (see section 6.2). In this atmosphere of distrust and pressure, adaptation and mitigation projects on the Mediterranean shores are unlikely to harmonise, which may lead to conflicts between them. As an example, one may think of large-scale solar energy projects conducted by the EU in North African countries, which as a side effect increase the vulnerability of those countries, e.g. by an accumulation of capital and people in exposed areas and the absence of proper protection there. Another example is the above-mentioned energy-intensive desalination plant. In the absence of clear mitigation targets and international commitments, there is little reason for a water-scarce country to care for emission reductions in their adaptation efforts.

But also the adaptation processes themselves would suffer under weak political leadership and coordination. The scenario may be described by inefficient, inadequate or missing adaptation governance (which could mean too much or insufficient or wrong intervention). Furthermore, a lack of cooperation in the formulation of adaptation policies may result in conflicts and consequently in high transaction costs for policies.

The ‘Red Transition’ is the worst-case scenario where, together with weak international cooperation, low long-run growth prevents the 11 SEMCs from having the economic resources necessary to carry out effective adaptation plans and the spread of poverty generates massive migrations to EU countries and other rich areas in the world. Equity problems worsen to the severest extent, for both distributive and participation concerns. As explained for the Blue Transition scenario, less procedural justice is foreseen. In relation to distributional issues, international adaptation support would have to cope with weak governments in the southern Mediterranean, asking for resources to compensate small national budgets and a high degree of vulnerability among poor households. An additional effort from developed countries would be required to balance out the lack of regional cooperation on technological and organisational issues. Under this scenario, however, EU countries would also experience low economic growth and the resources made available for foreign aid would not be enough to meet the needs of the 11 economies, even if it is in EU countries’ interest to prevent waves of migration from the south.

We see the following drivers that might lead to a Red Transition scenario: i) the UNFCCC negotiations could fail to achieve an effective and legally binding agreement for greenhouse gas abatement and ii) there could be a lack of sufficient contributions to adaptation funds for projects in vulnerable countries. Both failures could lead to an environment of non-cooperation and distrust in the international climate debate. This atmosphere would be exacerbated if one of the partners has the impression that another partner is significantly contributing to the failure of a global mitigation agreement.