The Rich World’s Climate Distraction

 The past 75 years have brought the greatest improvement of human welfare in history. But over the past decade, much of that progress has stalled. This happened at the same time that the rich world shifted its attention to climate change. This isn’t a coincidence, and it has to change.

Consider extreme poverty, long defined as living on less than $1 a day, adjusted for inflation and purchasing power. In 1950, more than half of humanity was that poor (using the 1985 dollar as the benchmark). Today the share is 7.6%, the lowest ever recorded. Average schooling has almost tripled, from 3.2 years to nearly nine. Electricity access has soared. Problems remain, but the gains have been spectacular.

Yet that development has lately slowed to a crawl. After almost two centuries of declining poverty, the number of poor people in the world hasn’t budged since 2016. Global progress is at its slowest pace since 1950, according to the World Bank.

There are many causes, but one stands out. In 2016, the world retired its Millennium Development Goals—a short list of mostly efficient, targeted aims: cut poverty, disease, and maternal and child deaths, and get every child into school. In their place came the Sustainable Development Goals. Climate change became the rich world’s obsession.

Nowhere is this obsession clearer than in the development banks, whose core purpose is to help the poor develop. Yet in 2025, climate finance from multilateral development banks to low- and middle-income countries topped $103 billion—nearly half of all their financing. The World Bank alone directed 48% of its lending to climate finance.

One of us (Mr. Gill) stepped down this week at the end of a four-year term as the World Bank’s chief economist—a position that gave him an insider’s view of the fixation.

The banks, like many development organizations, convinced themselves that because poor people are more vulnerable to climate change, climate policy is crucial for their development. The logic is seductive but wrong. Poor people are more vulnerable to everything—disease, hunger, broken infrastructure, economic shocks. The question is whether climate policy is the best way to help them. Examined rigorously, policies focused on traditional development goals, such as reduced poverty and improved health, generally win decisively.

Sustained economic growth is the surest predictor of a country’s ability to withstand climate shocks. A 10% rise in per capita gross domestic product can reduce the number of people at high risk from climate-related hazards by almost 100 million. Prosperity is the ultimate climate adaptation strategy. A hurricane kills hundreds in Haiti; the same storm merely inconveniences Florida. Resilience runs through development—not through a solar farm that raises power prices and slows industrialization.

The core problem is opportunity cost. Every dollar subsidizing solar panels or carbon accounting is a dollar not spent on schools, maternal health or clean water. Research by the Copenhagen Consensus, with more than 100 economists and several Nobel laureates, compared the returns. Smart investments in nutrition, health and education routinely deliver $40 to $110 in social benefits per dollar. Climate-mitigation investments—funding emissions cuts in poor countries—often deliver much less back.

The trade-offs are concrete. For $2.50, an expectant mother can receive micronutrient supplements that prevent stunting and lifelong cognitive damage in her child—returning nearly $100 of long-term benefits per child. Expanding diagnosis and treatment for tuberculosis and malaria, which still kill more than a million people a year, returns more than $45 for each dollar invested.

The energy dimension is starkest. Much of Africa uses less electricity per person than a single refrigerator in a Western home. The rich world built its wealth on cheap, reliable fossil fuels, which still supply more than 80% of global energy. Yet development banks refuse to finance new fossil-fuel projects in poor countries. Germany has spent more than €700 billion on its energy transition since 2002; power prices more than doubled and its economy is still almost four-fifths fossil-fueled. To demand that African nations achieve what Germany can’t—with a fraction of the resources—isn’t climate leadership. It is hypocrisy.

None of this is to say we should abandon the climate—both adaptation and green innovation deliver strong returns on investment.

But the rich world’s development institutions must overcome their climate fixation. It’s a welcome sign that the World Bank has finally announced it will retire its climate spending goals, but with its main climate action plan still firmly in place, the shift risks being superficial. Britain’s new foreign secretary, Ed Miliband, has taken the U.K.’s governor seat at the World Bank. He vows to keep climate at the heart of the institution.

Most of humanity is still poor. For them, we should spend billions on tackling urgent, cheaply solved problems before spending trillions to nudge the thermometer in a century. Tellingly, Africans ranked climate change 31st among 34 priorities in a recent Afrobarometer survey. We must rediscover the smart, focused development solutions that transformed the world in the past 75 years—and put the best development policies first.

Mr. Gill was chief economist of the World Bank Group (2022-26). Mr. Lomborg is president of the Copenhagen Consensus Center and author of “Best Things First.”

The Rich World’s Climate Distraction - WSJ