The poor countries need help fight global warming or the world will face catastrophic floods, droughts and other disasters.
The report said rich nations will need to provide US$86 billion (58 billion EUR) by 2015 to "strengthen the capacity of vulnerable people" to cope with climate-related risks.
Some US$40 billion (27 billion EUR) of that should come from the U.S. government, according to the report. Projects would include strengthening buildings to make them more weather resistant.
"The scenario is that our generation will experience reversals on a grand scale in the areas of health, education and poverty. For the future there is real threat of ecological catastrophe," Kevin Watkins, the report's lead author, told reporters in Brasilia, the country's capital.
The nearly 400-page Human Development Report comes just a week before the world's nations convene in Bali, Indonesia, to negotiate a new climate treaty.
At the report's release ceremony, Brazilian President Luiz Inacio Lula da Silva called on rich nations to do their part.
"In Bali we are going to very seriously discuss the price rich countries have to pay so that poorer countries can preserve their forests," Silva said. "Because you're not going to convince a poor person in any country that he can't cut down a tree if he doesn't have the right to work and eat in exchange."
Brazil is home to around 70 percent of the Amazon rain forest - the world's largest remaining tropical wilderness.
Scientists believe the rain forest can act as enormous sponge to soak up greenhouse gases, but deforestation and burning in the rain forest releases millions of tons of carbon into the air each year making Brazilian one of the leading emitters of greenhouse gases.
The report also found that increased energy efficiency, alternative fuels and even the reduction of trade barriers could go a long way toward reducing greenhouse gas emissions.
The report suggested, among other measures, that a reduction of tariffs on Brazilian ethanol "would generate gains not just for Brazil, but for climate change mitigation."
Brazilian ethanol made from sugarcane is more efficient than the corn-based ethanol produced in the United States, but is subject high U.S. import taxes meant to protect American farmers.
"For Brazil to export ethanol, we have to pay an enormous tariff, almost twice the price, Silva said, adding the that oil producing countries pay no such taxes. "Where is the desire to depollute the planet. We could start taxing petroleum."
Without money from developed countries, the panel found, a warmer world "could stall and then reverse human development" in the countries where 2.6 billion people live on US$2 (1.35 EUR) a day or less.
Developed countries, meanwhile, are failing to meet their targets under the current climate treaty, the 1997 Kyoto Protocol, for cutting greenhouse gases by 2012, the report said. France, Germany, Japan and Britain have reduced their emissions somewhat, it said, but the European Union is falling short of its goal of a 20 percent cut by 2020.
Scientists have reported temperatures rose an average 1.3 degrees Fahrenheit over the past 100 years, bringing the prospect of a century of extreme weather, rising seas, widening drought and disease and harm to fisheries, forests and farmland.
"These impacts ... go unnoticed in financial markets and in the measurement of world gross domestic product," the panel's report said. "But increased exposure to drought, to more intense storms, to floods and environmental stress is holding back the efforts of the world's poor to build a better life for themselves and their children."
Olav Kjorven, head of the U.N. Development Program's bureau for development policy, called the financial aid a sort of "climate-proofing" for the poor that is only natural "when we know that the frequency of droughts and floods is going up."
Because of global warming, he said, 600 million more people in sub-Saharan Africa will go hungry from collapsing agriculture, an extra 400 million people will be exposed to malaria and other diseases and an added 200 million will be flooded out of their homes.
"We're suggesting 1.6 percent of (global) GDP - still very affordable," Kjorven said. "The countries of the world that are the principal culprits, if you wish, for creating this problem in the first place need to act strongly to safeguard the future of those that have done nothing to cause this problem but are the most vulnerable."
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