CLIMATE CHANGE AND ITS COST - ENVIRONMENT
News: Adapting
to Climate Change to Cost India Rs.85.6 Lakh Crore By 2030
What's in the news?
● Recently,
the Reserve Bank of India's (RBI) Department of Economic and Policy Research
(DEPR) estimated in its Report on Currency & Finance 2022-23 (Towards a
Green and Cleaner India) that the cumulative total spending on climate change
adaptation in India is anticipated to reach Rs.85.6 lakh crore by 2030.
Key takeaways:
Findings of the report:
● To
achieve the net zero aim by 2070,
India will need to reduce its energy intensity of GDP by roughly 5% per year
and significantly increase its
energy-mix in favor of renewables to around 80% by 2070-71.
● To
address the infrastructure gap caused by climate events, India's green financing requirement is estimated to be at least 2.5% of
GDP annually until 2030, and the financial system may need to mobilize
adequate resources as well as reallocate current resources to effectively
contribute to the country's net-zero target.
● The
report covers four major dimensions of
climate change to assess future challenges to sustainable high growth in
India, viz.,
○ the
unprecedented scale and pace of climate change
○ its
macroeconomic effects
○ implications
for financial stability
○ policy
options to mitigate climate risks.
Other studies:
● According
to NITI Aayog in 2019, around 600
million of India’s population are facing severe
water stress, with 8 million children below 14 years in urban India at risk
due to poor water supply.
● The
World Bank in 2020 said that India
could account for 34 million of the projected 80 million global job losses from heat stress associated with productivity decline
by 2030.
● The
IPCC Working Group in 2022 stated
that India is one of the most vulnerable countries globally in terms of the
population that would be affected by the sea
level rise. By the middle of the present century, around 35 million people
in India could face annual coastal
flooding, with 45-50 million at risk by the end of the century.
Economic cost of climate change:
1. Difficult to estimate:
● As
it depends on a number of factors, including the severity of climate change,
the rate of climate change, and the ability of societies to adapt to climate
change.
2. Highest in developing countries:
● Study
by IPCC found that the economic cost of climate change would be highest in
developing countries.
● This
is because developing countries are less able to adapt to the effects of
climate change.
● The
economic cost of climate change would be highest in countries that are heavily
dependent on agriculture and tourism.
3. Supply and demand of economy:
● Climate
change can affect both the supply side (productive potential) and the demand
side of the economy.
4. Diverse topography:
● India
is vulnerable to climate change due to its diverse topography, which exposes different regions to varying
temperature and precipitation patterns.
5. Extreme weather events:
● Extreme
weather events such as floods, droughts,
and heat waves, are becoming more frequent and intense due to climate change.
● These
events are causing damage to property and infrastructure, and are also
disrupting economic activity.
6. Health problems:
● Health
issues such as heat-related illnesses,
respiratory problems, and waterborne diseases.
● These
health problems are costing India billions of dollars in healthcare costs.
7. Agriculture:
● Climate
change has a negative impact on agriculture. Rising temperatures and changes in rainfall patterns are making it
more difficult to grow crops.
● This
is leading to food shortages and higher food prices.
8. Tourism:
● Climate
change has a massive impact on the tourism industry.
● Rising sea levels
are threatening coastal resorts, and extreme weather events are making it more
difficult for people to travel, costing India billions of dollars in lost
tourism revenue.
Challenges ahead:
1. Green financing requirement:
● Estimations
imply that India's green funding demand might be at least 2.5% of GDP each year to cover the infrastructure deficit
induced by climate disasters.
● To
properly contribute to the country's net-zero aim, the financial system may
need to mobilize appropriate resources as well as reallocate present resources.
2. Vulnerability of Bank:
● The
findings of a climatic stress test show that public sector banks in India may
be more vulnerable than private sector banks.
WAY FORWARD:
● Promote
sustainable farming practices that
reduce greenhouse gas emissions.
● Implement
effective waste management strategies
such as recycling, composting, and reducing landfill waste.
● Enact
and enforce policies that support climate-friendly
practices.
● Invest
in research and development of clean
technologies and innovations that can help reduce emissions and mitigate
climate change.
● Collaborate
with other countries to address global climate challenges.
● Support
businesses that are working to reduce their environmental impact.