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India may lose 3-10% GDP annually by 2100 due to climate change, says report

The report, titled ‘The Costs of Climate Change in India’, looks at economic costs of climate-related risks in the country and points to the possibility of increased inequality and poverty.

Written by Esha Roy | New Delhi |
Updated: June 9, 2021 8:07:12 am
India is already experiencing the consequences of 1°C of global warming, it said.

India may lose anywhere around 3 to 10 per cent of its GDP annually by 2100 and its poverty rate may rise by 3.5 per cent in 2040 due to climate change, according to a report released by the London-based global think tank Overseas Development Institute on Tuesday.

The report, titled ‘The Costs of Climate Change in India’, looks at economic costs of climate-related risks in the country and points to the possibility of increased inequality and poverty.

India is already experiencing the consequences of 1°C of global warming, it said. Extreme heatwaves, heavy rainfall, severe flooding, catastrophic storms and rising sea levels are damaging lives, livelihoods and assets across the country, says the report.

Observing that India has made rapid progress in boosting incomes and living standards over the last three decades, but without rapid global action, climate change may reverse development gains of recent decades, it states.

“Climate change is already slowing the pace of poverty reduction and increasing inequality in India. The districts that have warmed the fastest have seen gross domestic product grow on average 56 per cent less than those that have warmed the slowest. Without rapid global action to reduce greenhouse gas emissions, rising average temperatures may actually reverse the development gains of recent decades,” it states.

The report finds that even if the temperatures are contained to two degrees Celsius, India will lose 2.6 percent GDP annually, and in case the global temperatures were to increase to 3 degrees Celsius, this loss will magnify to 13.4 per cent annually.

“These results are narrowly based on projections of temperature and precipitation changes, and the effect on labour productivity in different sectors. Climate change may also affect labour productivity through additional channels, for instance by increased incidence of endemic vector-borne diseases such as malaria, dengue, chikungunya, filariasis, Japanese encephalitis and visceral leishmaniasis.”

An analysis of the Ganges-Brahmaputra-Meghna and Mahanadi deltas (over 60 per cent of cropland and pastureland in these regions is devoted to satisfying demand from elsewhere) shows the climate induced disappearance of this activity will lead to an economic loss of 18–32 per cent of GDP.

It further points to the possibility of rising inequalities. “Income and wealth levels, gender relations and caste dynamics will likely intersect with climate change to perpetuate and exacerbate inequalities.”

For instance, the combination of rising cereal prices, declining wages in the agricultural sector and the slower rate of economic growth attributable to climate change “could increase India’s national poverty rate by 3.5 per cent in 2040 compared to a zero-warming scenario”. This equates to around 50 million more poor people than there otherwise would have been in that year, and while both urban and rural populations will face the brunt of rising cereal prices, it will be the rural population that will be impacted harder.

Pointing out that pursuing low-carbon development could mitigate projected costs, and would also yield other economic advantages, Economist Rathin Roy, Managing Director (Research and Policy) at ODI, said, “Pursuing a cleaner, more resource-efficient path to development could stimulate a faster, fairer economic recovery for India and help secure India’s prosperity and competitiveness in the long term. Lower-carbon options are more efficient and less polluting, producing immediate benefits such as cleaner air, greater energy security and rapid job creation.”

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