Sailab

IS THE CLIMATE CHANGE MITIGATION POLICIES AND REFORMS AFFECTING THE INDIAN ECONOMY?

Climate change has been provoked as a ‘wicked’ problem–it has no precise definition, is riven with scientific uncertainty, and proposed solutions are complicated by their influences on social, political, and economic systems. The long-term economics of mitigating climate change has played a high-profile role in the most important analyses of climate change in the last decade. Economic risks feature in the 5-10 years horizon, environmental risks such as biodiversity loss, natural resource crises and climate action failure dominate; besides weapons of mass destruction, adverse effects of technology and collapse of states or multilateral institutions. Climate change, to which no one is immune, continues to be a catastrophic risk. Although lockdowns worldwide caused global emissions to fall in the first half of 2020, evidence from the 2008–2009 Financial Crisis warns that emissions could bounce back. A shift towards greener economies can’t be delayed until the shocks of the pandemic subside. Climate change mitigation failure is the most impactful and most likely long-term risk identified in the Indian Economy. (Rosen, R. A., & Guenther, E. (2015))

The Swiss Re Institute warns, in a more extreme scenario, unmitigated climate change could wipe off up to 18% of GDP off the worldwide economy by 2050, if global temperatures rise by 3.2°C on average. Today, the generally accepted temperature target, to which most governments agree, would limit the increase in temperature due to greenhouse gas emissions derived from human-related activities to 2 °C, relative to pre-industrial times, by 2100. But, with the passing of time, if no efforts to cut GHG emissions are made, global temperatures will rise by more than 4°C by 2100. ( Swiss Re Institute: The economics of climate change: no action not an option April 2021)The estimated and actual temperature-rise scenario by mid-century, shows a loss of global economic output relative to a world without climate change. The associated and baseline temperature-rise scenario by mid-century (2°C to 2.6°C and x10 multiplicative for (un)known unknowns), shows a loss of global economic output relative to a world without climate change of 11% and 14%, respectively. The regional discrepancies are large, and a clear north-south divide emerges. However, no country is immune to climate change. In a more extreme scenario, one of unmitigated climate change and above-average 3.2°C warming, losses could amount up to 18% by mid-century.

(Source: Swiss Re Institute: The economics of climate change: no action not an option, April 2021)

Climatic trends in India are intersecting with economic trends in such ways that often multiply the risk and vulnerability on its development path. India is already experiencing climatic change consequences. As we can see, over the last three decades, India has made rapid progress in boosting incomes and living standards. Before the pandemic struck, the median annual income in India was $2,100 (World Bank, 2021). This is almost a sixfold increase since 1990, yet most Indians still live close to the poverty line. Climate change is already slowing the pace of poverty reduction and increasing inequality in India. According to a report released by the London-based global think tank Overseas Development Institute, India may lose around 3 to 10 % of its GDP annually by 2100 and its poverty rate may rise by 3.5 per cent in 2040 due to climate change. (Roy, R. (2021) The costs of climate change in India: a review of the climate-related risks facing India, and their economic and social costs). The total cost of heatwaves, extreme flooding, water scarcity, cyclones, sea-level rise and other climate-related hazards will be determined by the direction and level of economic development. India has to go mile-stone in the right way with proper strategies that ultimately deliver values to people, environment, economy and finally put lights on its development.

So,

1. Should the climate change mitigation policies be based on the net economic impact estimation or should they be forcefully implemented?

2. Is there a role of technological changes in mitigating climate change in the Indian Economy?

3. Is the economy a limiting factor for mitigation of climate change or it helps for better technological advancement?

4. Is it even possible to predict or forecast the economy of climate change mitigation?

5. Is the economic forecast for cost estimation of mitigating climatic change even a reality? Is it being done while policy making? If yes, then what parameters do we consider for it?