Physical Address
23,24,25 & 26, 2nd Floor, Software Technology Park India, Opp: Garware Stadium,MIDC, Chikalthana, Aurangabad, Maharashtra – 431001 India
Climate change is not just an environmental challenge but a pressing economic threat, especially for the Asia-Pacific region. The Asian Development Bank (ADB)’s recent Asia-Pacific Climate Report 2024 highlights the urgency: climate change could erode the region’s economic foundation without substantial emissions reductions and resilience-building measures. The report projects that the Asia-Pacific region could see a GDP contraction of up to 41% by 2100, driven by escalating heat, flooding, and coastal erosion. For instance, in nations like India, the consequences are particularly severe, with the agricultural sector facing significant losses due to changing weather patterns, highlighting the need for immediate action and long-term strategies to protect economic stability and public welfare.
Economic Risks of Climate Change in Asia-Pacific
The ADB report paints a stark picture of climate-related economic risks, estimating that 2070 climate change could reduce GDP across developing Asia by 17%, which could rise to 41% by 2100 if high emissions persist. These losses will disproportionately impact lower-income countries and regions highly dependent on agriculture and sensitive to temperature changes and precipitation patterns. As rising temperatures strain labour productivity and increase energy demands, countries such as Indonesia, Thailand, and the Philippines face potential economic contractions that could reverse decades of progress in poverty reduction and industrial growth.
In addition to productivity challenges, the report highlights the devastating effects of intensified natural disasters. With more frequent heatwaves, storms, and floods, the financial toll on infrastructure and housing is expected to surge. According to ADB, an estimated $102–431 billion annually is required to fortify infrastructure and develop climate-resilient cities across Asia-Pacific, far beyond the current adaptation financing available, which was only $34 billion in 2021-2022. This financing gap underscores the urgency of mobilising public and private investment to safeguard the region’s economic future and maintain a viable growth trajectory.
India’s Projected GDP Loss by 2070
With its vast and diverse landscape, India faces unique climate challenges that could dramatically impact its economic future. By 2070, ADB projects that India could lose nearly 24.7% of its GDP due to the effects of climate change, with particularly severe impacts expected in labour-intensive sectors like agriculture and manufacturing. The report identifies several vital vulnerabilities: falling labour productivity due to extreme heat, rising demand for cooling, and increased flood risk. If emissions remain high, these factors could cost India over $1.2 trillion annually.
The risks extend beyond economic losses, threatening livelihoods and public health. For instance, the agricultural sector, employing nearly half of India’s workforce, is highly susceptible to changing weather patterns. Irregular rainfall and prolonged droughts could destabilise food security, impacting rural communities and the broader economy. Additionally, major urban centres like Mumbai and Chennai face the growing threat of coastal flooding, putting millions of residents and critical infrastructure at risk. ADB’s report notes that labour productivity losses alone could shrink India’s GDP by 11.6%, underscoring the pressing need for adaptive policies
In response, India has committed to achieving net-zero emissions by 2070, an ambitious target that aligns with broader international climate goals. Net-zero emissions mean that the amount of greenhouse gases emitted into the atmosphere is balanced by the amount removed, effectively reducing the overall emissions. However, the scale of the challenge necessitates substantial support, especially in terms of financing and access to green technologies. Experts argue that without international aid and strategic investment, India’s development gains could be severely jeopardised by climate-induced disruptions, potentially pushing millions back into poverty and exacerbating economic inequality across regions.
Floods and Rising Sea Levels Threaten Millions
Rising sea levels and extreme weather events pose a particularly acute risk to Asia-Pacific’s densely populated coastal areas. According to the ADB report, up to 300 million people could be displaced by coastal inundation by 2070, with nations like Bangladesh, Vietnam, and India most affected. The impact on coastal cities like Mumbai could be especially dire in India, with potential asset losses reaching hundreds of billions of dollars if resilience measures are not implemented.
The escalating frequency of tropical storms further intensifies the risk of displacement and economic loss. These storms, amplified by climate change, bring heavy rainfall and subsequent flooding that devastate communities and disrupt critical infrastructure. The report predicts that river flooding alone could incur annual losses of approximately $1.3 trillion by 2070 across Asia-Pacific, affecting over 110 million people. For India, residential damages are estimated to surpass $400 billion annually, while commercial sector losses could exceed $700 billion.
Such extreme climate events threaten immediate physical and economic safety and cascade health and social stability effects. Flooding can spread waterborne diseases, exacerbate food and water scarcity, and create conditions that force large-scale migrations. Addressing these risks requires proactive investment in flood defences and resilient urban planning, which could provide long-term safeguards for vulnerable communities and infrastructure.
Financing Climate Adaptation and Resilience
Securing adequate financing for climate adaptation remains a critical challenge across Asia-Pacific. ADB estimates that the region needs between $102 billion and $431 billion annually for effective climate adaptation, a far cry from the current levels of adaptation finance. This financial gap threatens to widen significantly as climate impacts accelerate, making it increasingly difficult for countries to implement necessary resilience measures.
One promising avenue for mobilising resources is through private sector investment, which can supplement public funds and foster innovative solutions for climate resilience. However, the report notes that regional policies and regulatory frameworks must evolve to encourage more private investment. Governmental reforms that emphasise climate risk management and integrate adaptation strategies into national planning can attract private climate capital, creating a more robust funding environment for resilience projects. ADB’s report suggests that collaborative action, both regionally and globally, is vital to addressing the financial and technical challenges posed by climate change.
The ADB’s Asia-Pacific Climate Report 2024 findings provide a stark reminder of the economic and humanitarian stakes in the fight against climate change. For Asia-Pacific, the challenges are immense, but so too are the opportunities for transformative action. The region can take meaningful steps toward a sustainable future by mobilising adequate financing, prioritising resilient infrastructure, and fostering international cooperation. For countries like India, which face some of the highest projected losses, these efforts are beneficial and essential for protecting economic stability and public welfare.
References:
https://www.adb.org/climate-report/editions/2024
https://www.adb.org/sites/default/files/publication/1008086/asia-pacific-climate-report-2024.pdf
https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1961797
https://www.weforum.org/stories/2024/08/india-economy-natural-climate-solutions
https://www.adb.org/news/events/asia-pacific-climate-report-2024-launch-live-webinar
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