Further, over 40% have experienced climatic disruptions such as a shift from being flood-prone to being drought-prone, or vice-versa. 2021 calls for climate action and as India unlocks, now more than ever, it needs a reality check on the costs of its climate inaction. The clock is ticking – and fast.
CEEW estimates that the direct costs of India’s lack of disaster preparedness in the last two decades amounted to Rs 13.14 lakh crore ($179.5 billion). Extreme climate events in particular have cost India over $99 billion in the last 50 years. A customer data platform (CDP) analysis suggests that such events will likely cost India Inc. Rs7 lakh crore ($100 billion) and Indian banks over Rs 6 lakh crore ($84 billion) in the next five years.
International Labour Organisation (ILO) projects that inaction in the face of slow-onset events like heat waves will cost India 34 million jobs by 2030. According to a recent University of Chicago study, it could also cause annual industrial revenue losses of 2%.
The impact of climate change is not limited to extreme events. Multiple studies suggest that it will likely reduce the GDP contribution of agriculture – the biggest provider of livelihoods in India – by 1.5% by 2030. It could reduce yields of staple crops like rice and wheat by 6-10%. It is also expected to cause more than 45 million people in India to migrate by 2050. In the near term, failing to prepare for climate impacts will hinder India’s socio-economic recovery from the pandemic and put our most vulnerable citizens at risk.
But timely and calibrated action could both reduce systemic risks and generate revenue benefits. Studies suggest that investments in disaster-resilient infrastructure (DRI) could fetch benefits worth $4.2 trillion in vulnerable countries. Each dollar invested will offer benefits worth $4, while the cost of inaction could be in the range of $1 trillion between 2020-2030. CEEW analysis indicates that implementing robust risk mitigation mechanisms and investing in better disaster preparedness alone could have saved India over Rs6.76 trillion ($89.7 billion) in the past two decades.
India needs a proactive climate risk mitigation strategy with a broad focus on building back quicker and better. First, there should be a comprehensive evaluation of the country’s exposure to climate impacts like infrastructure damage, financial losses, lost livelihoods, migration, and health impacts.
A high-resolution Climate Risk Atlas will help India map critical vulnerabilities at the district level. Its many applications would include support for improved coastal monitoring and forecasting, which are indispensable given the rapid intensification of cyclones and other extreme events.
India should make it mandatory for companies to report climate-related financial risks to lenders, insurers, and regulatory authorities. Doing so will help them make risk-informed business decisions and develop extreme event-ready value chains, leading to increased sectoral resilience.
Third, we should climate-proof critical infrastructures using system innovation and new technologies. We also need new national- and state-level economic and infrastructure policies to help build and maintain resilient systems, reduce and manage risks, and improve our capacity to predict and respond to adverse climate events.
Finally, as the world enters the UN Decade of Ecosystem Restoration, India should recognise its natural ecosystems as critical infrastructure — on par with climate-proof roads, bridges and power grids. Ecosystems such as mangroves, wetlands, forests, and coral reefs act as natural shock absorbers that cushion the impacts of extreme climate events and promote community resilience. Their restoration is a national imperative needing political, financial, and technological support.
If fighting climate change seems like an uphill task today, the slope is only getting steeper. We only have a decade to make things right. Time is running out.
(Mohanty is programme lead, Council on Energy, Environment and Water (CEEW). Ganesh Radha-Udayakumar contributed to this article.)