Severe impact

One of the most vulnerable regions to climate change is South Asia. Low-lying Bangladesh is at the front line of at-risk countries from climate change and could suffer annual losses of up to 9.4 percent of its economy by the end of this century, according to a new Asian Development Bank (ADB) climate and economics report for the region released on August 19.

The paper, titled Assessing the Costs of Climate Change and Adaptation in South Asia, forecasts that six countries - Bangladesh, Bhutan, India, the Maldives, Nepal, and Sri Lanka - will see an average economic loss of around 1.8 percent of their collective annual gross domestic product (GDP) by 2050, rising sharply to 8.8 percent by 2100 if the world continues on its current fossil fuel-intensive path.

But Mahfuz Ahmed, the ADB's Principal Climate Change Specialist and co-author of the report, says in a DW interview that if climate change slows in line with the two degree temperature rise under the Copenhagen-Cancun agreement, then these countries will only lose 1.3 percent of their economies by 2050 and 2.5 percent by 2100.

DW: What are the main findings of the report?

Mahfuz Ahmed: The report assesses the impact of climate change on the economies of South Asia, making it very clear that unless the region works to adapt to climate change, then economies will suffer. That means flood- and-drought-resistant crops, climate-proofed infrastructure, better water and energy use, and other adaptation measures are critical to protect South Asia from the ravages of climate change.

Moreover, since climate change doesn't respect borders, countries must work together to share resources and knowledge to better withstand the impact of climate change.

How will climate change affect the economies in the region?

If the world continues on its current fossil-fuel intensive path with no efforts to mitigate climate change, then we forecast South Asia – meaning the economies of Bangladesh, Bhutan, India, the Maldives, Nepal, and Sri Lanka – will lose up to 1.8 percent of its collective economy every year by 2050 and up to 8.8 percent every year until 2100. There is a slight chance that the cost could be up to 24 percent per year by the end of this century.

On the other hand, if climate change slows in line with the two degree temperature rise under the Copenhagen-Cancun agreement, then these countries will only lose 1.3 percent of their economies by 2050 and 2.5 percent by 2100. That is still a lot, of course and the region must start working now on adaptation technologies and activities.

Which countries in the region are set to be the worst affected and why?

The Maldives would be the worst affected, and could be losing 12.6 percent of its economy annually by 2100. Average annual economic losses could amount to up to 9.4 percent in Bangladesh by 2100.

Both of these countries are low-lying and are therefore highly exposed to rising sea levels and uneven precipitation which will take a heavy toll on coastlines and the industries, like fishery or coastal farming that depend on the coasts or are located there like ports. The losses in Nepal could rise to 9.9 percent - largely because of melting glaciers – while they could total 8.7 percent in India, 6.6 percent in Bhutan, and 6.5 percent in Sri Lanka.

Losses in South Asia could be higher than in the world at large and more than most other regions in Asia. If nothing is done to slow or reverse climate change, the global economy could lose 2.6 percent per year by 2100. The East Asian economy would lose 5.3 percent; the Southeast Asian economy would lose 6.7 percent, and the Pacific 12.7 percent.

If you take Bangladesh as an example, how exactly would climate change affect the economy?

Agriculture is very vulnerable, which is worrisome because agriculture contributes 20 percent of Bangladesh's gross domestic product and employs 48 percent of the labor force. Droughts and floods have both been huge problems - a 1998 flood killed 1,100 people, flooded nearly 100,000 square km, and rendered 30 million people homeless.

Under the business-as-usual scenario, paddy production would fall by up to 1.6% annually by 2050 and 5.05 percent by 2100. A four- degrees-Centigrade rise in temperatures could cause a drop in crop yields of 28 percent for rice and 68 percent for wheat.

Climate change can affect energy generation too – especially hydropower and thermal - and demand. Cyclones and floods damage infrastructure. The coastal fisheries, forests, salt, minerals, export processing, harbors and airports on the coastal zones are also at risk. But climate change will increase the costs of production such as water, electricity and land for all domestic goods or exports like garments, so no industry or sector is immune.

But one also has to remember the impact on people. Livelihoods will become more precarious especially in coastal areas and industries like farming. Water, energy, and food supplies will become more uncertain – and possibly more costly. Changing weather patterns may bring health impacts. Deaths from dengue and malaria and other water-borne diseases are likely to rise particularly during the monsoon months and extreme weather force migration as people move to safer, more secure areas of their country.

To what extent should these economies diversify to better adapt to climate change, and how?

Economic diversification is not the key response needed. What is needed is for all sectors of the economy to be prepared to withstand climate change. In agriculture, for example, new technologies such as rice cultivation systems with more efficient water and nutrient use should be promoted. Altering planting times, using resistant varieties, and diversifying crops can help.

But it isn't only industries themselves, countries need to look at better management of resources and services. Better coastal zone management, efforts to protect riverbanks from erosion and building climate-proofed roads, bridges and other infrastructure is needed. In the water sector, groundwater should be protected. Better water management and use of recycled water can also help. And in health, better living conditions, better emergency responses, and better surveillance and monitoring of diseases is key.

What else can South Asia do to mitigate the impact of climate change?

Different countries have different levels of emissions in South Asia. Bangladesh's, for example, are very low on a per capita basis and on an overall basis. The same is true of Bhutan and Nepal. Other countries, such as India, have higher and fast-rising greenhouse gas emissions. As such, efforts at mitigation are different in different countries.

To really tackle climate change therefore, action is needed on a global level and the global community should continue to work towards agreeing and implementing measures to keep emissions from pushing the temperature rise above 2 degrees.

That said, emissions in all countries in South Asia are set to rise as they become wealthier and so all countries should be thinking about clean energy, energy efficiency, protection of carbon sinks, clean transport and other measures that keep emissions low, especially when these can be achieved with little or no additional costs.

How high will the costs of implementing these measures to shield the region against climate change?

If there is no change to current behavior, South Asia will need to spend at least 73 billion USD or an average of 0.86 percent of its GDP every year between now and 2100 to adapt to the negative impacts but if the Copenhagen-Cancun agreement is realized, the cost would be a much smaller, but not negligible, 40.6 billion USD per year. In Bangladesh, the annual adaptation cost in the energy sector alone could be 89.3 USD million in the 2030s and soar to 363.4 million USD in the 2050s.

Financing for this should come from a variety of sources – government, private sector, national and international, or a combination of those. ADB has been part of efforts to do that. From 2011 to 2013, ADB's approved climate financing averaged 3.2 billion USD a year with about 75 percent for climate change mitigation and 25 percent to adaptation. Our annual clean energy investment has been just over two billion USD, of which 38 percent supported private sector projects.

Dr. Mahfuz Uddin Ahmed is the Principal Climate Change Specialist at the Asian Development Bank.