ADB: Climate Change Threatens South Asia’s Economy

The adverse effects of climate change threaten to cut up to 9% off the South Asian economy every year by 2100 if the world continues on its current “fossil-fuel intensive path”, the Asian Development Bank (ADB) has warned.

In its report entitled
‘Assessing the Costs of Climate Change and Adaptation in South Asia’
, the Manila-based lender said its forecast assumes a 4.6 degree Celsius rise in global temperatures. However, the ADB says that the uncertainties of climate change mean there is a ‘slight chance’ that annual losses will rise to as high as 24% by the end of this century.

“South Asia’s economy is under serious threat and the lives and livelihoods of millions of South Asians inhabiting the region’s many mountains, deltas, and atolls are on a knife edge,” said ADB vice- president Bindu Lohani.

The report suggests that the Maldives and Nepal are the most vulnerable to climate change, potentially losing up to 12.6% and 9.9% of their economies respectively, every year, by 2100. Bangladesh would lose 9.4%, India 8.7%, Bhutan 6.6% and Sri Lanka 6.5%.

However, ADB stresses that almost every area of South Asia will suffer adverse effects from the rise in temperature unless the global community actively addresses the problem. As an example, annual rice production will drop by as much as 23% in Bangladesh, India, and Sri Lanka by 2080.

A one metre rise in sea levels would be enough to affect 95m people and this figure would more than double in the event of storm surges. Changes in rainfall pattern will make it harder to meet energy and water needs in the region and bring increased cases of dengue fever and diarrhoea.

ADB said a concerted action to reduce dependence on fossil fuel and slow the rise in global temperatures would reduce the projected financial and human toll of climate change on South Asian nations.

The cost of climate change adaptation in South Asia will depend largely on how the global community tackles the issue. “If the world continues on its current path, South Asia will need to spend at least US$73bn, or an average of 0.86% of its gross domestic product [GDP], every year between now and 2100 on adaptation measures,” state the report’s authors.

However, they suggest that if the rise in global temperatures is kept below 2 degrees Celsius under the so-called Copenhagen-Cancun agreement, then South Asia’s economy would only be reduced by 1.3% annually by 2050 and 2.5% by 2100. The cost of shielding the region from the worst of the impacts would be nearly halved to around US$40.6bn, or 0.48% of GDP.


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