IE: What are the key climate trends observed in India over the past few years? How has it impacted the Indian economy?
VV: Given India’s diverse agroclimatic zones and multiple externalities that influence climate change impacts, it has witnessed extreme events such as floods, droughts, cyclones, hailstorms, extreme heat waves, etc. In many cases, the same district or city has witnessed both, extreme heatwaves, droughts and floods during the same year as well. The frequency and magnitude of such events have only increased in the last decade. Future climate projections indicate that precipitation levels and temperature are expected to increase over most parts of India. While maximum warming across all four seasons is estimated to increase by 4-5 degrees over the end of the century and precipitation is to experience a maximum increase by about 2 mm a day across all seasons.
IE: Climate scenarios are expected to become more unpredictable. What measures must be taken to tackle it?
VV: It is imperative to understand that resilience building is like targeting a moving goalpost and changes from time to time. It requires a multi-pronged approach which is temporal and dynamic. Firstly, looking at resilience building to short-term climate variations and extreme events. Secondly, exploring the long-term adaptation solutions that provide both low and no-regret investments. Additionally, short-term resilience building and preparedness need to be dynamic enough to handle uncertainties in climate stresses.
IE: What is climate change’s consequence on India’s GDP growth, employment rates and poverty levels?
VV: The Reserve Bank of India (RBI) in its report on currency and finance, 2022-23 pegged the loss of India’s GDP to due loss of labour hours owing to extreme temperatures and humidity to 4.5 per cent by 2030. The same report also suggests that approximately 2.8 per cent of its GDP could be lost by 2050 and anywhere up to 10 per cent of GDP annually could be lost by 2100 due to temperature changes and extreme climate hazards like floods, cyclones, etc. Additionally, it can also suppress the standard of living of almost 50 per cent of the Indian population. It is also noteworthy that several jobs could become infeasible and non-viable due to climate impacts.
IE: Which sectors are most vulnerable?
VV: According to the World Risk Index 2023, India stood third of 193 countries with the highest disaster risk worldwide. This index is based on interactions between exposure and vulnerability. Climate change will most certainly impact all prominent sectors in the country and the supply chain in each of them. Key impacts could be felt on agriculture as marginal and small farmers could be extremely vulnerable to both extreme events and climate variabilities. They could shift to single crops rather than multiple ones. This could lead to natural food inflation and increase the burden of subsidies on the government. This would also affect agriculture-based MSMEs that employ a large population across the country. Labour productivity could decrease due to extreme temperatures and affect industrial growth as well. Similarly, power plants and steel industries which are intensive on water usage could be heavily affected thereby having indirect employment and power supply-related fluctuations. This goes to highlight just a minuscule proportion of climate impacts on the economy and its fiscal health.
IE: What additional measures should be taken at the national, regional and local levels to enhance resilience and adaptation?
VV: The centre and state governments have identified critical strategies that could help in both resilience building as well as long-term adaptation for the country. Locally led adaptation is the best form of developing strategies as it integrates micro-level vulnerabilities, capacities, inclusivity, technology, finances, ensures local ownership, etc., and thereafter suggests solutions that are plausible and of greatest benefit to the communities. Centrally sponsored schemes such as the National Mission on Sustainable Agriculture (NMSA) focus on climate-resilient agriculture and supply chain mechanisms. Similarly, bilateral projects have piloted mechanisms to develop substantial climate-resilient rural infrastructure through schemes such as Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). Similarly, traditional schemes such as the crop advisories that are provided to farmers by the Indian Meteorological Department (IMD) are typical examples of integrating weather and climate information in local-level decision-making on crop and agricultural practices.
IE: In your opinion, what additional measures should be taken at the national, regional and local levels to enhance resilience and adaptation?
VV: The centre needs to frame its National Adaptation Plan (NAP) to provide a larger mandate or policy guidance to what India’s adaptation agenda could be. Secondly, given adaptation is best when localised, district and block-level administrations need to focus on adaptation and resilience-building solutions and bucket them into short, medium and long-term periods. It is also imperative that all levels of the government recognise existing adaptation co-benefits delivered implicitly by traditional development schemes and only target additional or incremental action.
IE: What policy changes or institutional reforms are necessary to better integrate climate considerations into economic planning and decision-making processes?
VV: Formal periodic documentation of climate impacts on the fiscal health of the economy and at a regional level is crucial. A country-level legislation on climate investments is required to accelerate climate action by both government and private investors. Even though the National Mission on Strategic Knowledge of Climate Change (NMSKCC) has created dedicated climate change cells within the state governments, they have inadequate capacity and awareness about how to accelerate adaptation actions within the state. Hence, greater dedicated technical manpower is required at state and district levels to ensure that someone steers this action at every level of administration.
IE: Some best practices from across the world that India could adopt?
VV: The Government of Fiji mandated climate action within the country by enacting a Climate Change Act in 2021 which provided a blueprint of how the country would tackle climate change through its action and investments. Similarly, Thailand introduced its Climate Change Act in 2022. India could potentially explore this in the coming years, step by step, to enhance both public and private investments in climate adaptation. Given developing countries cannot expect finance for adaptation from external or climate funds, at the scale they require, exploring internal and market-based sources would be prudent.
The Tamil Nadu government has taken pioneering efforts in climate action by establishing the first Section 8, not-for-profit company called the Tamil Nadu Green Climate Company (TNGCC) to accelerate climate investments within the state. This company also has the mandate to engage and build capacities internally within line departments and externally with the private sector to help scale up climate actions. The state has also announced district climate missions and climate officers who will be responsible for anchoring and spearheading climate actions at the local level under the aegis of the district collector.
IE: Based on your expertise, what recommendations would you make to policymakers, businesses, and civil society organisations to effectively address the economic impacts of climate change?
VV: Policymakers:
- Create legislation that could mandate investments in climate adaptation across the country by different stakeholders (specifically the private sector).
- Include climate budgeting as part of the annual budget planning and develop tagging of climate co-benefits already being delivered by traditional development schemes.
- Empower city and local administrations to explore market-based mechanisms (such as bonds) to fund adaptation and resilience building.
Businesses:
- Invest in resilience building for labour and infrastructure as climate impacts will also heavily hamper production and supply chain processes and their profits.
Civil Society Organisations:
- Develop viable models and business cases for the private sector to invest.
- Help the government build capacities by prioritising climate adaptation actions and building local capacities through dedicated training.
- Help co-develop economically beneficial investment models that highlight low-regret and no-regret adaptation solutions that will deliver social welfare under different scenarios of climate uncertainties.
