Climate Change Could Depress Living Standards in India, says New World Bank Report

The report provides long-term forecasts at the district level across India

NEW DELHI, June 28, 2018 – Rising temperatures and changing monsoon rainfall patterns from climate change could cost India 2.8 percent of GDP and depress the living standards of nearly half the country’s population by 2050, a World Bank report says.

According to “South Asia’s Hotspots: The Impact of Temperature and Precipitation Changes on Living Standards”, almost half of South Asia’s population, including India, now lives in the vulnerable areas and will suffer from declining living standards that could be attributed to falling agricultural yields, lower labor productivity or related health impacts. Some of these areas are already less developed, suffer from poor connectivity and are water stressed.

India’s average annual temperatures are expected to rise by 1.00°C to 2°C by 2050 even if preventive measures are taken along the lines of those recommended by the Paris climate change agreement of 2015. If no measures are taken average temperatures in India are predicted to increase by 1.5°C to 3°C.

The work scientifically identifies vulnerable states and districts as “hotspots” using spatial granular climate and household data analysis. The report defines hotspot as a location where changes in average temperature and precipitation will have a negative effect on living standards. These hotspots are not only necessarily higher temperature zones than the surrounding areas, but also reflect the local population’s socio-economic capacity to cope with the climatic changes.

In India today, approximately 600 million people live in locations that could either become moderate or severe hotspots by 2050 under a business-as-usual scenario, the report says. States in the central, northern and north-western parts of India emerge as most vulnerable to changes in average temperature and precipitation.

According to the report’s analysis, by 2050 Chhattisgarh and Madhya Pradesh are predicted to be the top two climate hotspot states and are likely to experience a decline of more than 9 percent in their living standards, followed by Rajasthan, Uttar Pradesh, and Maharashtra. Seven out of the top 10 most-affected hotspot districts will belong to the Vidarbha region of Maharashtra.

“These weather changes will result in lower per capita consumption levels that could further increase poverty and inequality in one of the poorest regions of the world, South Asia,” says report author Muthukumara Mani, a Lead Economist in the South Asia Region of the World Bank. “Identifying hotspots will help policymakers in finding specific locations and household types where the resources are needed the most to address the rising risk to living standards.”

The report provides options to prioritize investments and strategies to build local resilience to climate change. To offset the negative economic impact in India, for example, the analysis suggests enhancing educational attainment, reducing water stress, and improving job opportunities in the nonagricultural sectors. The analysis predicts that a 30 percent improvement on these measures could halt the decline in living standards by almost 1 percent from -2.8 percent to -1.9 percent.

Muthukumara Mani adds: “Development is indeed the best adaptation strategy, since it is associated with improved infrastructure, market-oriented reforms, enhanced human capabilities, and a stronger institutional capacity to respond to the increasing threat of climate change and natural disasters.”