Factoring climate change in economic planning

Asjadul Kibria | Published: August 31, 2024 20:04:52

"Despite some uncertainty around its magnitude, climate change clearly dampens output levels in Asia and the Pacific through channels such as loss of physical capital, people's health conditions and productivity."
The Asia-Pacific Quarterly Economic Update, prepared and published by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), made the statement in the highlights of the publication released in the third week of last month. As the report provided a brief note on climate change and economic output, the above-mentioned text summarises the note.
The ESCAP paper mentioned that Asia and the Pacific are facing various manifestations of climate change, such as higher surface temperatures, delayed monsoons, droughts, and intense flooding. The current devastating flood in Bangladesh is an example in this connection. It also added that climate change affects economic outcomes through diverse channels in this region, which is the most disaster-prone region in the world.
The natural disasters have affected millions of people's physical capital or health conditions in the region. For instance, increased water scarcity and heat reduce agricultural productivity and aggravate food insecurity. Heat also reduces labour productivity and increases the spread of diseases such as dengue. The broader effect of climate change is reflected in climate-induced migration and conflict disrupting economic activities in different countries. Various climate mitigation and adaptation policies also have economic implications, it further pointed out. So, what is the economic cost of climate change in the region?
ESCAP paper provided the cost estimate in various scenarios. For example, the average annual losses in gross domestic product (GDP) due to climate hazards could amount to $980 billion per year in a 2°C warming scenario in Asia and the Pacific. Also, under a high carbon emissions scenario, climate change could lead to a GDP loss of 24 per cent in developing Asia by 2100.
Though the estimates do not claim that these will happen ultimately, there is no doubt that there is no way to avoid the negative impact of climate change. "There is broad agreement that the output impact is negative, that there is a high chance of negative surprises (e.g. more extreme weather events than anticipated), and that poorer countries are more vulnerable to the adverse impacts of climate change," said the quarterly report of the ESCAP. It also cautioned that the lack of consensus on the precise output impacts of climate change 'should not deter governments from actively pursuing national climate goals.'
The ESCAP's brief note on climate change and economic output is relevant for Bangladesh when the eastern part of the country is submerged heavily due to flash floods. Many in the country squarely blamed India for releasing water from the Dumbur dam over Gumti River in neighbouring Tripura state with no warning. India, however, denied that the dam release was deliberate and said excessive rain was a factor - although it conceded that a power outage and communications breakdown meant they failed to issue the usual warning to neighbours downstream. Though India can't avoid its responsibility for not providing warnings in time, the weak forecast system in the local Met Offices is also somewhat responsible.
One also needs to remember that three-fourths of Bangladesh is floodplain, and managing the water flow of any transboundary river is challenging. It is true that Bangladesh and India share 54 common transboundary rivers, but Bangladesh is in a more difficult position for being a lower riparian country. India is an upper riparian country that essentially controls the river flows and is not always cooperative in sharing the water. The joint-river commission is also not adequately functional, and India's indifference to Bangladesh's legitimate demand for balanced management of these rivers is well known. It does not mean that India is responsible for the current flood or any other flood, for that matter, in Bangladesh. The misinformation and disinformation on the social media alleging an 'Indian conspiracy' to 'punish Bangladesh' by opening a dam are nothing but irresponsible comments and not helpful in addressing the problem.
In fact, flood management requires both domestic capacity and international cooperation. Bangladesh and India need to work mutually, especially when the negative impact of climate change is widening. Both countries need to continue their efforts in data collection and data sharing on a regular basis. Otherwise, it will be difficult to manage floods and contain losses and damage.
The current flood in Bangladesh is a big blow to the already troubled economy mismanaged by the authoritarian Hasina regime during the last one and a half decades. Preliminary estimation showed that the country's fisheries and livestock sectors incurred an estimated loss of over Tk 20 billion due to current floods. The actual loss will be greater, and the overall economic damage is yet to be estimated. The 2022 floods in Pakistan caused damage equivalent to 4.8 per cent of the country's gross domestic product (GDP) as it was one of the most devastating ones in the world that year. Hopefully, Bangladesh will not suffer to that extent, and the damage will be much less compared to Pakistan.
Economic output is widely linked with climate change today, and there is no way to avoid the impact of natural disasters originating from climate vulnerability on the economy. One way to reduce the negative impact is to shield vulnerable people with climate risk insurance to some extent. Another way is to manage natural disasters like floods and cyclones better. Above all, the current flood reminds us that Bangladesh must redesign its climate policy and realign its economic policy.
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