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Press Release: new ODI review assesses the costs of climate change in India including the current and projected economic toll

A new ODI study, The costs of climate change in India, reviews climate change related risks faced by India and their possible impact on GDP, calls for greater climate ambition in advance of the 2021 G7 Summit and COP26.

London, 07 June 2021 – The climate emergency will have a catastrophic human and economic impact in India. Different threats will interact to devastating effect, as exemplified by Cyclones Tauktae and Yaas landing during the second wave of the pandemic. A new review by the global think tank, ODI, The costs of climate change in India, lays out how rising temperatures will jeopardise India’s economic development through different channels, including falling agriculture productivity, impacts to public health, reduced labour productivity and sea level rise.

The study is a first-ever literature review on the economic costs of climate inaction in India. At 1°C of global warming, the country is already experiencing damages. Flooding in India over the last decade caused $3 billion in economic damage – accounting for 10% of global economic losses from flooding. The evidence clearly demonstrates that the human and economic costs of climate change will only increase in the coming years, particularly without urgent action to reduce greenhouse gas emissions. One study finds that India’s GDP in the year 2100 will be reduced by 90% if the world reaches 3°C of warming.

Angela Picciariello, Senior Research Officer at ODI said:

India is already feeling the costs of climate change, with many cities reporting temperatures above 48°C in 2020 and a billion people facing severe water scarcity for at least a month of the year. If action is not taken to cut emissions enough to limit the global temperature rise to 1.5°C, the human and economic toll will rise even higher.”

The total cost of heatwaves, flooding, water scarcity, cyclones, sea-level rise and other climate-related hazards will be determined by the direction and level of economic development; the choices made in spatial planning and infrastructure investment; and the way different hazards intersect.

Amir Bazaz, Senior Lead-Practice at the Indian Institute for Human Settlements, said:

As we are seeing now with Cyclones Tauktae and Yaas, low-income and other marginalised groups are most vulnerable to the impacts of climate change. They often live in dense settlements that lack basic services and infrastructure that could reduce risk. Many households also live on hazardous sites such as steep slopes and floodplains, where the cost of land is cheaper. It is therefore crucial to bring climate and development goals together.”

The study cited in the paper found that India’s GDP would be around 25% higher today were it not for the current costs of global warming. Looking forward, the numbers are even more grim. Researchers have assessed different mechanisms through which climate change will affect India’s economy, and predict that GDP in 2100 could be reduced by:

● 10% at 3°C of global warming due to declining agricultural productivity, sea-level rise and increased health expenditure.

● Up to 13.4% at over 4°C of global warming due to declining labour productivity from temperature and precipitation changes.

● 90% at 3°C of global warming, based on the historical relationship between temperature and GDP.

Pursuing low-carbon development could mitigate these projected costs, and would also yield other economic advantages.

Rathin Roy, Managing Director (Research and Policy) at ODI, said:

“Pursuing a cleaner, more resource-efficient path to development could stimulate a faster, fairer economic recovery for India and help secure India’s prosperity and competitiveness in the long term. Lower-carbon options are more efficient and less polluting, producing immediate benefits such as cleaner air, greater energy security and rapid job creation.”

Much depends on India’s policy, investment and diplomatic choices over the next decade. As the only country in the G20 that currently has a ‘2°C compatible’ Nationally Determined Contribution (NDC), India is already doing its fair share for climate mitigation. However, pursuing a more carbon-efficient and resilient pathway would enable India to climate-proof its development gains. Given India’s low per capita emissions and lower-middle income country status, it may need international support to make it happen.

Sarah Colenbrander, Director of Climate & Sustainability, ODI, said:

“While India is the world's third largest emitter, emissions per person in India are well below the global average. Indians should not bear the cost of mitigating a climate crisis that they have not caused. The G7 Summit, which India is invited to join this year, offers an opportunity for high-income countries that have historic responsibility for climate change to step up. Clear commitments to close the climate finance gap and accelerated technology transfer would build trust and boost ambition in the lead-up to COP26."