On his recent visit to Sri Lanka, Vice President for Knowledge Management and Sustainable Development of the Asian Development Bank (ADB), Dr. Bindu N Lohani held a media roundtable briefing on the book ‘Assessing t he costs of climate change and adaptation in South Asia’.
He is responsible for ADB’s Economics and Research Department (Office of the Chief Economist), Office of Regional Economic Integration, Regional and Sustainable Development Department ( RSDD), and the Office of Information Systems and Technology. Following is an insight to the contents identified by the book, in addressing the impact of climate change on the economy of Sri Lanka.
The developing members of ADB in the South Asian region are facing the challenge of achieving and sustaining rapid economic growth, with a population of 1.43 billion people, one-third of who live in poverty.This is quite evident in their battle to reduce poverty and attain other Millennium Development Goals in an era of accentuated risks posed by global climate change.
Climate change will sow confusion and concern as it unfolds across South Asia in the coming decades. Its impacts are quite heterogeneous across South Asian countries. Home to a quarter of the world’s population, this vast region will be hit harder than just about anywhere else. Sudden flooding, storms, droughts and other hazards will upend lives, livelihoods, and economies. Sri Lanka, is among those more adversely affected by agriculture-related constraints because it has a higher share of GDP in agriculture and a much higher expenditure share on agri-food products.
CLIMATE CHANGE IMPACTS ON SRI LANKA
Widespread degradation of Sri Lanka’s coastal and agricultural resources due to climate change could cost the economy more than 6 percent of its gross domestic product (GDP) by the end of this century, according to a new Asian Development Bank (ADB) climate and economics report for South Asia.
Economic losses in key sectors, such as agriculture, energy, transport, health, water, coastal and marine, and tourism are expected to be significant, rendering growth targets harder to achieve. Impact assessments carried out by the ADB reveal that under the current fossil fuel-intensive development path, climate change impacts could affect the contribution of crop production, water availability and arable land to Sri Lanka’s real GDP. In turn this reduction would be 1.9 percent, 4.3 percent and 6.1 percent respectively by 2050.
These assessments further reveal that at the macroeconomic level, climate impacts could reduce real output by 25 percent, exports by 6 percent, imports by 5 percent and domestic consumption by 2 percent in 2050. Therefore the overall price of consumer goods and services could increase by 4 percent. While analyses suggest that costs of climate threats to 2050 are moderate, detailed results imply that climate impacts on food security in general and on the poor in particular could be much more severe.
KEY SECTORS TO BE AFFECTED
The agriculture sector is vulnerable due to variability of meteorological parameters and extreme events, such as floods, cyclones and storm surges.
The vulnerability of rice crops to droughts is expected to increase, especially in the dry and intermediate zones.Tea plantations at low and medium elevations are more vulnerable to impacts of climate change t han those at high elevations. Higher temperatures eventually reduce yields of desirable crops while encouraging weed and pest proliferation.
Changes in precipitation pattern (timing and amount) increase the likelihood of short-run crop failures and long-run production declines, posing a serious t hreat t o food security. Although there will be gain in some crops in some regions, the overall impacts of climate change on agriculture are expected to be negative and need to be much better understood.
Due to projected climatic changes, both energy generation and energy demand would be affected during hot summer seasons especially during peak hours.
Regular cyclones and floods cause power supply failures and infrastructure damage. The declining annual average rainfall, as observed in the last 6 decades, can put additional stress on the already insufficient energy resource base. A rise i n average warming will increase energy requirements for space cooling (but reduce energy needed for warming), while increasing energy demand for irrigation.
On the supply side, there is a direct influence on hydropower and thermal power generation through availability of water and the temperature of cooling water, respectively. Increases in intensity and frequency of extreme events like storms and sea level rise may cause more electrical system failures.
Sea level rise, higher temperatures and an increase in cyclone intensity will damage the forest resources of the country, put pressure on many climate-sensitive species and cause increased erosion and deterioration of soil quality in many upland forested areas. Sea level rise will also increase saltwater intrusion and negatively affect the flora and fauna in coastal mangroves, lagoons and estuaries. The boundaries of the dry zone may spread into the intermediate zone and the latter may spread into the wet zone under climate change.
ADB’S RESPONSE AND PROGRAM
Given this broad picture on climate change, ADB will focus on many investment plans that would contribute towards a resourceful future.
As such, ADB aims to continue transforming t he energy sector, through clean energy and energy efficiency whose investments sum up to US$ 2 billion. Several initiatives such as t he Asia Solar Energy Initiative, Quantum Leap in Wind Initiative, Energy for All Partnership, and Energy Efficiency Accelerator Program have been implemented. Recently, ADB was selected as the regional hub of Sustainable Energy for All (SEA4All).
On the other hand, ADB finds it i mportant to address urban development issues and transform the transport sector. According to ADB, cities are the main battleground against climate change with a need to boost sustainable urban infrastructure.
ADB’s Urban Operational Plan promotes green, i nclusive, competitive and livable cities. The urban lending for 2010-2013 is $6.6 billion, with more than 90 percent of urban lending allocated for urban environment improvement. The Trust Fund for Urban Climate Change Resilience aims to strengthen resilience in secondary cities in Asia. A Sustainable Transport Initiative guides ADB in transport operations.
ADB is also in the process of allocating financing mechanisms for climate finance. In turn they are deploying concessional resources from both multilateral climate funds and internally-manage funds totaling about $2.55 billion. While the Clean Investment Funds amount to $1.76 billion the ADB also provides carbon finance through the Asia-Pacific Carbon Fund ($151.8 million) and Future Carbon Fund ($115 million).
Finally, ADB will continue t o do knowledge work t o harness innovative ideas to address climate change and climate finance. Broadly, through Finance++ and One-ADB approach, ADB aims to render their support towards the development of new knowledge solutions through partnership with centers of excellence and knowledge hubs. Support for pilot-testing new innovations and other knowledge solutions would be provided and the results will be used to consider their wider application on regular operations.