Sunday, December 7, 2008

The Economics of Climate Change

The catastrophe of climate change is inevitable with the floods, tsunamis, irregular rains, cyclones and temperature rises that have been observed in recent years. Many lives were lost, crops damaged, and infrastructure destroyed as a result of the indirect effect of climate change. Studies by IPCC predict the average global temperature to change by 2.33–4.78°C because of the doubling of CO2 concentration. Stern Review puts the cost of failing to cut greenhouse gas emissions between 5 and 20% of global Gross Domestic Product (GDP).

Climate change poses an increased threat to the already burdened ecological and socioeconomic system of India due to increase in population, industrialization, and rapid economic development. Impact of climate change on the economy of India is very much prominent as many of the factors vulnerable to climate change correlate directly to its economic development.

Agriculture constitutes the single largest component of India’s economy. It contributed 22% of the total Gross Domestic Product (GDP) in 2003–04, and India’s agricultural activities fully depend on the weather. With the change in weather pattern due to climate change, crop yield may decrease, resulting in rise in price of essential food crop, thereby affecting the lower income groups of the society more adversely. Increase in surface temperature will also bring about plant diseases and pests, thereby further declining the crop yield. And since the farmers (both men and women) need to produce more crops as a result of the greater demand by the ever increasing Indian population, they will spend more hours toiling the farm. Women are responsible for around 65% of household food production, and due to reduction in crop yield, more time would be spent in gathering food that directly relates to lesser time for education, personal and family life, and her overall development.

The impact of climate change on water resources will affect the already water-depleted parts of India. Increase in surface temperature will lead to rise in the snowline, increasing the risk of floods in North India. The coastline erosion will happen due to rise in sea-level, resulting from melting of glaciers in the Himalayan and Hindukush ranges.

The major direct health impacts of climate change would be an increase in heart-related diseases and illness, thereby increasing the cost of heath and social well-being.

According to the estimates made by Fankhauser (1995), annual losses due to various factors would be around US$200 billion worldwide.

Solutions

Ever since human beings discovered fire, their need for energy has increased. India being on the verge of economic upliftment requires huge amounts of energy from all sources.

In the present context, India’s major energy need is being supported by its vast reserve of coal. About 74% of all electricity generated comes from thermal power stations fueled by coal. But coal is also one of the major green house gas emitters. So a need for a renewable source of energy becomes much more evident. Solar-, wind-, hydral-, etc. based power plants hold good promises for energy-starved India.

India imports almost 90% of all its fuel need that costs about Rs. 2,72,700 billion, and with rise in crude oil price, this amount may increase in the future. The rise in crude oil price is directly related to the cost of essential commodities, so a reality check on the same needs to be done. India cannot depend on imported fuel for long. It needs to come up with alternatives like biodiesel, algae-derived biofuels, and other transport-specific energy solutions.

The future of the Indian economy depends on the alternate energy and the Indian Youth should be the driving force behind the change so desperately needed by India.

By Gunajit

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