Climate change ‘bigger threat’ than economic crisis – ADB

Economic degradation and climate change pose the greatest systemic threat to Asia’s long-term economic security and prosperity, a senior ADB official has warned.

Most vulnerable are low-lying regions of Southeast Asia faced with rising sea levels, routine flooding, and the destruction of agriculture by increasingly turbulent weather leading to food insecurity.

Up to 6.7% of gross domestic product (GDP) will be wiped off the economies of Indonesia, Thailand, Vietnam and the Philippines by the end of the century unless governments tackle or adapt to climate change, Bindu Lohani, vice president, knowledge management and sustainable development, told Emerging Markets.

“The most immediate short-term threat to Asian economic growth is global uncertainty. But in the longer term the greatest challenge to Asia is undoubtedly from climate change,” he said. “Studies show that the impact [of a changing climate] will be more extreme here than in any other part of world.”

Most countries are expected to see no more than 2.2% shaved off economic growth under the worst-case scenario.

In its seminal report Asia 2050 the ADB said Asian countries can boost social, economic and physical security by investing just 0.2% of annual GDP in building new sea walls to combat rising tides, and cultivating new drought- and heat-resistant crops.

Yet even then, under the best-case scenario, those four nations will see nearly 2% shaved off GDP by 2100. “However much action is taken, some impact will be felt,” Lohani said.

Many believe the world is already living under the shadow of more extreme climate change. Another ADB paper finds that temperatures climbed steadily in the Philippines over the past 60 years while rainfall and cyclones have intensified.

When tropical storm Sendong hit the southernmost Filipino island of Mindanao in 2011, it killed 1,200 people and displaced tens of thousands more. “[The] climate is changing in the Philippines, as are all the elements of risk: hazard, vulnerability, and exposure,” the paper said.

Lohani said policymakers must take action now but warned it would be costly. Multilateral funding can help, notably a planned Green Climate Fund (GCF), first mooted at the Copenhagen climate summit in 2009 and designed to channel up to $100 billion a year into environmental projects in emerging markets by the end of the decade.

One of the clear aims of the GCF is to divert more funding to nations willing to close coal-fired power plants and invest in renewable energy.

Lohani said Asia should receive the majority of the funding, some of which should go into protecting Southeast Asia’s dwindling forests. “If we want to protect our forests, we will have to pay,” said Lohani.

Then there is the tricky issue of growing enough food to sate a rising populace. During the first global food “crisis” of 2007-2008, when grain prices spiked, Asian countries led by Thailand sought to profit by fixing rice exports, further driving up prices.

Lohani stressed the importance of liberalizing the food market and stamping out protectionism, and helping Asian countries ramp up food production.

“We need to help countries become more efficient in how they grow and consume food, investing in irrigation projects and growing more food with less water and energy,” he says.