In the march to progress in the 21st Century, Humanity has to confront three major challenges, posed by Climate Change, Critical Technology (hybrid of bio-tech and info-tech) and the Healthcare challenge to withstand with any future pandemics. These challenges require a concerted and coordinated global as well as decentralized response. Out of these three, Climate Change is going to be the most important given its wide-ranging and inequitable impact across the globe as well as the costs and efforts required to mobilize the global community to fight against it. It is characterized by global externality and fostering a global response will always be difficult to achieve.
Climate change is defined as any undesirable change brought about by anthropogenic factors that change the composition of earth’s atmosphere. It manifests itself in terms of melting glaciers, rise in sea levels, more frequent occurrence of floods and irregular patterns of weather. As per the recent IPCC report 2021, world has lost around 28 trillion tonnes of snow between 1994 to 2017. The recent breakdown of Iceberg A-76 from the western side of the Ronne Ice Shelf in Antarctica is a reflection of retreating glaciers and our unsustainable practices. It is believed that if we continue to emit the Green House Gases (GHGs) at current pace, Bangladesh will be flooded out of existence at the end of this century.
One can gauge the seriousness of this by analyzing the loss of land due to rise in sea levels in the Sundarban Delta of West Bengal over last few decades. The increase in the floods in recent years from Chennai floods (2015) to Kashmir floods in 2014 and to Uttarakhand recently, show how serious turn climate change can take and how damaging it can be.
The last but not the least is the impact of climate change on weather conditions across the globe. Be it the rise in wild fires in Australia or the changing temperature and regular weather in Kashmir, the climate change is more visible at grassroots level if not at the policy level. The rise in the hailstorm incidents in Kashmir in recent years and the damage it inflicts on farmers or other livestock owners, the most vulnerable section of our society is beyond solace.
Few days back, we witnessed a strong hailstorm that destroyed the apple orchards and with it the prospects for this year for majority of the farmers. This has general equilibrium effects especially on the banking sector which are exposed to it through the KCC loans. The frequent damage to farmer crops destroys the asset base of the farmers and affects their chances of honoring the debt obligations.
This brings the importance of mitigation and adaptation strategies for climate change at gross-root levels to deal with the loss and damage. In recent years, the climate change has got recognition at world stage, thanks to the efforts of scientific community, various NGOs and climate activists who have tirelessly campaigned for bringing the desirable change in the mindset at the global level. The concern for future generations has put the concept of sustainable development back on track after losing a steam in between. The commitment of nations towards achieving Sustainable Development Goals by 2030 and reducing the emission rates to levels agreed under the Paris Agreement 2016, will go a long way in global fight against climate change.
However, it is not enough given the size of the challenge and the acute resource scarcity. The UNDP report 2020 has mentioned that even if all countries commit to the targets set under PA, still the world average temperature will increase by around 3 ֠ C by the end of this century. The report has suggested that more needs to be done in order to restrict the rise in temperature to below 1.5’C. This needs enormous resource and technology transfer from the global north to the global south under the ‘Common but Differentiated Responsibilities’. However, out of the $1 trillion dollar commitment of developed countries (DCs) in 2010 to be mobilized by 2020 to developing countries, only 2% of it has been so far mobilized. This hampers the global fight against the CC. India has reiterated in Conference of Parties (COP-25) meeting the obligations of DCs towards developing world in resource transfer and cheap technology transfer. The concerted global effort is essential towards achieving the sustainable development at the global scale.
At national or macro level, a move towards the renewable energy, a tax on emissions, shift towards electric vehicles and use of Clean Tech are essential for achieving sustainable development. India can’t afford to ignore climate change at this stage. It needs growth but that growth should be sustainable in economic, social and ecological sense. Climate change has a bearing on sovereign risk and bank credit risk and can lead to proliferation of bad assets owing to the loss of asset base of borrowers. It can lead to higher defaults due to physical damage it inflicts on the assets of the borrowers and systematically to collateral assets of creditors. India is the 7th most vulnerable country as per the Global Climate Risk Index 2021 published by the Bonn-based environmental think tank German watch. The physical risks associated with CC have to be countered with proper institutional mechanism in place which deal with immediate relief and rehabilitation of the calamity affected people. The damage can also be reduced through the effective use of modern technology and early warning system.
However, at the micro level, a different strategy is needed, one which is localized and decentralized. To offset the effects of the natural calamities on farmers, proper insurance mechanism needs to be put in place. The Pradhan Mantri Fasal Bhima Yojana (PMFBY) needs to be made broad based especially in climate vulnerable areas. Its coverage needs to be increased to more crops and horticultural products especially apples. The awareness and a right behavioral nudge is needed to induce farmers to insure their crops. At the same time, other climate adaptation and mitigation strategies need to be implemented at the local level as well through Jan Andolan. For example, using the tools from Behavioral and Cognitive Sciences, the people can be persuaded to protect forests and increase the green cover, to reduce the use of plastics, to maintain proper sanitation and to protect the purity of natural water bodies. In addition to this, we need to develop a comprehensive vulnerability assessment and national and local adaptation plan, develop a framework for monetizing the climate risks and implement and support green and clean tech. These steps will go a long way towards building a safe and secure future. However, the transition will come at a cost and global support to withstand the difficult transition will determine the future course of the planet.
Tanveer Ahmad Khan is Economics Research Scholar
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