Greening the Indian Economy
by
Climate Change Action
Scientists around the world continue to point out that if we continue with business as usual, we are facing a rise in global temperatures that will be apocalyptic. This rise in temperatures is due to anthropogenic causes of greenhouse gas emissions. To avoid such an apocalypse, the new economy must move away from using fossil fuels in order to reduce its emissions. At the University of Yale, using the Dynamic Integrated Model of Climate and Economy (DICE), as per the current business as usual rate, it was projected that losses to the gross world product would be about 2 per cent if there is a temperature rise of 4.5 degrees by 2100.
Many studies have also estimated that Indian economy loses a lot due to impacts of climate change. As per a CEEW study with a linear representation of climate change impacts, the cost of inaction will be in the range of 0.45% - 1.19% of India’s GDP in 2050 and 0.59% - 1.17% of India’s GDP in 2100. This will increase many folds if non-linear impacts are also valued. India stands to lose about 8.7% of its GDP by 2100 if the global economy continues business as usual as per the Asian Development Bank (ADB). Further, economic losses equivalent to 1.8% of annual GDP are estimated by 2050. As per the IPCC (2014), India’s vulnerability and exposure to climate change will slow its economic growth, make poverty reduction more difficult and erode food security. And to avoid that apocalypse, we have to wean our economy from the use of fossil fuels, coal above all. The question is that is it possible to make drastic cuts in greenhouse-gas emissions without destroying our economy.
There is agreement among environmental
economists that a market-based
programme
to deal with the threat of climate change - one that limits carbon emissions
by putting a price on them can achieve large results. Some economists agree
that reducing carbon in the economy would be expensive, but new programmes
can unleash a lot of creativity and innovation and usher nations into a new
era (NPR, 2017). It is not necessary to treat the greening of economy as a
loss taking measure. Even in financial crises governments can find ways to
green their economy. The best example is after the 2008 crisis countries
such as Germany, Denmark and Korea responded by green stimulus packages. It
was a pragmatic move that they saw good business in clean technology,
efficient transportation and energy infrastructure. The fiscal stimulation
focussed on green goods and services.
India is seeing a strong growth in urbanisation, which will go on for a few more decades. But we see an environmental downturn in India’s major cities. It is in turn becoming a threat for the people living in it. Problems such as air and water pollution have been well documented. If unaddressed they can undermine health, quality of life and productivity. India with its elephantine growing economy is being pressurised from the international arena to be climate positive. The economy can use this growing trend to actually revert its emissions to move towards a green route rather than exploding like China has done or as other countries expect India will. There has been growing evidence that decarbonising an economy is economically feasible, and will bring added benefits such as cleaner air in major cities. This was partly the push factor for the Paris Agreement.
When we look at causes of climate change, any presumption that the market economy left to its own devices will do the right thing regarding these negative externalities does not stand strong. Although it is ultimately the responsibility of the public sector to meet the critical climate change adaptation needs of the poor and vulnerable, all other sectors of the economy have to take responsibility too. Risk to communities due to climate change such as extreme weather events, water scarcity, declining agricultural productivity and poor health are also business risks. Private businesses need communities as suppliers, customers and employees. Businesses in India must also take concrete steps to address climate change risks and to respond to new opportunities in a comprehensive, integrated way.
An interesting platform for India is the G20.
Being a member
of
such a powerful economic group, India can not only demonstrate to the rest
of the world that global economic and environmental issues are inseparable
but also could have a measurable impact on greening the world economy. The
idea of green economy in India should move ahead from being a buzz concept
to represent a profound change in how economic and environmental issues must
be seen together.
Paul Krugman (2010) suggests that there should be a price on carbon emissions and this price must eventually be very high. Additionally, policies regarding the economy of the future should keep in mind the high probability of disaster that climate change is predicted to bring. Such an outlook can push for aggressive moves to green the economy.
Path Ahead
The word ‘green’ in green economy is usually seen with controversy in India. The word is associated with radical environmental movements that are against development. What needs understanding is the true meaning of green economy i.e. amalgamation of ecology and economics, that helps foster a future that balances material prosperity and environment.
Smarter low carbon choices such as mass public transit, investing in buildings efficiency and a digital, decentralised electric grid promotes clean air and water. This will help bring international attention to Indian cities and economy and make it ahead of the competition in the global market. However, it is important that the informal, unregistered economy that accounts for two thirds of the Indian economy is not ignored in the climate change policy and mitigation debates that try to usher in the green economy.
There is need for green economy as the growth fuelled by fossil energy will reach its limits. In green economy, growth in income and employment can be generated by strategic public and private investments that reduce greenhouse gas (GHG) emissions, improve resource efficiency and prevent the loss of biodiversity and ecosystem services. There is benefit in shifting towards a low-carbon, climate-resilient growth, driven by innovation, cleaner energy and greater efficiency. It is required for India to lead a low carbon developmental pathway in order to integrate sustainability in the growth trajectory of its economy. ■
References:
http://www.thehindubusinessline.com/opinion/economic-growth-and-climate-change/article 7983536.ece
http://www.greeneconomycoalition.org/know-how/basis-climate-friendly-prosperity
http://www.huffingtonpost.ca/jagmeet-singh/green-economy-climate-agenda_a_22516534/
CEEW, March 2015 | New Delhi, India The Costs of Climate Change Impacts for India A Preliminary Analysis VAIBHAV CHATURVEDI, http://ceew.in/pdf/ceew-cost-of-climate-change-impacts-for-india-2-apr-5.pdf
http://www.unrisd.org/80256B42004CCC77/(httpInfoFiles)/67569F881A578E76C1257942005654B2/$file/3-2%20Bullard% 20and%20Muller.pdf
http://www.e-ir.info/2012/06/29/the-green-economy-challenge-after-rio20/
http://www.nytimes.com/2010/04/11/magazine/11Economy-t.html
http://www.greeneconomycoalition.org/know-how/basis-climate-friendly-prosperity
http://pdf.wri.org/adapting_for_a_green_economy.pdf
Syed A A Farhan
sishaqi@devalt.org