Soaring Economic Costs From Climate Change

Southeast Asia, one of the most vulnerable regions in the world to climate change, faces a poorer future unless global warming is controlled, concludes the new Asian Development Bank (ADB) study, titled The Economics of Climate Change in Southeast Asia: A Regional Review.

The study finds that the benefits to the region of taking early action against climate change far outweigh the costs.

If the world continues with business as usual, Indonesia, Philippines, Thailand and Viet Nam could experience combined damages equivalent to more than 6% of their countries’ gross domestic products every year by the end of this century, dwarfing the costs of the current financial crisis.

Rice production will dramatically decline because of climate change, threatening food security. Rising sea levels will force the relocation of millions living in coastal communities and islands, and more people will die from thermal stress, malaria, dengue and other diseases.

“Climate change seriously threatens Southeast Asia’s families, food supplies and financial prosperity, and regrettably the worst is yet to come,” says Ursula Schaefer-Preuss, Vice-President for Knowledge Management and Sustainable Development.

“With the world mired in the current financial crisis, climate change risks being pushed down the policy agenda,” she adds. “If Southeast Asian nations delay action on climate change, their economies and people will ultimately suffer.”

The report argues that Southeast Asian nations should address the dual threats of climate change and the global financial crisis by introducing green stimulus programs – as part of larger stimulus packages – that can simultaneously strengthen economies, create jobs, reduce poverty, protect vulnerable communities and lower emissions.

There are a series of cost-effective measures that can help countries protect themselves from the worst effects of climate change, including improving water management, enhancing irrigation systems, introducing new crop varieties, safeguarding forests and supporting the construction of protective sea walls.

The study also notes there are “win-win” mitigation options in the energy sector – particularly more efficient power plants, more energy-efficient lighting, appliances and industrial equipment, and cleaner transportation – that could allow Southeast Asian nations to mitigate carbon emissions up to 40% by 2020 at a negative net cost.

“Countries have everything to gain and nothing to lose by investing in these low-cost and no-cost adaptation and mitigation measures,” says Ms. Schaefer-Preuss.

If no global action is taken to control GHG emissions

• The average temperature in Southeast Asia could increase by 4.8°C (above the 1990 level) by the end of this century (high-emissions scenario).
• Southeast Asia could experience a 70cm increase in sea level by the end of the century.
• Rainfall could appreciably decline over the next 20-30 years in Indonesia, Thailand and Viet Nam, and will increase in the Philippines.
• Rice production could decline (starting in 2020)
• Large tracts of forests could be replaced by savanna or shrub land.
• Water stress could escalate, affecting over 20 million by 2050.
• More people could die from malaria, dengue, cardiovascular and respiratory diseases.
• Rising sea levels could force the relocation of millions living in coastal communities and islands.
• By the end of the century, the total costs of climate change impacts could be the equivalent of 6.7% of Southeast Asian nations’ GDP each year.

The way forward

• The benefits of investing in climate change adaption and mitigation outweigh the costs.
• The forestry sector has the greatest potential to reduce the region’s GHG emissions.
• GHG emissions can also be affordably reduced through better energy efficiency in the building, industrial and transport sectors.
• The agriculture sector can reduce GHG emissions through better land and farm management.

The forestry sector is the largest contributor to Southeast Asia’s greenhouse gas emissions, and has the greatest potential to reduce the region’s emissions through reduced deforestation, the planting of new forests and improved forest management.

Southeast Asia also has the highest technical potential to sequester carbon in the agriculture sector of any region of the world.

All four countries have adopted wide-ranging measures to counter the harsh impacts of climate change, but the study says they could do more to tap the broad array of global and regional initiatives that offer funding, technology and other support for countering climate threats.

At the same time, many climate challenges could be more effectively countered through closer regional cooperation, particularly in the areas of water basin management, shared marine ecosystems, extreme weather events and the containment of infectious diseases.

Since the negative impacts of climate change will continue to worsen, the study finds that only global action to mitigate greenhouse gas emissions can effectively address the root causes of the current climate crisis.