- An Asian Development Bank report warns of severe climate change impacts in Asia Pacific, resulting in a 17% GDP loss by 2070.
- The report emphasises the urgent need for both adaptation and adaptation finance and suggests pathways to achieve those.
- It also stresses on scaling up private climate capital for mitigation and adaptation and the need for clear climate laws and policies to achieve it.
The Asia-Pacific (APAC) region has made limited progress in reducing emissions, despite significant efforts, and remains a major emitter, responsible for 45.9% of global emissions. The newly released Asia-Pacific Climate Report 2024 from the Asian Development Bank (ADB) highlights that, as a result, the region is unlikely to meet the Paris Agreement’s 1.5°C target, that aims to limit global warming to 1.5 degrees Celsius above pre-industrial levels to avoid the worst impacts of climate change. The report forecasts around 3°C of warming by the end of the century, with some mitigation efforts potentially reducing this to 2.4°C. This, despite many APAC countries, including India, have ratified the Paris Agreement and set net-zero targets, clearly indicating that current policies and actions are insufficient.
In the near term, the report predicts that warming in the region could lead to more severe climate impacts than the global average, along with a potential GDP loss of 17% in the region, by 2070, under a high-emissions scenario. For India, this could mean a staggering GDP loss of 24.7% by 2070.
The 135-page Asia-Pacific Climate Report 2024 – Catalyzing Finance and Policy Solutions from the Asian Development Bank, aims to guide the APAC region in addressing climate change through necessary policy reforms. The report includes several projections for the next 50-70 years, offering stark warnings about the future climate scenario in the region. These projections include more frequent and extreme hot days exceeding 35°C; stronger and more frequent storms and floods, with annual flood damages potentially surpassing $1 trillion by 2070, particularly in South Asia, including India. Agriculture is expected to be severely impacted, with wheat and maize yields dropping by as much as 45% and 20%, respectively. Labour productivity could also decline by approximately 30% by 2070.
The projections deliver a clear message that urgent and decisive action is necessary.
At the climate COP conferences, economically disadvantaged nations with rapid growth potential — many of which are in the APAC region — are often called out for their share of global emissions, which currently account for half of the total global emissions. These countries have frequently responded to such calls with demand for more climate finance. This discussion continues into the ongoing COP29.
Adaptation finance
The ADB report emphasises the urgent need for both adaptation and adaptation finance. It suggests several pathways to achieve this, including correcting market distortions, strengthening property rights, removing subsidies for water use, and promoting open trade.
“While adaptation is necessary,” says Ashish Fernandes, CEO and lead analyst at Climate Risk Horizons, “it should not fully replace mitigation.” He stresses that countries such as India cannot prioritise one over the other, as mitigation remains just as crucial as adaptation. “We don’t have the luxury of choosing between them,” Fernandes argues, “because without mitigation happening alongside adaptation, the latter is futile in the long term.” Climate Risk Horizons is an organisation focused on identifying and analysing financial and economic risks associated with climate change.
Meeting the annual adaptation financing needs, with coastal and flood protection as major priorities, continues to be a challenge. Of the $102 billion previously estimated as financial assistance for adaptation through 2030, the region received only about $34 billion in 2021-2022. The report suggests that the financing gap just got wider as the recent estimates point to a need of $431 billion which far exceeds current commitments.
Abinash Mohanty, Sector Head of Climate Change & Sustainability at IPE Global, a global advisory and implementation services group, expresses disappointment over the constant shifting of goalposts at the COPs, which he says undermines efforts to meet financial targets. “The loss and damage facility was initiated at Sharm el-Sheikh (COP27) and operationalised the following year in Dubai. Now, when the real money should be flowing, the focus has shifted to the NCQG (New Collective Quantified Goal) which is raising above what is committed on financing and security,” he points out.
Similarly, while mitigation has dominated discussions at past climate COPs, the emphasis is now on adaptation. In India, adaptation efforts have primarily relied on public funding, with private-sector climate finance largely directed toward mitigation, as it is easier to track, Mohanty explains. “It’s easier to calculate the carbon reduction from solarising a country’s transport system than to measure the percentage of a community that becomes resilient to climate change by implementing adaptation measures, such as climate-resilient housing,” he elaborates. “Public funding alone is not going to be enough to meet our adaptation needs. The real challenge lies in micronising the funds and finding pathways of distribution.”
More private players
Of the $34 billion the region received in adaptation finance in 2021–2022, only $11 billion came from international sources. Moreover, a very small proportion (1%) of the adaptation finance came from the private sector. The report suggests ways by which necessary adaptation funds can be generated with robust public-private sector collaborations topping the list. Blended finance solutions — combining public and private funds — are seen as a key strategy.
Mohanty sees significant potential for India to promote homegrown climate innovations. “Take technology transfer in climate change innovations. Developing countries have been the largest emitters, but the patents for mitigation technologies have mostly come from developed countries. Now is a great opportunity to mobilise our own innovations through public-private-philanthropic partnerships or blended finance,” he notes.
Private investment in climate projects, currently hindered by policy uncertainty and market barriers, could benefit greatly from supportive government policies, such as carbon pricing, emission trading systems, and clean energy subsidies. Mohanty also emphasises the need to view carbon trading in terms of co-benefits. “For example, forest cover expansion can sequester carbon, restore landscapes, mitigate climate risks, and provide natural resources,” he says. He adds that India is making progress on carbon trading mechanisms at COP29 and should soon take concrete steps toward legalising and mandating them.
However, Fernandes flags a major challenge in attracting private funds for adaptation: the need for lenders to make a profit. “In adaptation, the financial incentives are minimal,” he explains. He warns that private financing might drive unsustainable deals, such as privatising public land or commons, to generate profits. “For instance, if an adaptation project involves building a sea wall to combat sea-level rise, there’s no obvious financial return for private investors. To repay a loan, we might be forced to create some commercial activity, which could undermine the project’s long-term goals.” As a result, Fernandes advocates for more public investments and grants from developed countries to fund adaptation efforts.
Clear laws and policies
The report highlights the need to scale up private climate capital for both mitigation and adaptation, stressing that clear climate laws and policies are essential to achieving this. Uncertainty and conflicting policies can deter private investment by creating an unstable regulatory environment, making investors hesitant to commit to long-term, sustainable projects. To address this, the report calls for comprehensive and aligned policies that combine price-based measures, such as carbon pricing, with non-price policies, like sector-specific regulations. For instance, linking emissions standards with infrastructure investments—such as electric vehicle charging stations—can help strengthen market signals.
Mohanty argues that India needs a policy mandate to map physical climate risks in alignment with the RBI’s guidelines on physical risk assessment, along with concrete steps for implementation. “We must fast-track more innovations in climate adaptation and remediation. Creating a national contingency or climate risks fund is also crucial,” he adds.
According to Mohanty, what India urgently needs for adaptation is highly granular mapping of hazard risks and vulnerabilities. “Beyond national and state-level mapping, we need to go down to the city, village, and block levels. Studies by IPE Global show that 45-50% of Indian districts are experiencing a shift, with traditionally flood-prone areas becoming drought-prone, and vice versa. Adaptation efforts will be ineffective without understanding these shifts in landscape trends,” he warns.
Banner image: A volunteer at Chooralmala, Wayanad, after a devastating landslide in July 2024. Image by Spworld2 via Wikimedia Commons (CC0 1.0).
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