Climate change at the current pace can bring in unmitigated disaster, as global economy could shrink sharply
Taiwan, considered as the world’s chip factory, has for long been the major source of electronic chips used in a wide variety of products ranging from mobile phones to high end cars. The importance of Taiwanese chip manufacturing on the global centre stage can be gauged by the fact that the recent trip by Nancy Pelosi to Taiwan included her meeting with Mark Lui, chairman of the Taiwan Semiconductor Manufacturing Corporation (TSMC).
Pelosi’s trip coincided with the US efforts to convince TSMC – the world’s largest chip manufacturer, on which the US is heavily dependent – to establish a manufacturing base in the US and to stop making advanced chips for Chinese companies.
But all has not been well for Taiwan. Besides the Chinese threats, the small island nation has been at the receiving end of one of the worst droughts seen in the last five years on account of inadequate Monsoons and now rare typhoons. Given the fact that chip factories are water guzzlers, this drought has triggered production cuts due to water scarcity and sent shockwaves across the world supply chain for chips. This shortage severely impacted global industry, especially the automotive sector and resulted in frozen delivery schedules, as vehicle inventory could not be forwarded to the dealers.
The rapidly worsening climate change conditions have played a key role in the above instance and if the report by Swiss Re Institute is to be considered, the larger impact of climate change could wipe out 18 per cent of GDP of the global economy by 2050 if global temperatures rise by 3.2°C. The Swiss Re Institute forecast is based on temperature increases staying on the current trajectory and the Paris Agreement and net-zero emissions targets not being met. The Institute warns in its report that climate change is a systemic risk that must be addressed immediately, but unfortunately the adverse impacts of climate change on the global economy are already evident.
The spectre of rising global temperatures as predicted by The Swiss Re Institute report seems to be coming true considering the increasing heat waves across the world, especially in the West where temperatures of 40 degree Celsius were hitherto unheard of but are a reality today. The United Kingdom for instance recently experienced searing hot days that saw traffic signals and road surfaces melting. The spiralling temperatures aided by climate change are not only impacting the economy and industrial output, but are also extracting a huge cost from the global agricultural sector. Europe especially is experiencing stiff price hikes of food items due to falling food production in the face of unfavourable farming conditions arising out of erratic Monsoons and punishing summers.
The Indian economy too is seemingly fighting a losing battle with climate change. It is projected that climate change is poised to erode India’s GDP by 2.6 per cent by 2100 even if the global temperature rise is held below 2 °C. In a scenario where global temperatures breach 3.2°C the GDP erosion is projected to be 13.4 per cent. Despite this grim reality, it is noteworthy that India is not responsible for rising temperatures despite having 17.8 per cent of the world’s population. It accounts for only 3.2 per cent of cumulative emissions. However, the crossing of paths between economic progress and climate change is unavoidable as many aspects of the economic development are interlaced with the wellbeing of the environment in the absence of which economic growth is adversely impacted.
The major manifestation of climate change playing with the economy in India is in the form of dwindling rainfall. The Indian Summer Monsoon (ISM) has a major influence on agriculture, water resources, human health and ecosystems, which in turn ensure a robust economy. However, of late the ISM has seen erratic patterns of either excessive rainfall to the point of triggering devastating floods or scanty rainfall resulting in droughts. This manifestation has indeed put the Indian economy in a tight spot and unless remedial measures are undertaken to dial down emissions and ambient temperatures, the economy can incur irreversible sectoral losses in the form of $ 1.5 trillion per year.
Today, India and the world are moving from climate change to climate emergency. India must hasten to protect those vulnerable sectors of the economy that are exposed to the vagaries of climate change. Sectors such as services, retail, tourism and construction require urgent protective measures as these account for over 80 per cent of the GDP of India. As a first step, the “silo” approach needs to be dispensed with and instead an integrated strategy that combines policy making with technology needs to be adopted. Additionally, compelling financing models need to be designed for climate action projects, thereby putting climate change mitigation on centre stage in India. These efforts will undoubtedly insulate the economy against climate change and enable India to surge ahead.
(The writer is an environmental journalist. The views expressed are personal)
