| The article is available at | | | | energy resources which are more energy efficient so |
| In the run up for Copenhagen Climate Conference to | | | | as to reduce it’s over dependence on burning of |
| be scheduled from 7-Dec-09, India has become the | | | | fossil fuels like coal which is less energy efficient and |
| center stage for the key negotiations between | | | | results in more Carbon emission. |
| developed and developing nations for its stance on | | | | 2. Spending on building more energy efficient |
| reducing Carbon emissions. India has expressed | | | | products |
| concerns over sacrificing its ‘development and | | | | This would apply to a wide range of products from |
| objectives of eradicating poverty’ at the | | | | almost every sector.India needs to build Energy |
| expense of ‘costs for reducing greenhouse | | | | efficient engines, Energy efficient commercial and |
| emissions'. The main obstacle India sees is its | | | | residential buildings, Energy efficient transportation of |
| spending costs on reducing Carbon emissions that | | | | all forms, Machines and Technologies that enable |
| would have a significant negative impact on it’s | | | | energy efficiency. |
| objectives of development and poverty eradication. | | | | 3. There would be costs incurred due to reduced |
| In this article I have tried to analyze the concerns of | | | | economic development taking into consideration the |
| India by evaluating the costs of reducing Carbon | | | | reduced economic development taking into |
| emissions and the costs of not reducing Carbon | | | | consideration the factors such as unemployment, |
| emissions, and base my conclusions on the differential | | | | Industries spending on equipments, technologies for |
| costs between the two. To reiterate I am | | | | reducing Carbon emissions, policies, administrative and |
| considering the following costs: | | | | legislative costs and more |
| 1. Costs incurred for Not reducing Carbon emissions - | | | | So what would be the likely total cost for |
| CN | | | | accomplishing all the above stated spending at |
| 2. Costs incurred for Reducing Carbon emissions till | | | | reducing Carbon emission? |
| 350 ppm - CR | | | | Unfortunately as of now [5-Dec-09] I have not been |
| Comparing the above two costs If CN > CR Then | | | | able to find any data released by Indian govt about |
| reducing Carbon emissions would have a negative | | | | the costs estimates for reducing its Carbon emissions. |
| impact on India’s Objectives of development and | | | | I urge the Govt of India to release its estimates for |
| eradicating poverty | | | | costs associated with reducing Carbon emission at a |
| Else If CN < CR Then reducing Carbon emissions | | | | particular target.Had this been released our work |
| will have a positive impact on India’s objectives | | | | would have been easier. But that shouldn’t stop |
| and India should aim at reducing Carbon emissions. | | | | us from continuing further as the cost estimates on |
| 1.Costs incurred for not reducing Carbon emissions - | | | | reducing Carbon emissions are available from many |
| CN | | | | other sources. Various academic and research |
| According to a study released by the group | | | | groups like Economics for Equity and Environment |
| Economics of Climate Adaptation - ECA [Swiss Re, | | | | network (E3), groups from European universities |
| Mckinsey & Company, ClimateWorks, the | | | | have tried to estimate the costs for attaining |
| European Commission, Rockefeller Foundation and | | | | emission reduction till 350ppm. One group starts from |
| Standard Chartered Bank make up the ECA working | | | | the (realistic) assumption of high unemployment, and |
| group] under climate change scenarios, the climate | | | | finds that long-run employment and economic growth |
| related disasters can result in 9-13 percent of loss of | | | | would be increased by a program of public |
| India’s GDP by 2010 and 19% loss of India’s | | | | investment in green technology and emissions |
| GDP by 2030. Accordingly the Costs for not reducing | | | | reduction that leads to 350 ppm. The other three |
| Carbon emissions till 2030 i.e, CN is 19%. However | | | | groups adopt the common assumption that short-run |
| there is a potential for this loss to be increased as | | | | unemployment can be ignored in long-run models. |
| the long term effects of climate related disasters are | | | | They generally find that the needed emissions |
| serious on the economy. | | | | reductions will cost an average of 1 to 3 percent of |
| To examine how much loss a natural disaster may | | | | world economic output, for some years to |
| cause, let’s take a case study of the floods that | | | | come. Studies from other groups such as |
| recently hit North Karnataka in October 2009, and | | | | Greenpeace, Union of Concerned Scientists (UCS) |
| examine the losses incurred as a result of the | | | | have arrived at more optimistic estimates where the |
| disaster. This would give us an idea of the | | | | savings from fuels would be more compared to the |
| approximate losses that would incur if a natural | | | | spending. They assume high oil prices at 140$ per |
| disaster of similar severity happens due to the | | | | barrel (Greenpeace). Now considering Mckinsey’s |
| climate changes resulting from not reducing Carbon | | | | estimates (Non conservative and pessimistic |
| emissions, which could have been avoided otherwise. | | | | compared to the estimates of Greenpeace and UCS), |
| Following are some of the significant losses caused | | | | it would cost 2.3% of India’s GDP to halve the |
| by the floods: >> 194 people died | | | | Carbon emission growth by 2030. Hence the Costs |
| >> 10 million homeless. This means that the | | | | for Reducing the Carbon Emission - CR would be |
| Govt had created 10 million poverty people at an | | | | 2.3% of India’s GDP. |
| instant by letting the disaster happen. | | | | Comparison of the Costs between reducing and not |
| >> Losses totaled to 18,000 crore, according | | | | reducing Carbon emissions |
| to the State government estimates | | | | As already reasoned before, the value of CN is 19% |
| >> State govt sought 9,000 crore flood relief | | | | of GDP and the value of CR is 2.3% GDP. The |
| from the Central govt. | | | | Difference Costs of CN and CR = 19 - 2.3 = 16.7 % |
| >> State demanded for the release of 1.5 lakh | | | | of GDP |
| metric tonne food grains under BPL rates for the | | | | India would actually save 16.7 % of GDP subjected |
| affected people | | | | to the reasons presented above if it aims at reducing |
| >> 25 lakh hectares of crop area | | | | Carbon emissions. These savings can eventually be |
| affected. This amount of land would not | | | | used for economic development and reducing |
| be productive for a few months which is a | | | | poverty. The earlier reasons from Indian govt that |
| Loss. The investments in terms of labor, | | | | reducing Carbon emissions would reduce economic |
| resources, subsidy provided by the govt | | | | development and increase poverty would hence |
| on fertilizers from citizen's taxes are totally wasted, | | | | needs to be strongly suspected. |
| A very big loss again. | | | | According to the 2006 military data released by |
| >> Supply chain disruption. Industries, | | | | Central Intelligence Agency [CIA, US], India’s |
| Businesses, Prices, Markets in | | | | military expenditures cost 2.5 % GDP annually. These |
| other areas which were reliant on the flood hit | | | | military expenditures are effectively the safety |
| area are affected. The standstill region wouldn't be | | | | needs of the country to protect the citizens from |
| able to supply any goods or services which it | | | | deaths and losses.If the climate changes are allowed |
| was supposed to, to other businesses. | | | | by not reducing the Carbon emissions, the resulting |
| >> Inflation figures during this period. | | | | climate change disasters would eventually lead to |
| Vegetable prices up 50%, potatoes up 81%, sugar | | | | more deaths and homeless people. This is indeed a |
| up 44% and rice up 19%. Food prices were more | | | | basic safety and physiological need for the country. |
| broadly up by 16% compared to the previous year. | | | | The costs for mitigating this is spending on reduction |
| Although floods weren’t the only reason, they | | | | of Carbon emission [ CR ] which is 2.3 % of GDP. |
| were significant in contributing for rising Inflation.This | | | | Comparing the Annual 2.5 % GDP costs on military |
| is a serious impact. Higher inflation would reduce the | | | | expenditures with 2.3 % GDP costs till 2030 for the |
| buying power of people and would create more | | | | safety needs of similar importance, the spending on |
| poverty | | | | Carbon emissions looks very meager. Again India |
| >> The state's machinery and resources are | | | | need not bear all the costs [ 2.3% of GDP ] for |
| dedicated for flood relief works which | | | | reducing Carbon emissions alone. India can actually |
| would have otherwise been dedicated for other | | | | make a case for contributions from other developed |
| Productive works | | | | nations. India has now started pressing the developed |
| >> Chances of spreading of epidemics are very | | | | nations for contributing 0.5 % of GDP to fund its |
| high. More spending on health. | | | | costs. |
| >> Affects both the physical and mental health | | | | Based on the reasons presented in the article, I |
| of the people in the flood affected region. The | | | | conclude that India should target for reducing Carbon |
| implications of this are very serious. | | | | emissions so as to pursue with its objectives of |
| >> Job losses | | | | economic development and eradication of |
| >> The list runs | | | | poverty.India should focus on building newer energy |
| All the above effects which would be caused | | | | sources and energy efficient products towards its |
| because of ignoring the climate change disasters | | | | pursuit for greener world. I hope to see a positive |
| have eventually resulted in hampering development | | | | move from India towards this end in the Copenhagen |
| and creating more poverty which would have been | | | | Climate Conference. |
| avoided otherwise. | | | | Global warming Skepticism |
| 2. Costs incurred with spending on Reducing Carbon | | | | With the leaking of emails and the documents from |
| emissions - CR | | | | the Climate Research Unit (CRU) at the university of |
| There will be some significant costs associated with | | | | East Anglia, UK the skeptics of Global warming who |
| spending (or rather investing) on reducing Carbon | | | | are arguing that climate change is not man-made |
| emissions. The following are the areas where the | | | | have found new reason to support their claim. What |
| government has to chiefly spend if it makes a | | | | if the skeptics were right? Should India be not |
| commitment for Carbon emission reduction. | | | | bothered at all about reducing carbon emissions? |
| 1. Spending on newer energy resources | | | | Watch out in the next post. |
| India should start spending (investing) in newer | | | | |