Maldives Most At-Risk Economy in South Asia from Climate Change - Report

News Release | 19 August 2014

MANILA, PHILIPPINES – The Maldives, with its pancake-flat islands, is the most at-risk country in South Asia from climate change impacts, which if left unchecked, could cause annual economic losses of over 12% of gross domestic product (GDP) by the end of this century, says a new Asian Development Bank (ADB) climate and economics report for South Asia.

“A potential ocean rise of up to 1 meter by 2100 will have devastating consequences for this island archipelago, where the highest natural point is only a little over 2 meters above sea level,” said Bindu Lohani, ADB Vice-President for Knowledge Management and Sustainable Development. “At the same time, the Maldives stands to gain the most in South Asia if the global community takes the necessary steps to change resource use patterns and limit damage and impacts from climate change.”

The report, titled Assessing the Costs of Climate Change and Adaptation in South Asia, predicts the six countries—Bangladesh, Bhutan, India, the Maldives, Nepal, and Sri Lanka—will see an average annual economic loss of around 1.8% of their collective GDP by 2050, rising sharply to 8.8% in 2100.

Without changes to current global resource use behavior, the Maldives would see economic losses equivalent to over 2% of annual GDP by 2050, widening sharply to 12.6% by the end of the century. Given the uncertainties of climate change, there is a slight possibility that the losses could swell to more than 38%. But if mitigation and adaptation steps are taken, the Maldives will benefit the most in the region, with annual losses limited to around 3.5% of GDP by 2100.

A 1-meter sea level rise would inundate 66% of the archipelago’s total land area, causing widespread damage and displacement of communities. Warmer seas, which bleach coral reefs and harm reef fish stocks, would also negatively affect tourism, the mainstay of the country’s economy. Dengue, a vector-borne disease which is already endemic, could spread across atolls and potentially reach epidemic proportions.

Rising saline contamination of limited groundwater supplies, along with changes in rainfall patterns and dry spells also pose a serious threat, with rain providing the main source of drinking water for over 90% of households. Increased beach erosion and flooding from storm surges are other future challenges.

The cost of climate change adaptation measures in South Asia will depend largely on how the global community tackles the issue, the report says, noting that if the world continues on its current path, the region will need to spend at least $73 billion, or an average of 0.86% of its GDP, every year between now and 2100 to adapt to the negative impacts. On the other hand, if countries act together to keep the rise in global temperatures below 2.5°C, the cost of South Asia shielding itself from the worst of the impacts would be nearly halved to around $40.6 billion, or 0.48% of GDP.

The report does not provide adaptation cost projections on a country basis, but highlights a broad variety of measures that economies can take to respond to climate change. These include the use of drought-, flood- and saline-resistant crop varieties, more integrated coastal zone management, improved disease and vector surveillance, and more protection of groundwater resources and greater use of recycled water. In the case of energy, the Maldives should look to scale up development of its ample solar energy potential, which would help the country reduce its near-total dependence on imported fuel oil.