Book Launch of Assessing the Costs of Climate Change and Adaptation in South Asia - Bindu N. Lohani

Speech | 19 August 2014

(As drafted)

Special Address by ADB Vice President Bindu Lohani at the Book Launch of "Assessing the Costs of Climate Change and Adaptation in South Asia" on 19 August 2014 in Dhaka, Bangladesh.

Introduction

Honorable Minister Anwar Hossain Manju, Secretary Shafiqur Rahman Patwari, distinguished guests, colleagues, ladies and gentlemen, good morning.

I am extremely happy to be here this morning to formally launch an important book, "Assessing the Costs of Climate Change and Adaptation in South Asia", that delves into very interesting and crucial issues related to climate change adaptation in South Asia. This is the second volume on our work on climate change in South Asia. Last year, we released the "Economics of Reducing Greenhouse Gas Emissions in South Asia: Options and Costs", which focused on mitigation, and examined low-carbon growth opportunities and greenhouse gas (GHG) abatement potential.

Asia’s economic, climate and environmental challenges

Let me start by giving you a quick view of the Asian economy.

Asia’s economic growth in past decades has been remarkable. Asia is the main driver of global economic growth today. In ADB’s 2014 Asian Development Outlook Supplement, we estimated that developing Asia’s economic growth will accelerate from 6.1% in 2012 to 6.3% in 2013 and 6.4% in 2014. South Asia is expected to expand 5.4% this year and 6.1% next year [Note, internal numbers: Bangladesh is forecast to grow by 6.1% in 2014 and 6.2% in 2015]. And the potential for future long-term growth is enormous. If policymakers make the right kind of policy choices, Asia could potentially account for 52% of global GDP by 2050, making this century the Asian Century.1

However, Asia’s continued success is not pre-ordained. Rapid growth has brought with it rising inequality--within and across countries. And, growth was achieved at the cost of environmental degradation. Moreover, there is risk that countries can fall in the middle income trap, where Asia will only account for 31% of global GDP by 2050. To avoid this, Asia will have to hurdle several mega-challenges, and let me mention one such mega-challenge: climate change.

I see that the frontline of the climate challenge will in the cities. By 2050, 64% of the population in Asia will be in cities, hence, we need to make cities climate resilient.2 More than 50% of urban residents in Asia live in low lying costal zones or flood plains, including cities like Bangkok, Dhaka, Jakarta, and Manila. Rapid urban growth has also caused other environmental problems resulting from industrial activity and waste generation, which must be tackled.

Without ambitious action against climate change, we are headed towards a global temperature increase of 4.4°C by the end of this century. And, I now you are familiar with some of the impacts:

  • Sea levels could rise by as much as 46 cm by 2100, and likely more
  • In terms of vulnerability to rising sea levels, 15 of the 20 most exposed cities, and 9 out of the top 10 cities will be in Asia
  • Deserts are expanding in PRC, India, Mongolia and Pakistan, and many Asian regions already experience severe, recurrent droughts
  • reports 1 billion of Asia’s inhabitants are potentially vulnerable to increased water stress by 2050
  • IPCC reports about 2.5-10% decrease in crop yield for parts of Asia in the 2020s
  • In South Asia, a one meter rise in sea levels would affect 95 million people and another 100 million when there are storm surges.
  • A one meter sea level rise will cause permanent inundation to nearly 1% of the land area in Bangladesh, while affected population will be as high as 36%.

We have also seen how natural disasters have become more frequent and amplified. Between 1970 and 2010, 1.7 million hazard-related deaths were recorded in Asia, 51% of the global total. Nine out of ten countries estimated at highest mortality risk from flooding and six of the ten countries with the highest tropical cyclone mortality are in Asia. We have also seen that disaster losses have been rising more rapidly than Asia has been expanding economically. Based on 2007 estimates, Bangladesh loses about 0.6% of its annual gross domestic product due to disasters. This could increase to 0.70% in 2020 and 0.75% in 2050, if no future adaptation or risk reduction is in place.

The book we are launching today is the latest in a series of studies on the economics of climate change across Asia and the Pacific. In other regions, under business-as-usual scenario, annual economy-wide loss by 2100 ranges from 5.3% in Northeast Asia, 6.7% in Southeast Asia to 12.7% in the Pacific. South Asia’s mean economic loses would be at 8.8%, including 9.4% for Bangladesh. Under the Copenhagen-Cancun scenario, where actions are taken to keep the global mean temperature rise below 2oC, this would be 2.5% with a 5%probability of it reaching 6%.

The environment ministries of Bangladesh, Bhutan, India, the Maldives, Nepal, and Sri Lanka led the coordination of the country studies. Here, it was led by the Ministry of Environment and Forests with support from Government of the United Kingdom through the Department for International Development.

The study:

  1. assessed impacts of climate change, and
  2. associated economic costs and benefits of climate change adaptation.

With improved knowledge and information on climate change, policy makers in the region will be able to undertake the necessary measures and select concrete and appropriate economic policies. Allow me to emphasize two important messages that we can pick up from the book:

  1. While the needs and investments required for adaptation will depend on global mitigation efforts, early investment can help mitigate large economic damages in later decades.
  2. Climate change response policies (both adaptation and mitigation) are only effective when they are fully integrated with an overall sustainable development strategy and policy.

ADB’s response and program

Given this picture, how should we respond to climate change? Let me focus on what ADB is doing.

Addressing climate change remains a key agenda for ADB. Recently, we had the Midterm Review of our Long-term Strategic Framework, and one of the outcomes is the reaffirmation that the environment and climate change as one of 10 strategic priorities until 2020. ADB will scale up its support for climate change adaptation, while maintaining its assistance for mitigation through clean energy and energy efficiency projects and sustainable transport. Let me give you some details of our response.

First, we have and will continue to transform the energy sector, through clean energy and energy efficiency. We will continue our $2 billion clean energy investments. We several initiatives like the Asia Solar Energy Initiative, Quantum Leap in Wind Initiative, Energy for All Partnership, and Energy Efficiency Accelerator Program. Recently, ADB was selected as regional hub of Sustainable Energy for All (SEA4All).

Second, we will need to address urban development issues and transform the transport sector. We cities as the main battleground against climate change with need to push for sustainable urban infrastructure. ADB’s Urban Operational Plan promotes green, inclusive, competitive and livable cities. Our urban lending for 2010-2013 is $6.6 billion, with more than 90% of urban lending is for urban environment improvement. We have the Trust Fund for Urban Climate Change Resilience to strengthen resilience in secondary cities in Asia. Our Sustainable Transport Initiative guides us in our transport operations. The Dhaka Bus Rapid Transit System is a good example of sustainable transport. ADB and the other major multi-lateral development banks partnered last year during the Rio+20 summit to $175 billion for sustainable transport.

Third, increasing adaptation work is essential to responding to climate change. At ADB, we are increasing our capacity to do climate proofing. Our water supply and drainage infrastructure in project in Khulna is one good example of climate readiness - addressing the concern of possible salinity of the groundwater brought about by sea level rise.3 Recently, we adopted climate screening procedure for our projects. From our experience in ADB, the additional costs of climate-proofing vulnerable investment projects can range from around 5% to 15% of baseline investment requirements. What is critical though is the financing - adaptation costs in Asia and the Pacific may require financial resources of about $40 billion annually, through 2050. We have also adopted an integrated disaster risk management framework that includes climate change adaptation.

Fourth, we have in place financing mechanisms for climate finance. We are deploying concessional resources from both multilateral climate funds and internally-manage funds totaling about $2.55 billion. We have the Clean Investment Funds amounting to $1.76 billion. We provide carbon finance through our Asia-Pacific Carbon Fund ($151.8 million) and Future Carbon Fund ($115 million). This year we established the Y1.8 billion Japan Fund for the Joint Crediting Mechanism (JFJCM) to support the adoption of advanced low-carbon technologies. We promote public-private partnership (PPP) in climate finance. For example, we recently launched the $400 million Asia Climate Partners, a joint venture that will undertake commercially-oriented private equity investments across a variety of environmentally supportive, low-carbon transactions throughout Asia.

Finally, ADB will continue to do knowledge work to harness innovative ideas to address climate change and climate finance. Broadly, through Finance++ and One-ADB approach, we will support the development of new knowledge solutions through partnership with centers of excellence and knowledge hubs. We will expand our support for pilot-testing new innovations and other knowledge solutions and use the results to consider their wider application in our regular operations. And, we will strengthen our sector and thematic communities of practice, and open them up on a selective basis for external participation by experts. To support technological solutions, we established the Pilot Asia-Pacific Climate Technology Finance Center. This Center does (1) technology Identification and Assessment; (2) technology mainstreaming in development finance; (3) financial facilitation; and (4) knowledge sharing.

To help Bangladesh move to low-carbon and climate-resilient development, we have prepared a country-specific plan that is closely aligned with the government’s Sixth Five-Year Plan, Bangladesh Climate Change Strategy and Action Plan and National Adaptation Programme of Action, among others.

Conclusion

In closing, allow me to reiterate ADB’s commitment to help Asia, including Bangladesh, on its way to a green and climate-resilient sustainable development. We at ADB will continue to use policy dialogues, capacity building, knowledge services, and innovative financing and partnerships to support this journey.

The book we are launching today has one clear message – by ignoring climate change, we stand to lose the economic gains we made. I hope that with this thinking, we will catalyze more climate action in Bangladesh and South Asia, as part of the larger global effort.

Thank you.

1 ADB. 2011. Asia 2050: Realizing the Asian Century. Manila.
2 United Nations. 2014. World Urbanization Prospects.
3 Noting that sea level rise will make the groundwater around Khulna increasingly saline, we identified a point upstream where we estimate that surface water will remain fresh for much of the time. Consequently, in the future, we can construct an impounding reservoir to store fresh water when available for use during periods when river water is saline.