Assessing the Costs of Climate Change and Adaptation in South Asia

Publication | June 2014

This report synthesizes the results of country and sector studies on the economic costs and benefits of unilateral and regional actions on climate change in Bangladesh, Bhutan, India, the Maldives, Nepal, and Sri Lanka.

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With a population of 1.43 billion people, one-third of whom live in poverty, the South Asia developing members of ADB face the challenge of achieving and sustaining rapid economic growth to reduce poverty and attain other Millennium Development Goals in an era of accentuated risks posed by global climate change. Economic losses in key sectors, such as agriculture, energy, transport, health, water, coastal and marine, and tourism, are expected to be significant, rendering growth targets harder to achieve.


According to the report's findings the total climate change cost in South Asia will increase over time and will be prohibitively high in the long term. Without global deviation from a fossil-fuel-intensive path, South Asia could lose an equivalent 1.8% of its annual gross domestic product (GDP) by 2050, which will progressively increase to 8.8% by 2100. The model suggests that the Maldives will be hardest hit in GDP loss, while Bangladesh, Bhutan, India, Nepal, and Sri Lanka are projected to face 2.0%, 1.4%, 1.8%, 2.2%, and 1.2%, respectively, loss of annual GDP by 2050.

However, should the global community take actions along the Copenhagen–Cancun agreements to keep the global mean temperature rise below or within 2 degrees Centigrade, the region would only lose an average of 1.3% of GDP by 2050 and roughly 2.5% by 2100. Impacts on vulnerable sectors include the following:


Higher temperatures eventually reduce yields of desirable crops while encouraging weed and pest proliferation. Changes in precipitation pattern (timing and amount) increase the likelihood of short-run crop failures and long-run production declines, posing a serious threat to food security. Although there will be gain in some crops in some regions, the overall impacts of climate change on agriculture are expected to be negative and need to be much better understood.


A rise in average warming will increase energy requirements for space cooling (but reduce energy needed for warming), while increasing energy demand for irrigation. On the supply side, there is a direct influence on hydropower and thermal power generation through availability of water and the temperature of cooling water, respectively. Increases in intensity and frequency of extreme events like storms and sea level rise may cause more electrical system failures.

Forest and other ecosystems

Climate change will affect forest carbon pools in some countries of the region.


The modeling results suggest that the mortality rate for the region caused by dengue, malaria, and diarrhea would increase over time as a consequence of climate change. Morbidity and deaths from such diseases could increase in the future under all scenarios.


Although the monsoon-dominated annual precipitation cycle is expected to remain unchanged over South Asia, future decades are predicted to have drier and warmer winter months with reduced snow cover, while the summer/monsoon months are predicted to become wetter and warmer. The seasonal pattern of flows over the year could become more erratic, as rainfall is immediately converted to runoff instead of being stored as ice.

Adaptation options, policies and strategies

The region’s adaptation response need not be confined to symptomatic treatment of threats to traditional patterns of economic activity. More efficient regional economic diversification can create entirely new patterns and supporting infrastructure to take their place. In other words, policy makers need to take early action to adapt to climate risks, and this action needs to be informed by rigorous and timely evidence.

The South Asia developing member countries have by now developed their adaptation strategy. In some countries, such as India, state and subnational action plans have also been developed, allowing for integrating climate change adaption options in local project and facilities development. Building resilience to the impacts of climate change requires identifying the risks and vulnerabilities of sector and area development projects and programs, followed by developing the options for adaptation and mitigation measures that are socially, environmentally, and economically sound.

About this report

This report synthesizes the results of country and sector studies on the economic costs and benefits of unilateral and regional actions on climate change in ADB’s six South Asia developing members, namely Bangladesh, Bhutan, India, the Maldives, Nepal, and Sri Lanka. The study takes into account the different scenarios and impacts projected across vulnerable sectors and estimates the total economic loss throughout the 21st century and amount of funding required for adaptation measures to avert such potential losses. It is envisioned to strengthen decision-making capacities and improve understanding of the economics of climate change for the countries in South Asia.


  • Executive Summary
  • Situation Analysis and Methodology
    • Introduction
    • Methodology
    • Climate Change Scenario in South Asia
  • Climate Change—Impact and Adaptation
    • Modeling Climate Change and Its Impacts on Sectors
    • Economic Implications of Climate Change in South Asia
  • Responses
    • Adaptation Options, Policies, and Strategies
  • Appendixes
  • References

Additional Details

  • Climate change
  • Promoting climate resilient development
  • Economics
  • Environment
  • Bangladesh
  • Bhutan
  • India
  • Maldives
  • Nepal
  • Sri Lanka
  • BKK146474-2
  • 978-92-9254-510-9 (Print)
  • 978-92-9254-511-6 (Electronic)

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