CWA # 231
Strategic Forecast 2020
Climate Change: The Economy of the Indian Ocean Region in 2020
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Aarathi Srinivasan
26 February 2020
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Photo Source: AFP/Getty Images
CWA Brief, February 2020
Given the rise in the number of estimated environmental hazardous that the world will face in the years to come, correspondingly, the world will witness an all-time increase in the number of people becoming migrants due to climate change
Background
The Indian Ocean Region is projected to become a dominant economic force in the coming decade. But till 2015, the Gross National Income of Australia, Singapore and the UAE feature at the top, rest of the countries are still developing.
Blue Economy provides ample opportunities to the IOR, new sustainable oceans industries, such as sustainable fisheries and aquaculture, marine renewable energy present opportunities to generate new sources of jobs and growth, diversify the economy, build climate resilience, reduce the region’s dependence on energy imports, and address the achievement of food security. In 2019, the Intergovernmental Panel on Climate Change (IPCC) released its latest assessment report, stating that climate change will accelerate several desertification processes and that the risk of desertification will increase in the future with implications such as loss of biodiversity and wildfires. India, Madagascar and Somalia are at the top of the list of most affected countries in the IOR. Out of the 10 most-affected countries in 2017-18, Madagascar, India, Sri Lanka and Kenya ranked 4th, 5th, 6th, 7th respectively. Heatwaves, recurring floods and cyclones are the major cause of damage in 2019. Parts of east and southern Africa was hit by floods, landslides, cyclones and droughts, leaving at least 33 million people at emergency levels of food insecurity.
With the formation of cyclone Pawan on the morning of December 5, 2019, in the south-west Arabian sea, the total number of cyclones in the north Indian ocean region this year has reached eight. Six of the cyclones in the year 2019 were of the ‘severe’ or ‘very severe’ category.
Major Trends in 2019
Depletion of Natural Resources
The countries in the IOR are home to nearly 45 per cent of the world’s fisheries and constitute about 8 per cent of the total world’s fish production. During the year 2019, there has been a noticeable reduction in the fish stock in the IOR. The fisherfolk of the port town of Kakinada in Andhra Pradesh are battling with marine pollution and climate change that is causing coastal ingress and unemployment. They report that fish catch has reduced by 75per cent and state that nearly 250 varieties of fish are going to be extinct in the upcoming years. The educated unemployed youth have given up their traditional vocation and have taken up other jobs like driving auto-rickshaws. The melting ice caps and rising sea levels have encroached 8 kilometres into the land. The situation in Sri Lanka is similar. The eastern coast of Sri Lanka has seen a reduction in the number of fishing boats and employment levels in this vocation. The phytoplankton levels in the Kenyan and Somali coasts have fallen, which are home to large shoals of fish.
Huge mineral stocks are found on the coast of Africa. Discharge of wastewater from ships mining polymetallic modules has caused temperature differences threatening life dwelling in the top layers of the ocean. Acidification and rise in sea temperature destroy the coral reefs that are critical to various sea species. In 2016, the Great Barrier Reef experienced a mass bleaching event that scientists say was made 175 times more likely to have occurred due to climate change. In fact, about 30 per cent of corals on the reef have died since the 2016 mass bleaching event. The impact of climate change would not only be catastrophic for the marine species alone, but also for the communities that depend on them while increasing their additional socioeconomic and environmental pressures.
Infrastructure Damage
In 2018-19, due to climate change, there has been nearly 10 per cent excess rainfall in the IOR. Massive and recurring floods in Kerala and Bihar, cyclones in Orissa, Bangladesh and south-eastern coast of Africa, caused excessive damage to the infrastructure and have pulled the economy backwards. Cyclone Fani in Orissa and Bangladesh has had destructive effects, setting back the state’s economy by ₹12000 crores. Production loss is about ₹300 crores due to a cyclone induced power and water crunch. Cyclone Fani has wreaked havoc in Africa’s Mozambique, Malawi, Zimbabwe and Madagascar. It has caused a $1 billion loss of infrastructure, ruining nearly 500,000 hectares of crops and increasing food-price inflation. Floods in Iran have caused damage in 23 out of 31 provinces, destroying bridges, houses and parts of the historic monument as well.
Southeast Asia faces a dual challenge. It not only must adapt to climate change caused largely by greenhouse gases emitted over decades by advanced economies—and more recently by developing economies such as China and India—it also must alter its development strategies that are increasingly contributing to global warming.
Impact on Agriculture Sector
IOR is characterised by high population. These developing countries constitute one-third of the world population, extremely dependent on agriculture, as well as the fishery. Climate change is one of the reasons for the destruction of agricultural lands, through droughts and desertification, thereby reducing the productivity of the land. The monsoon season of 2019 in Somalia has been the third driest since the early 1980s. Unreliable weather pattern and climate shocks have led to Somalia’s worst harvest, which has forced nearly 6.3 million people into food insecurity. Cyclone Fani in Mozambique has destroyed the cornfields just before the harvest time, pushing farmers to migrate. Flooding has caused severe damage to the Iranian agricultural sector since March 2019. The losses in the agriculture sector have been estimated up to 46 trillion rials by April 2019. Horticulture, animal husbandry, apiculture and poultry arming have borne the maximum damage in the agriculture sector as some 600 poultry farms have been damaged across the country. During the last decade, agricultural losses have amounted to $29 billion in developing countries.
Displacement of people
In the initial 6 months of the year 2019 alone, 7 million people have been displaced. In India and Bangladesh, cyclone Fani triggered more than 3.4 million new displacements. Cyclone Idai displaced 1,46,000 people. By mid-2019, nearly 2.1 million people have been displaced in Ethiopia, Kenya, Somalia, South Sudan and Sudan due to drought and food insecurity. Small Island Developing States (SIDS) in the Indian Ocean Region continue to be disproportionately affected by natural hazards. The worsening droughts in Somalia are driving thousands of people to flee within the country or trek to Ethiopia.
In South Asia, increasing temperatures, sea-level rise, more frequent cyclones, flooding of river systems fed by melting glaciers, and other extreme weather events are aggravating the current internal and international migration patterns. Such migration is mostly internal, but they have a resounding impact on the economy. Additionally, rapid economic growth and urbanization are accelerating and magnifying the impact and drivers of climate change. Apart from this, many of the expanding urban areas are located in low-lying coastal areas, already threatened by sea-level rise. The coastal areas of Bangladesh, low lying areas such as Mumbai in India are already facing threatening situations.
Increase in Economic Inequality
Within the Indian Ocean Rim Association (IORA), there is a noticeable difference in the economic index of its member countries. Climate change plays another factor in widening the inequality between developed and developing countries. A rapid increase in the temperature over the IOR has reduced the labour productivity in the region. Increase in CO2 emissions increases the number of heat days. Extreme summers and extreme winters were noticeable in the past five years, which affects the health of labourers, especially those working in the agriculture and mining industries.
Temperature changes caused by climate change have enriched cool countries like Norway and Sweden while dragging down economic growth in warm countries such as India and Nigeria. For every trillion tonnes of CO2 emissions, the GDP has reduced by 1 – 2per cent. Though such large-scale emissions are not from IOR alone, developing countries in the region will be affected the most. India’s and Sudan’s economies have become over 30 per cent smaller than what it would have been if there was no global warming.
Impact on Tourism Sector
For a number of Indian Ocean nations, tourism represents another sector highly dependent on marine and coastal resources. The small island states, especially rely on the appeal of their beaches, coral reefs, and coastal waters.
Degradation of coastal estuaries, mangroves, lagoons, coral reefs, and kelp forests has destroyed the habitats of many species that support artisanal and commercial fisheries. Australia’s iconic Great Barrier Reef has been hit exceptionally hard by climate change. Stressed by warmer and more acidic waters, coral expels the colourful algae it depends on to survive. The coral turns white – known as “coral bleaching” – and unless the coral has a chance to recover and the algae to return, it can die, upsetting entire marine ecosystem. In 2016, the Great Barrier Reef experienced a mass bleaching event that scientists say was made 175 times more likely to have occurred due to climate change. In fact, about 30 percent of corals on the reef have died since the 2016 mass bleaching event. The reef supports fisheries, helps employ more than 64,000 people, and brings tourists from around the globe to see this World Heritage Site.
Regional Cooperation
Apart from initiatives for a region-wide approach largely through the IORA, most of the countries have individual climate change policies. Countries have ratified the UNCLOS, the Paris Agreement on Climate Change (2015), Sustainable Development Agenda 2030. The Bay of Bengal large marine ecosystem (LME) initiative is aimed at improving fisheries management and governance frameworks for enhancing adaptation and resilience of the marine ecosystem.
The regional efforts in the Indian Ocean have largely remained disjointed, lacking a unified law and policy framework. Though the Indian Ocean Commission developed a Regional Climate Action Plan 2016-2020, they did not implement it properly since regional economic development was the priority. Regional agreements such as the African Convention on the Conservation of Nature and Natural Resources (ACCNNR), and the Nairobi Convention for the Protection, Management and Development of the Marine and Coastal Environment of the Eastern African Region, as well as the Association for South East Asian Nations (ASEAN), have been active in the area of ecosystem conservation and climate change. However, they can only play a minimal role in facilitating regional coherence in the IOR as their scope extends beyond the region.
Forecasts for 2020
Diversion of resources
Since the fish catch has reduced by 75per cent in certain coastal towns of India, the fishermen venture into the deep sea to catch more fish. Declining income forces the labourers employed in the primary sector to turn towards the government for support. The subsidy rates for fishermen are expected to hike in 2020. The diesel subsidy currently is ₹6 but is expected to rise to ₹9. Similarly, the volume of diesel to be subsidised is going to increase from 3000 litres to 6000 litres.
The amount allocated towards disaster management and rescue operations has been on an increasing trend from the start of the century in India. With the recession setting in most of the countries, the diversion of resources from productive asset formation to disaster relief funds is expected to pull the economy down the spiral. Cyclones and floods due to climate change not only pause the economic activities for a while, but it can also cause a year-long impact on the budget of the country, increasing-price inflation.
Impact on Coastal Cities and Infrastructure
The SIDS in the IOR faces a challenge in safeguarding their territory and population. The land: sea ratios for SIDS are skewed, in the sense that their Exclusive Economic Zones (EEZs) are larger than their land area. In Seychelles, about 80 per cent of the infrastructure and population are found along the coast. Currently, the mean tidal level at Malè has shown an increasing trend of about 4.1 mm/year. This is expected to rise in 2020. This will move the territorial baseline of the country inwards, dragging the EEZs inwards. The reduction in the EEZs will have an economic impact on the economy of SIDS since they depend on it.
In Southeast Asia, the economic impacts will be devastating. The Asian Development Bank (ADB) estimates Southeast Asia could suffer bigger losses than most regions in the world. Unchecked, climate change could shave 11per cent off the region’s GDP by the end of the century as it takes a toll on key sectors such as agriculture, tourism, and fishing—along with human health and labour productivity.
To combat climate change-induced disasters, an investment of 1.8 trillion dollars is required by the next two years. Investment in five areas, including early warning systems, climate-resilient infrastructure, improved dryland agriculture and mangrove protection, will give four times the return on investment by 2050. Many coastal countries in the IOR face an “adaptation deficit”, that is, the funds allocated to build a climate change resilient economy cannot be optimally utilised since they do not have an existing strong infrastructure. Despite these shortcomings, investment opportunities in coastal countries and SIDS seem promising. Last year, the government of Seychelles issued a blue bond, approved by the World Bank, to raise capital to finance ocean-based projects that have positive environmental, economic and climate benefit. There will be an inflow of investment towards greener economies, to upgrade the existing infrastructure.
Displacement of People
In 2019, internal displacements were mainly due to floods, cyclones and food insecurity. At the current rate of climate change-induced disasters and rainfall pattern, it is estimated that, by the end of 2020, 22 million people will be displaced in South Asia, more than 4 million in eastern and southern Africa and increasing trend in external migration from SIDS. Water scarcity will become one of the major variables affecting displacement in the years to come. In India, already one billion Indians live without access to water for at least one part of the year. By 2020, demand on India’s water will exceed its supply, leading to severe drinking water shortages. Around 21 cities in India will run out of groundwater in 2020, 40per cent of India’s population will not have access to drinking water by 2030. This situation is expected to trigger external migration, especially to Europe and the USA. Despite these projections, Prime Minister of India, Shri Narendra Modi has promised piped water to all rural areas by 2024.
Population and Health
The population of countries in the IOR is projected to experience dramatic growth in the next few years. They will collectively host nearly half of the world’s population by 2050. This population explosion will create dependency on agriculture and fishery. The eastern coast of Africa is a cyclone-prone area and is facing desertification and droughts as well. With this rate by mid-2020, an estimated 1 million children are likely to be acutely malnourished. Many SIDS lies in the tropical zone, where the climate is favourable for transmission of diseases such as malaria and dengue, filariasis and schistosomiasis. It is estimated that in the Maldives, there will be a projected increase in the non-communicable diseases in 2020-2025.
An unusual warming event over the Antarctica that has soared temperatures in the South Pole by more than 40 degrees Celsius, is driving record-breaking warm temperatures in Australia. This is expected to trigger hot, dry winds across Australia over the next few months, impacting rainfall and worsening droughts in the continent. Dry and windy conditions are likely to increase the fire threat in a number of regions, with 15 fires already burning in the southeast region. As wildfires become more common, a person’s short-term exposure to a wildfire can trigger a lifetime of asthma, allergy and constricted breathing. It is estimated that, without any stringent climate change action, there will be nearly a 10 per cent increase in the death rates compared to the current statistics.
Impact on Productivity of Land and Labour
Most of the countries in the IOR are heavily populated making them a labour-intensive country. Excessive production of carbon-di-oxide into the air can reduce the productivity of the labour. Loss of productivity due to high heat exposure will be highest in agriculture, mining, quarrying and in construction industries. By 2030, India will lose 5.8per cent of its working hours due to heat stress, which is equivalent to 34 million full-time jobs out of 80 million worldwide. Nearly 3-5per cent of the GDP of countries like India, Malaysia and Thailand will reduce due to excessive CO2 emissions.
Droughts and the process of desertification will reduce the productivity of land. Even if the rainfall patterns are restored, the yield of agricultural land may not be the same. Approximately 42per cent of the land in India is threatened by drought – an area home to approximately 500 million people.
Seychelles economic growth is expected to be stagnated at 3.3per cent in 2020. Maldives economic growth will be around 4.7 per cent. Considering that 80per cent of its territory is less than one meter above sea level, the government is worried about the impact of erosion and global warming on the low-lying country in the long-term. Australia’s economy continued to grow at an estimated rate of 4.7 per cent in 2018, and is expected to reach 6.5per cent and 6per cent in 2019 and 2020 respectively. Australia must face climate change impacts, such as the loss of 20 per cent of the Great Coral Reef's coral due to a catastrophic bleaching situation and the increasing frequency and duration of droughts putting an unprecedented level of water stress on the Australian agriculture.
Regional Cooperation in Combating Climate Change
The UNEP Regional Seas Programme - the South Asia Seas Programme that includes India, Bangladesh, Sri Lanka, Pakistan and the Maldives as members, focuses on Integrated Coastal zone management, environmental effects and climate change issues. However, there is a lack of focus on the fisheries and their limitation in acting beyond the boundaries of member states pose implementation challenges across the entire Indian ocean.
The western Indian ocean countries have taken efforts to identify and implement steps to achieve Aichi Target 11 of the Convention on Biological Diversity (CBD) through increasing national coverage of well managed Marine Protected Areas (MPAs) in EEZs to at least 10 per cent by 2020. In 2017, the estimated MPAs covered was 2.1per cent of EEZs in the western Indian Ocean region.
The ASEAN has addressed the concerns on climate change and food security through policy responses and initiatives. In 2009, the ASEAN adopted the ASEAN Integrated Food Security (AIFS) Framework, supported with the Strategic Plan of Action – Food Security (SPA-FS) 2009-2013, as a regional initiative and systematized approach to food security, which is now adopted as second phase AIFS and SPA-FS 2015-2020. The member countries of ASEAN have taken up pledges to reduce emissions. Under the ASEAN Plan of Action on Energy Cooperation (APAEC) 2016-2025, ASEAN targeted a reduction of energy intensity level through energy efficiency effort of 20per cent by 2020 and 30per cent by 2025, based on 2005 levels. Today the plan is on track to achieve the 2020 target.
On the contrary, the South Asian Association of Regional Cooperation (SAARC) showed a lack of cooperation to combat climate change. Though they signed an agreement on rapid response to natural disasters during their 17th summit, not much work has been carried out with regard to it apart from India’s relief efforts in the aftermath of the Nepal earthquake. The consecutive meeting of SAARC failed to reach an agreement over any issues to overcome climate change effects and plans for mitigation.
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Aarathi Srinivasan is pursuing her Masters in International Studies from Stella Maris College, Chennai
This essay was first published in the NIAS Quarterly on Contemporary World Affairs, Vol 2, Issue 1, January-March 2020
