Ahead of the Paris climate change talks beginning Monday—which will be attended by over 130 heads of states and governments including Prime Minister Narendra Modi—global rating agency Standard & Poor’s has released an interesting report on how climate-change-related hazards can impact sovereign ratings. The simulations based on a sample of 38 sovereigns and 44 natural catastrophes show that climate change impact, triggered by tropical cyclones and floods that can be expected once in every 250 years, would increase the negative rating impact on an average by about 20%. While in terms of average impact, tropical cyclones will be more damaging than floods, geographically, the Caribbean and Southeast Asian nations appear to be at the highest risk. As expected, the impact on ratings will be much higher for poor and developing countries. So, the tropical cyclones in the Bahamas, Barbados, Dominican Republic, Jamaica and Vietnam, and floods in Thailand, would see the maximum rating impact. The direct damage from climate change will rise significantly for rich countries too—that from tropical cyclones in the US, New Zealand or Japan would increase by 45%, 50% and 64%, respectively—but it will not alter their rating much because they are well prepared to handle the damages. The deliberations in Paris will have to focus on the expected increase in government debt due to climate change, anywhere between more than 4% of GDP in Vietnam and 42% in Bahamas, and per-capita income losses, projected to range from about 1.6% in Bermuda to 8.5% in Thailand.
For India, although the additional impact of climate change according to S&P estimates doesn’t appear to be significant, combined with the World Bank estimates on how it will raise poverty makes it a major challenge. The Bank has estimated an additional 100 million people will fall into extreme poverty by 2030 on account of this, of which 45 million will be in India. It is good that the country has committed itself to reduction in the emission intensity or emission per unit of GDP 33-35% by 2030 from the 2005 levels, but even if India raises its contribution of clean energy from 6% at present to 40% by then, as projected, 60% dependence would remain on fossil fuels. It is extremely important, therefore, that while poor and developing countries including India are looking at all the sources of investment in clean energy, developed countries also chip in with supply of technology and resources to lessen the impact. The way global discourse is shaping up, it will not be a surprise if PM Modi’s slogan of turning the ‘climate change’ talks into ‘climate justice’ takes centre-stage in Paris.