By Akhilesh Tilotia

Digital public infrastructure (DPI) is a unique Indian innovation: it has revolutionised identity, payments, commerce, credit, among many sectors. The 2023 Economic Survey estimated that DPI could add between 60 and 100 basis points every year to India’s economic growth potential.

DPI, as an interoperable, open, and inclusive system, can play a critical role in accelerating digital transformation. It is an infrastructure-based approach to achieve societal goals through an ecosystem (comprising technology, markets, and governance) built in public interest and leveraging private innovation.

Think of the payment apps built on top of the Unified Payments Interface or Know Your Customer applications built on the foundation of Aadhaar. Account aggregators Open Network for Digital Commerce and Open Credit Enablement Network have created the plumbing for financial and commercial transactions. It is now time to harness the versatile power of DPI: India needs a climate stack.The intense heatwave of north India this year or the devastating floods in Sikkim and Assam are only a few examples of climate events that significantly hit human and business activities. Four aspects emerge.

Physical changes: The physical impact of climate change-induced events ripples through almost all segments of society: agriculture, businesses, homes, health, insurance, etc. The impact is seen in physical aspects like soil, houses, infrastructure, and supply chains.

Business and insurance: Businesses see revenue losses, stalled operations, increasing expenses, or investment requirements. Many areas are becoming uninsurable as insurers and reinsurers are unable to come to a common understanding of what a good model of future losses could look like, at a time when regulatory reporting requirements with respect to climate are increasing.

Public intervention: Governments are being called upon to make global commitments and develop policies to attract investments. This impacts fossil fuel tax revenues and increases climate investment incentives. Governments are now required to invest in resilience and face uninsured expenditure for immediate relief after a crisis.

Time: Climate change events in the short run require quick adaptation measures. In the longer run, citizens and communities must develop a resilient lifestyle, or in extreme cases find new places and ways to live. The short- and long-term impacts feed into each other, requiring high quality data and forecasting.

At its core, a climate stack puts together the many pieces of information that various participants are observing. This information can be historical: weather data like temperature, humidity, precipitation, and significant events, losses, etc.; current: soil conditions, insurance rates, type, frequency, and impact of damage, etc.; future: model-based forecasts of weather events or their impact, or investments planned.

Many data points are already public, produced by authorities or agencies charged with their production and maintenance. Many current data points can be collected via a digital ecosystem of internet-of-things devices, subject to privacy and consent. Similarly, various agencies, largely in the public or academic sphere, are building forward-looking models on climate impacts.These data and models are being developed independently. Enterprises are integrating aspects pertinent to them to power forecasting and action systems. For example, ITC, along with an ecosystem of partners, has created artificial intelligence-powered models to identify micro and near-term impact of weather patterns that are disseminated to stakeholders (farmers, officers, supply chain participants), with advice on contingent actions.

Climate stack, a common platform with standardised vocabulary on climate terms and information, can create a shared language for all participants. It can foster reciprocal data relationships: all participants can receive input and offer data. This will help aggregate and develop learnings. A common understanding can power robust forecasting methodologies.

Unlike in traditional insurance where risks are empirically estimated through long-range data sets, climate risks are based on forecasts. Standard forecasting models can create a common definition and understanding of the risks being underwritten. With short-range and granular forecasting, such a tool can create a dispersed model of interventions.

The stack can also feed into various other initiatives: Gati Shakti in infrastructure, building codes in different locations, health-related digital interventions, or serve as the base for business reporting and supply chain planning. It can become a repository of India’s carbon emissions and inventory of its credits. In global negotiations, an open and transparent stack can create further confidence in our interventions to peak and bend our carbon curve to zero. Models and forecasts built on the stack can offer alternative ways to achieving India’s 2070 net zero goal.

Just like the DPI ecosystems, building a climate stack will require a grouping of climate stakeholders from engineering, social impact, financing, regulation, etc. to build common standards. It will require the convening power of the government, preferably in a separate entity like it was done for the the unique identification project. Cross-ministerial and cross-sectional support of the society will be required to make this stack a success.

The author is public policy strategist and climate finance expert. With inputs from Sivakumar S, ITC and Runa Sarkar, IIM Calcutta

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