ISLAMABAD: Climate change could cut Pakistan’s gross domestic product (GDP) by 21.1 per cent by 2070 under a high end emissions scenario, says the Asian Development Bank (ADB).

The bank in its latest report, “Asia-Pacific Climate Report 2024, Catalyzing Finance and Policy Solutions”, noted that climate change could lead to a 17 percent GDP drop across Asia and the Pacific region by 2070 under a high end emissions scenario, which could rise to 41 percent of GDP by the end of the century.

The projected climate effects of sea level rise and labour productivity losses will be the most damaging - with lower-income economies and the region’s poorest set to be the hardest hit.

The report noted that among the assessed countries and sub-regions, these losses are concentrated in Bangladesh (–30.5 per cent), Viet Nam (–30.2 per cent), Indonesia (–26.8 per cent), India (–24.7 per cent), “the rest of Southeast Asia” (–23.4 per cent), higher-income Southeast Asia (–22.0 per cent), Pakistan (–21.1 per cent), the Pacific (–18.6 per cent), and the Philippines (–18.1 per cent). Losses increase at a higher rate over time, as the difference between 2050 and 2070 losses is greater than between 2030 and 2050.

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These losses are far above prior model-based losses and are consistent with the upper bound of econometric estimates. They also confirm that climate policy responses, including adaptation and mitigation, will be essential to the future welfare of the Asia and Pacific region.

For many countries, effects on labour productivity from heat waves are large and rank second or even dominate losses. The GDP loss in 2070 from reduced labour productivity is found to be 4.9 per cent for the region. The most impacted locations are tropical and subtropical. These include “the rest of Southeast Asia” (–11.9 per cent), India (–11.6 per cent), Pakistan (–10.4 per cent), and Viet Nam (–8.5 per cent) as shown in Figure 2.17.

Losses are substantial in the natural resource sector, encompassing agriculture, forestry, and fisheries. The economic loss from shocks to these climate-dependent sectors is 2.1 per cent of GDP across the region by 2070.

The combined losses from these sectors are largest in Pakistan (–12.0 per cent), “the rest of South Asia” (–6.0 per cent), the Philippines (–4.7 per cent), higher income Southeast Asia (–4.5 per cent), Indonesia (–4.5 per cent), “the rest of Southeast Asia” (–4.3 per cent), and Viet Nam (-4.1 per cent).

With the largest economic impacts of climate change occurring in those areas of Asia and the Pacific with lower relative incomes—such as Bangladesh, India, Indonesia, Pakistan, the rest of Southeast Asia, Viet Nam, and the Pacific—via channels such as increased coastal inundation, lower labour productivity, and lower natural resource productivity, poor communities are likely to be most affected. Poor people are most likely to live in areas exposed to flooding and storm surges, to depend on natural resource sectors for livelihoods, and/or to work in sectors exposed to increasing heat. They also have the lowest capacity to adapt and cope with these shocks.

Developing Asia is both vulnerable to the effects of climate change and a major driver of greenhouse gas emissions growth. An ADB online climate change perception survey conducted this year found 91 per cent of respondents across 14 economies in the region view global warming as a serious problem, with many seeking more ambitious government action.

The projected climate effects of sea level rise and labour productivity losses will be the most damaging - with lower-income economies and the region’s poorest set to be the hardest hit. Mitigation must be increased to limit long term losses, while adaptation must be accelerated to address impacts that will not be avoided.

Annual investment needs for climate change adaptation by regional countries are estimated between $102 billion and $431 billion - far more than the approximate $34 billion of adaptation finance mobilized in the region in 2021-2022.

Private capital is increasingly helping to plug the climate finance gap, attracted by government regulations and recognition of climate risks, but barriers remain around policy uncertainty, unreliable information and weak markets.

Copyright Business Recorder, 2024