INDIA POLICY FORUM 2018 Quantifying India’s Clima Climate V te Vulner ulnerability bility Melissa LoPalo 1 , Kevin Kuruc 1 , Mark Budolfson 2 , Dean Spears 1,3 1 University of Texas at Austin 2 University of Vermont 3 Indian Statistical Institute – Delhi Centre; and r.i.c.e.
Climate change and the economy • Increase in global average (and extreme) temperatures over next century “virtually certain” (IPCC 2007) but how much depends on policy • Classic externality: Individual actions cause harm; collective action needed to solve • Economists’ theoretical solution: Equate marginal social cost of mitigation to marginal social benefit of averted damages →How much damage?: We quantify the potential damages from climate change, to Indian people only
Developing countries are especially vulnerable to climate damages • Developing countries are disproportionately located in the tropics (hotter starting climate) • More people are exposed to heat: • Less air conditioning • More outdoor work • Pre-climate-change health of poor people is worse • India is particularly vulnerable due to its combination of heat, , pover erty ty, and d humidi idity (see also Mani, et al . World Bank, 2018)
Outline Microeconomic evidence: The consequences of heat and humidity Macroeconomic projections: How much are climate damages worth? Health co-benefits: Consequences of mitigation for Indians today Concluding questions: What is India’s best response to international climate injustice?
Micr Microecon oeconomic omic Evidenc Evidence: e: The consequences of heat and humidity
Em Empir iric ical al str strat ateg egy: y: Learn from cases where the weather deviates from expected seasonal trends • No empirical technique with past data can see the effects of future climate change: we must study past realized weather • But learning from the weather has difficulties: • Avoid confusing effects of weather with effects of place or season Climate adaptation might reduce future vulnerability • • Recent economic literature compares seasonally unusually hot and cold days or months within a place, disentangling the effect of temperature from other factors (Dell et al ., 2012, and others) • This literature finds significant effects on GDP growth, productivity, agricultural yields, conflict, health, and more outcomes
Why hum umid idit ity y ma matt tter ers for India’s climate vulnerability • Humans must maintain a body temperature that is not too hot and not too cold • Humidity reduces the effectiveness of sweating • This is especially important for young babies: temperature regulation develops in early life • Literature in the U.S. suggests humidity is an important moderator of the impacts of heat on health (Barreca, 2012). • Wet et Bul ulb b Temperat perature ure (Twb): : a summary measure of temperature, humidity, and air pressure that more completely describes outdoor conditions for humans • Always lower than “dry bulb temperature” (regular temperature)
Exposure to wet and dry heat occurs in different places >95 Dry Bulb Days >85 Wet et Bulb Days
Reg egress ession ion strat ateg egy: y: How did weather in the time window of exposure differ from other instances of that month in that place in other years? Count of very hot and humid days j are degree- 𝛾 𝑘 ∙ 𝑈𝑓𝑛𝑞 𝑗𝑞𝑢 𝑘 𝑧 𝑗𝑞𝑢 = + 𝛽 𝑞 + 𝜄 𝑢 + 𝜚𝑌 𝑗𝑞𝑢 + 𝜁 𝑗𝑞𝑢 day bins 𝑘
Estimating effects of heat and humidity on infant mortality • Geruso and Spears (2018) estimate the impacts of wet bulb temperature on infant mortality in 53 developing countries • an additional day above 85 degrees (F) wet bulb (32 degrees Celsius at 80 percent humidity) predicts about half an additional infant death per 1,000 births • rare: last Thursday afternoon in Delhi probably above Twb 85 • We examine the implications for India under current and future projected weather distributions • Multiply Geruso and Spears effect size by local counts of days>85 degrees wet bulb
Projected effects of heat and humidity on infant mortality Benef efit it, due to this Obser served ed weath ther er Project cted ed weath ther er effect, ect, of mitigat igation on 2000-2010 RCP 8.5 (BAU) RCP 8.5 – RCP 2.6 Effect of days in month of birth above 85 ° F Twb from Geruso & Spears (2018).
Estimating effects of heat and humidity on labor productivity • LoPalo (2018) estimates the impacts of wet bulb temperature on worker productivity • Examines survey interviewers as workers • Looks at impact of wet bulb temperature on day of interview on quantity and quality of data produced • Daily average wet bulb temperature > 85 degrees results in 10% fewer interviews completed per hour worked
Projected effects of heat and humidity on labor productivity Benef efit it, due to this effect, ect, of mitigat igation on Observed weather Project cted ed weath ther er RCP 8.5 – RCP 2.6 2000-2010 RCP 8.5 (BAU) Effect on outdoor labor productivity of day above 85 ° F Twb from LoPalo (2018).
What do these effects amount to? • Causally well-identified microeconometric estimates are large • Applied to weather projections: large effects on future India • However, little can be known about future adaptation • Repeated pattern of in increa easin ing g in inequa equalit ity y within India, as damages are greater in disadvantaged states
Macr Macroeconomic oeconomic Pr Project ojections: ions: How much are climate damages worth?
Integrated Assessment Models People produce goods & emissions People harmed by Stock of CO 2 in warmer planet atmosphere Planet warms
Any climate IAM must aggregate costs and benefits for people in different times. 𝑢 1 𝑋 = 𝑜 𝑢 𝑣 𝑑 𝑢 1 + 𝜍 𝑢 • additive over time • time discounting (although we set this close to zero) • diminishing marginal utility of consumption • discount consumption because future Indians will be richer • we only consider consequences for Indian population Mec echanism ism: : mitigation costs reduce consumption today, but prevent climate damages in the future.
Damage function: % annual GDP loss, based on (dry bulb) climate change Indian ian damage ge functi ction on Nordhaus (2010) [humidity not included] Global damage function Sources: Tol (2009); IPCC (2007); Nordhaus and Sztorc (2013)
Da Dama mage ge fun unct ctio ion: n: % annual GDP loss, based on (dry bulb) climate change Under low-mitigation policy scenarios, India ia would d lose e 10 10-20% % of GDP for decades to centuries, with a larger population than today Sources: Tol (2009); IPCC (2007); Nordhaus and Sztorc (2013)
How costly would climate change be to India?: Ou Our val aluation uation metho method Goal: Compute equivalent near-term loss that would be as bad for social welfare 1. First, run model with each level of warming and record total Indian well-being 2. Next, assume no climate damages and instead reduce consumption for 20 years by x % until we match well- being Result: A long and deep economic recession is a policy outcome that is more easily understood Even without considering humidity, damages are • projected to be as costly as a 30% collapse for 20 years
Quanti antifying fying vulner lnerabili ability: ty: % annual 2020-2040 GDP loss, equivalent to levels of (dry bulb) climate change Source: Authors’ calculations, from modified RICE model. ρ ≈ 0. η = 2.
Quanti antifying fying vulner lnerabili ability: ty: % annual 2020-2040 GDP loss, equivalent to levels of (dry bulb) climate change Source: Authors’ calculations, from modified RICE model. ρ ≈ 0. η = 2.
Quanti antifying fying vulner lnerabili ability: ty: % annual 2020-2040 GDP loss, equivalent to levels of (dry bulb) climate change Source: Authors’ calculations, from modified RICE model. ρ ≈ 0. η = 2.
Quanti antifying fying vulner lnerabili ability: ty: % annual 2020-2040 GDP loss, equivalent to levels of (dry bulb) climate change Removing all Indian emissions would only make a tiny differe erence nce to India’s climate vulnerability Source: Authors’ calculations, from modified RICE model. ρ ≈ 0. η = 2.
Robustness: bustness: Alternative inequality aversion assumptions matter because future Indians will be richer than today Source: Authors’ calculations from modified RICE model.
A note: Our computations assume that the well-being (utility) of a future person should be as important for policy as the well-being of a present-day person. • These computations do consider the fact that any increase in money or consumption will probably produce less well- being for most future Indians than for most present-day ones, because of future economic growth. • In technical terms, we assume almost zero pure social time preference. • Changing this assumption to de-value future well-being would mean that climate change is less important.
Health Health C Co-benef benefits its Consequences of mitigation for India today
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