INDIA POLICY FORUM 2018

Quantifying India’s

Climate Vulnerability

Melissa LoPalo1, Kevin Kuruc1, Mark Budolfson2, Dean Spears1,3

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, poverty, and humidity

(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?

Microeconomic

Evidence:

The consequences of heat and humidity

Empirical strategy: 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 humidity matters 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 Bulb Temperature (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 Bulb Days

Regression strategy: 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-

day bins𝑦𝑖𝑝𝑡 =

𝑗

𝛽𝑗 ∙ 𝑇𝑒𝑚𝑝𝑖𝑝𝑡𝑗

+ 𝛼𝑝 + 𝜃𝑡 + 𝜙𝑋𝑖𝑝𝑡 + 𝜀𝑖𝑝𝑡

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

Observed weather

2000-2010

Projected weather

RCP 8.5 (BAU)

Benefit, due to this

effect, of mitigation

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

Observed weather

2000-2010

Projected weather

RCP 8.5 (BAU)

Benefit, due to this

effect, of mitigation

RCP 8.5 – RCP 2.6

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 increasing

inequality within India, as damages

are greater in disadvantaged states

Macroeconomic

Projections:

How much are climate damages worth?

Integrated Assessment Models

People produce goods & emissions

Stock of CO2 in atmosphere

Planet warms

People harmed by warmer planet

Any climate IAM must aggregate costs

and benefits for people in different times.

• 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

Mechanism: mitigation costs reduce consumption today, but prevent climate damages in the future.

𝑊 =

𝑡

1

1 + 𝜌

𝑡

𝑛𝑡𝑢 𝑐𝑡

Damage function: % annual GDP loss,

based on (dry bulb) climate change

Sources: Tol (2009); IPCC (2007); Nordhaus and Sztorc (2013)

Global damage function

Indian damage function

Nordhaus (2010)

[humidity not included]

Damage function: % annual GDP loss,

based on (dry bulb) climate change

Sources: Tol (2009); IPCC (2007); Nordhaus and Sztorc (2013)

Under low-mitigation

policy scenarios,

India would lose

10-20% of GDP

for decades to

centuries, with a larger

population than today

How costly would climate change be

to India?: Our valuation 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

Quantifying vulnerability: % annual

2020-2040 GDP loss, equivalent to

levels of (dry bulb) climate change

Source: Authors’

calculations, from

modified RICE model.

ρ ≈ 0. η = 2.

Quantifying vulnerability: % annual

2020-2040 GDP loss, equivalent to

levels of (dry bulb) climate change

Source: Authors’

calculations, from

modified RICE model.

ρ ≈ 0. η = 2.

Quantifying vulnerability: % annual

2020-2040 GDP loss, equivalent to

levels of (dry bulb) climate change

Source: Authors’

calculations, from

modified RICE model.

ρ ≈ 0. η = 2.

Quantifying vulnerability: % annual

2020-2040 GDP loss, equivalent to

levels of (dry bulb) climate change

Source: Authors’

calculations, from

modified RICE model.

ρ ≈ 0. η = 2.

Removing all Indian

emissions would

only make a tiny

difference

to India’s climate

vulnerability

Robustness: 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 Co-benefits

Consequences of mitigation for India today

Mitigation will lessen the current and

future burden of air pollution• Health co-benefits are

particularly large for India

• 14/20 most polluted cities in the world are in India (WHO)

• 7 of these cities are in UP and Bihar: substantial overlap between climate vulnerability and air pollution vulnerability

• Including health co-benefits along with climate benefits rationalizes aggressive unilateral CO2 mitigation by India -- i.e. in a non-cooperative equilibrium. (Scovronick, et al., 2018)

Current distribution of PM2.5

(uses Atmospheric Composition

Analysis Group data)

Concluding

Questions

What is India’s best response to international

climate policy injustice?

The global distribution of carbon

emissions is unjust, due to the high

emissions of rich countries.

• Some of the authors of this paper have previously used a

similar model to show that the globally optimal mitigation

policy would have rich countries decarbonize much more

quickly. Such an outcome would result in lower peak

temperature, higher global welfare, and more equality,

even without considering backwards-looking responsibility.

(Budolfson, et al. 2018)

• But India still has to ask: What is its best response to

global climate policy injustice? What is in India’s interest?

One question: Is international

influence possible by a creative non-

climate-policy concession from India?

•Mani, et al, 2018: It is important for India to find a way to influence other countries to comply with Paris.

•Could it be in India’s best interest to offer something other than climate mitigation to developed countries?

•We have no idea what (something symbolic?)

• The point: Deep climate vulnerability motivates creativity about the best response, in the interest of all Indians

Summary:

• India is especially climate-vulnerable: humidity is a

newly-understood source of vulnerability that has

not been incorporated into prior estimates.

• A conservative quantification of the aggregate

harms suggests that “business as usual” climate

policy could be as bad as a sustained, deep

economic disaster.

• India cannot go it alone: Policy-makers must

creatively seek India’s best response to

international climate injustice.