Economic consequences of climate change impacts on South Asian agriculture: A computable general equilibrium analysis

Abstract

South Asia is one of the most vulnerable regions of the globe in terms of climate change, with agriculture the most affected economic sector of the region. This study employs an environmental Global Trade Analysis Project model to simulate the impact of an average global 2°C temperature increase by 2050, with a focus on South Asian countries. The economic costs of climate change in relation to crop productivity losses due to increasing temperature, land productivity losses caused by rising sea levels and heat stress-induced agricultural labour productivity losses are assessed based on model simulations. The results show that the unfavourable climate change impacts on agricultural productivity (crop, land and labour) will reduce food production and create upward pressure on food prices. This will lead to a reduction in food consumption at the household level, threatening future food security in the region. The results further predict a contraction in all South Asian economies by 2050, due to adverse climate change impacts on the agricultural sector. In addition, out of the three climate change damage factors considered, labour productivity causes the greatest economic losses, while land productivity losses caused by rising sea levels impact the least. The study also found that low-income countries would suffer most severely due to the impacts of climate change on the agricultural sector, while high-income countries would be impacted the least.