Fighting fire as the world burns: The economic case for climate action

In an article I wrote mid-December for trends to watch out for in 2020, I spoke about the gravity of climate change and how a report by the IPCC is predicting serious consequences that climate-related risks impose on health, livelihoods, food security, water supply, human security, and economic growth with global warming of 1.5°C. 

It was with a sense of fatefulness that I had watched the news over November and December with the shocking images of bushfires ravaging the face of New South Wales (NSW). Indeed, Australian bushfires have been a wake-up call for the local government as well as for many countries around the world that have so far been downplaying the effects of climate change. 

What went wrong?

Caption: A view of the smoke from Australia’s unprecedented bushfires as taken from the International Space Station on January 4 (Credit: Nasa Earth Observatory Handout/EPA)

While there have been conflicting reports on the underlying causes with a view to gloss over the role of climate change, what is indisputable is that Australia experienced its hottest year on record in 2019, with average temperatures 1.52°C above the 1961-1990 average. What an enormous difference an incremental 1.5°C can make!

An explainer in the Guardian notes that, “at a very basic level, rising levels of greenhouse gases in the atmosphere change the Earth’s radiation balance, allowing less heat to escape.” Apart from bringing out the above statistics on rising temperatures in Australia, the report also goes on to emphasise that Australia also had its driest ever year in 2019, with rainfall 40% lower than average, based on records going back to 1900. 

Keeping climate change out of the conversation when it comes to the Australian bushfires is then a clear case of behaving like an ostrich with its head buried in the sand. We can no longer afford to look away as the world burns – big and small islands alike are in the line of fire, and it is only a matter of time before the larger continents face the heat. 

The economic rationale for climate change action

With Moody’s Analytics estimating that revenues in excess of $4.4 billion may have been lost as a result of this tragedy inclusive of the impact on agriculture, tourism, hospitality and worker productivity, it is clearer than ever that there is a strong investment case for climate action. 

Every dollar spent on adaptation yields a four-fold return in avoided damages, notes a report by the Global Centre on Adaptation. The report finds that adaptation actions bring multiple benefits, termed the ‘triple dividend’. The first dividend being loss avoidance, that is, the ability of the investment to reduce future losses. The second being positive economic benefits via risk reduction, increased productivity, and innovation driven by the need for adaptation. The third and final dividend is the social and environmental benefits of adaptation itself. 

Unfortunately, the mindset so far has revolved around avoiding losses as the most common motivation for investing in resilience. However, many adaptation actions generate significant additional economic, social, and environmental benefits such as increased productivity, innovation and social stability, which are both more certain and more immediate than their potential impact on the future state of the climate. 

It is thus clear that there is a strong case for generating better awareness of and evidence for all three dividends to make the economic imperative for adaptation stronger than ever.

Learning from small island developing states

Caption: Maldives is reeling under the impact of climate change as sea levels rise (Credit: Reuters/Reinhard Krause)

Living in Mauritius, where I have now been residing for the past six years, it is brought home to me strongly that Small Island Developing States (SIDS) are not just facing the risk of climate change – they are already firmly in the middle of it.

The existential threat of climate change is already ever-present for the nearly one-third of all citizens in SIDS who live in areas no higher than a few meters above sea level, and can no longer be pushed to the back of their minds. No wonder then that these islands are leading the fight against climate change, with the daily reminder of what damages storm surges, salt water intrusion and coastal destruction have already wreaked in the form of failing crops, water shortages and an uncertain future for their future generations as entire archipelagos get submerged.

Against this backdrop, it is heartening to note initiatives such as The Climate Smart Resilient Islands (CSRI), that the Maldives leads on behalf of a network of island nations. The CSRI will work towards greener transport and connectivity, greater food security through innovative and sustainable fishery and agricultural practices, investments in green tourism practices and climate proofing of all future infrastructure investments. 

These lessons are applicable not only to SIDS such as Mauritius but also the wider island community and beyond – if entire continents are to avoid the ire of Mother Nature in the face of unprecedented climate change.

Going beyond fire fighting

The case of Australia makes it clear that a mindset of mere loss avoidance is only likely to lead to a vicious cycle of more losses. What is sorely needed is a proactive approach that seeks to prevent global warming, and not simply dealing with the repercussions as and when these tragic episodes such as 2009’s Black Saturday and 2019’s bushfires in New South Wales occur. 

Ultimately, it is our entire planet’s fate that is hanging in the balance, not just islands, be they big or small. It is high time to go past fire-fighting and take a stand against climate action at the highest political levels across all countries, irrespective of size.