Update Country Report Maldives 30 Apr 2019

South Asia is one of the world's most vulnerable regions to the effects of climate change. The countries in the region that face the highest level of risk include Sri Lanka, Bangladesh, the Maldives and-to a lesser extent-India and Pakistan. However, the region's generally low level of economic development puts a constraint on government action against climate change, as do its rapidly growing energy needs. These issues, coupled with the inadequate response at global level, will make the economic effects of climate change on these countries more pronounced in the long term.

High temperatures, long coastlines and the dependence of a large proportion of the region's population on agriculture and fisheries make South Asia one of the most vulnerable parts of the world when it comes to climate change. Even though most of the countries in the region have dedicated policies to address these issues, they often suffer from a lack of funding, owing to low levels of fiscal resources. In addition, governments in the region have tended to focus on maximising economic growth rather than aiming for sustainable development.

Inconsistent policies and low allocation of funds

The National Climate Change Policy of Sri Lanka was drafted and adopted in 2011, with an overall aim of minimising the impact of climate change on the country and ensuring sustainable development. The comprehensive policy encompasses everything from assessing the vulnerability of the country to climate change to the adoption of adaptation and mitigation measures, promoting sustainable consumption and development, and creating awareness and capacity-building, as well as educating future generations.

However, inconsistent government policy has hampered the country's progress towards effectively combating climate change. In 2017 the government announced a plan to phase out all fossil-fuel vehicles in the country by 2040, with plans for all state-owned vehicles to be electric or hybrid by 2025. This was to be achieved through reducing import duties on electric and hybrid vehicles while increasing duties on vehicles powered by fossil fuels. However, in August 2018 the government sharply increased the duty on a popular model of hybrid car, citing concerns over a ballooning trade deficit caused by vehicle imports.

Bangladesh also has a programme for addressing climate change issues, but one that is compromised by a lack of funding to support it. The Bangladesh Climate Change Strategy and Action Plan (BCCSAP) was launched in 2009. Its primary aim of improving adaptation to climate change has been modified over the years to include mitigation measures as well. Nevertheless, over the past ten years the total amount of funding injected into BCCSAP stands at little over US$100m-far too little to have much impact in a country of Bangladesh's size. Although the country has been prominent in speaking about climate change issues on the international stage, domestically the government has not done much to address the problem.

A similar track record is shared by Pakistan, which also faces severe threats from climate change. Although Pakistan enacted a Climate Change Act in 2017, aimed specifically at meeting its stated climate change obligations under international conventions, the government's focus has largely been on attracting foreign funds for climate action. According to a UN Development Programme study published in 2017, climate-change-related expenditure was equivalent to 1.5-2.1% of GDP during 2012-15. However, most projects in this field are very limited in scope, and they are largely unco-ordinated.

We expect the Maldives to be among the economies hit worst by climate change, owing to the archipelago's vulnerability to rising sea levels. The country's Ministry of Environment and Energy formulated a climate-change policy framework in 2015 that prescribes strategic policies that the government should undertake in order to mitigate the impact of climate change over a ten-year period (2015-25). There are five thematic goals within the policy framework that the government has prioritised for implementation: sustainable financing; low-emission development; adaptation and opportunities; capacity-building and leading advocacy at climate negotiations; and fostering sustainable development. However, owing to a lack of data, it is hard to assess the progress made by the country in these regards. The framework will undergo a single mid-term review by an independent expert in 2020.

Despite diversification, coal-fired power continues to grow

Highlighting the inconsistent approaches that many countries in South Asia are taking on climate change, the region remains heavily reliant on fossil fuels for its energy needs. India is already the world's third-largest consumer of energy, and its consumption will continue to grow over the next five years as industrial demand expands and as more communities gain access to electricity. In order to add to its energy capacity, while also meeting its commitments under the Paris climate accord, the government is making efforts to diversify from conventional sources of energy.

However, even though India added more solar and wind power-generating capacity than thermal-generated power in both 2017 and 2018, coal-fired generation is still set to expand rapidly over the next five years. The Global Coal Plant Tracker, an online database maintained by Global Energy Monitor (a network of researchers), shows that the amount of coal-fired power capacity under construction in India, at 36.2 GW in 2018, was the second-highest in the world, after China. The amount of capacity at the pre-construction phase, at 57.8 GW, was also second only to China. In the medium term India's emissions will remain the largest in the region in absolute terms and second only to the Maldives in per capita terms.

Bangladesh and Pakistan also look set to add substantial amounts of coal-fired capacity in the near future as they seek to support the power needs of their burgeoning populations and expanding economies. Around 2.6 GW of capacity was under construction in Bangladesh in 2018, with a further 3.3 GW under construction in Pakistan. Both countries also have substantial volumes of coal-fired power capacity in the pre-construction phase.

In part this reflects the fact that both have been able to secure relatively easy access to finance from China to build coal-fired power plants. Such projects also tend to add substantial volumes of capacity relatively quickly. By comparison, although solar and wind power are now cost-competitive with coal, individual projects tend to be smaller in scale.

Climate change will hold back economic development in South Asia

Overall, even though the countries of South Asia will be among the worst affected by climate change, inadequate political will, expanding populations and the prioritisation by policymakers of economic growth over sustainability will act as constraints on tangible progress in combating climate change. This will have a real negative impact on the economies of these countries and the region as a whole. Over the long term, economic damage will come in the form of the loss of agricultural and labour productivity, the loss of land due to inundation and the loss of trade due to disruption in transport services. The Economist Intelligence Unit's calculations suggest that India and Sri Lanka's average annual economic growth rate will be 0.3 percentage points lower in 2021-30 as a result of the effects of climate change, while those of Bangladesh and Pakistan will be 0.4 percentage points lower over the same period. Such figures show clearly that climate change will exert a substantial drag on the region's economic development over the longer term.