Differential exposure: How climate change hits the poor the hardest

With the United Nations (UN) climate change conference, or the Conference of the Parties (COP29), scheduled to be held in less than a month, it is painfully evident that the climate crisis continues to escalate beyond the global efforts to temper it. While no country is immune to the impact of climate change, the world’s poorest countries and people will bear the greatest burden.

In this context, a recent research paper published by the World Bank gives interesting insights regarding the distributional consequences of climate change and global warming in South Asia. The paper uses spatially detailed data on climate shocks and relative wealth to examine household and firm exposure to extreme heat and floods in the wake of increased climate change-induced weather shocks. Across South Asian countries, places with lower wealth or poorer households are more exposed to heat, in both urban and rural areas. Additionally, in urban areas, places with lower wealth are more exposed to flooding. After all, poorer households have less resources to invest in adaptation, use lower-quality housing and infrastructure, and have less access to post-disaster relief mechanisms than better-off households. Poverty may deter investment that has a cooling effect. The poor are also more exposed to climate shocks because they face financial constraints and are less able to relocate to safer places.
 

Among Indian firms, the paper finds smaller non-agricultural firms are more exposed to flooding and heat than larger firms. Poor households tend to be disproportionately dependent on agriculture and informal micro-enterprises, which are worse-placed to adapt to climate change than large firms. Moreover, firm productivity is negatively affected. An earlier study by Duke University showed India lost around 259 billion hours of labour annually between 2001 and 2020 due to the impact of humid heat. This amounts to a loss of around $624 billion, equivalent to almost 7 per cent of a year’s gross domestic product (GDP). By hitting the poorest the hardest, climate change risks both amplifying existing economic inequalities and causing people to fall into poverty. Estimates suggest an additional 68-135 million people could be pushed into poverty globally by 2030 because of climate change.
 

Earlier this year, a Supreme Court judgment delineated for the first time the right to be free from the adverse effects of climate change for all individuals, regardless of their location or socioeconomic status, signifying the need for appropriate measures to contain the impact. Climate-change mitigation remains critical to poverty alleviation. In times of climate crisis and associated natural disasters, climate-resilient infrastructure can minimise the wide-ranging consequences for the livelihoods and well-being of vulnerable communities. This calls for large-scale investment targeted towards improving the capacity of the poor to adapt to climate risk. This includes access to finance and insurance products to increase their capacity to recover and rebuild after climate-related events, access to accurate and timely information about weather and climate that informs their operational and planning decisions to minimise losses to lives and property, and investment in human capital in terms of health, education, and skills to build the knowledge and tools to implement sustainable practices and increase resilience.