Opinion
Climate action: India mustn’t take the ruinous path other nations have taken
Summary
- Instead of going in for obsessively costly climate action, India should innovate in green energy and focus on climate adaptation. Meanwhile, here are some low-cost-high-reward measures of public welfare that the country should invest in.
In recent years, climate anxiety has taken over many Western governments and most international organizations. The result has been ruinous policies that help little but undermine future prosperity needed to deal with a host of other problems. Fortunately, India can avoid repeating these mistakes.
Climate change is a man-made problem, but campaigners and irresponsible politicians have distorted this out of all proportion and now falsely call it an existential problem that could lead to the extinction of humanity.
This exaggeration grossly twists the science in the United Nations Climate Panel reports and is repudiated by the world’s leading climate economists, including the only one to win the Nobel Prize. The cost of no further action on climate is equivalent to lowering gross domestic product (GDP) by 2-3% by the century’s end—a problem, but not the end of the world.
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Yet, incessant scare stories have driven some Western governments to enact immensely costly policies. The UK has gone further in its climate policies over the past two decades than nearly any other country. As a result, the inflation-adjusted electricity price in the country, weighted across households and industry, has tripled from 2003 to 2023. By comparison, the US electricity price has remained almost unchanged over the same period.
At the same time, the rich world is increasingly realizing that it faces many other expensive challenges, including an ageing population that brings higher pension and healthcare costs, crumbling infrastructure, poor educational outcomes and a need for larger defence spending.
Yet, the EU has committed itself to net zero carbon emissions by 2050, which will cost over 10% of its GDP or €3.3 trillion annually. This is more than today’s entire core spending across all 27 member countries on health, education, police, courts, prisons, defence and the environment.
India should not repeat the mistakes made by Western countries by diving headlong into climate policies. India has a record of huge achievements, vast potential, and—like every other country—myriad complex challenges.
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It’s important that India gets the balance right between the challenges and opportunities in front of it. A well considered and balanced response to climate change means rolling out solar and wind energy in areas where that is sensible, while also recognizing that the longer-term solution to climate change must be innovation.
In 1970, when hunger stalked one-third of Indians and 35% of the developing world, the answer was not making the rest of the world eat less to redistribute food. It was innovation through the Green Revolution, which dramatically increased yields through better varieties, more fertilizer and other yield-raising initiatives.
Likewise, we will not solve climate change by taking cues from the British, who are being left poorer, colder and with less power. Instead, we need to ramp up innovation in low-carbon energy technologies.. Once we innovate, like making fourth-generation nuclear energy cheaper than what we obtain from fossil fuels, everyone will switch.
Adaptation is another vital climate-change response. Farmers across India know this already: they adapt to suit changes in the climate. In cities, we know that adaptive infrastructure like green areas, more reflective surfaces and water features help keep temperatures lower. Adaptation can avoid a large part of the climate problem.
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Finally, poverty alleviation is a crucial part of the response to climate change. Lifting people out of poverty reduces their vulnerability to climate shocks like heat waves or hurricanes. Moreover, wealthier, more prosperous societies can afford better protection from the elements, along with better nutrition, healthcare and social protection. Wealthy countries can spend more on environmental protection and other things that enhance the quality of life.
Being smart about climate change also means that India will have more resources to invest in solving other important challenges. I was fortunate to work with the late Bibek Debroy at the Economic Advisory Council to the Prime Minister on a project that identified some of the smartest investments for India—those that would generate the most returns to society at the lowest cost.
One such investment is simple but powerful: nutrition and health counselling. Under such a plan, mothers are given information on how to give their children more and better food. Research in Andhra Pradesh and Rajasthan shows that a six-year campaign on nutrition counselling and hand washing returns ₹61 and ₹43 in benefits to society for every rupee spent in the respective states.
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Another phenomenal investment: increasing tuberculosis (TB) control. The cost of treatment is low, at about ₹20,000 per patient, and the cure rate is 90%. Spending relatively little can save a life. Because TB is a contagious disease, identifying and treating patients reduces onward infections, resulting in more lives saved and lower health expenses in the future. In economic terms, every rupee on this initiative in India would generate benefits worth ₹105.
A third example is agricultural research and development (R&D) to help Indian farming gain efficiency. According to a study, an annual extra ₹39,000 crore in agricultural R&D will increase yields by an additional 0.4% for crops and 0.2% for livestock. This would benefit farmers by increasing their income, as well as consumers who would pay less for food. Every rupee spent would return ₹22 to society, making it a phenomenal intervention.
Spending an additional ₹10,000 crore on these phenomenal programmes would create extra benefits for India worth more than ₹5 trillion.
India has immense potential if it can seize the opportunity to invest wisely. It should avoid the singular climate focus of some Western countries and invest its resources based on rigorous economic science in areas where it can make the most impact and greatest progress.
The author is visiting fellow at Stanford University’s Hoover Institution and author of ‘Best Things First’
