Abstract

This paper asks about the climate damages that Indian policymakers can expect. What is the likely magnitude of climate damages, and how sensitive are they to the level of warming? How much worse would climate damages be for Indians under, say, 5° of warming rather than 3°? Understanding the magnitude of climate damages and how rapidly they increase as temperature change increases is critical for finding the right climate mitigation policy. This paper provides projections of India’s climate vulnerability on the basis of new microeconomic and macroeconomic evidence. The authors’ quantifications show that India is highly vulnerable to climate damage. Their baseline macroeconomic approach suggests that climate change peaking at 5°C, rather than 3°C, would be as detrimental to Indian well-being as a reduction in GDP by about 18 percent for each of the years from 2020 to 2040. Such an equivalent threat to near-term economic outcomes would be an overriding policy priority if political leaders anticipated it. The authors’ microeconomic results suggest that this may be an underestimate, because it ignores humidity. Emerging evidence suggests that humans are especially vulnerable to exposure to high temperatures in contexts of high humidity; humidity is a previously underappreciated and unquantified reason way in which India may be more climate-vulnerable even than some hotter developing and middle-income countries.