View of IMPACT OF CLIMATE CHANGE ON EXPORT COMPETITIVENESS IN SOUTH ASIA

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Vol.03, Issue 04, April 2018, Available Online: www.ajeee.co.in/index.php/AJEEE

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IMPACT OF CLIMATE CHANGE ON EXPORT COMPETITIVENESS IN SOUTH ASIA

Rudra Prasad Ghimire Ph. D. Scholar, Tribhuvan University

Abstract - Climate change reality is affecting the biodiversity, socio- economic-demography and export trade competitiveness in south Asia. In Asia, South Asia region is worst caused by global warming.The main aim of the study is to investigate what are the major reasons that the climate change affecting the export competitiveness in south Asia reviewing the vast literature. Due to the climate change,peoples of this region are poor whose occupation depends mainly upon traditional agriculture farming, natural resources, vulnerable climate, to some extend; they have access of manufacturing and less quantity of eco- friendly goods availability. South Asia region has exposed to the threat of precipitation, floods, storms, droughts, cyclones by which export trade capacity has been eroding. People of coastal areas are sufferer due to climatically extreme events. By the climate change, migration, severe heath disease, water contamination, air pollution, soil erosion, land slide and deforestation etc. have been overwhelming in South Asia. Consequently, people’s organic production of exportable items and its share has been constraints. It is obvious that Paris Agreement regarding global warming and climate change adaptation is a milestone for all the concern stakeholders in order to green fund utilization technology development policy taking care of export competitiveness and avoiding climate change vulnerability. In this region, regional integration is necessary to cope with joint framework. Hence, the gap is lack of climate change mitigation and adaptation infrastructures, technology use, climate policy implementation and allocation of green investment fund. It is necessary to build regional strength with common understanding of climate risk to combat climatic extreme event. In this outset, therefore reviewing wide range of literature, it is urgency to investigate how climate is affecting adversely via different situation to export competitiveness explaining various reasons and consequences of climate change.

Keywords: South Asia, Global warming, Climate Change, Export Competitiveness

1. INTRODUCTION

South Asian countries constituent of eight countries such as Afghanistan, Bangladesh, Bhutan, India, Pakistan, Sri Lanka, Maldives, and Nepal; have been circumscribed by the context of poverty, weak infrastructure, limited institutional capacity and excessive supply constraints. Besides, exports flow from south Asia to the world market is very low because of the low-level production capacity. Majorly, import flow is high in each of the south Asian countries. The main source of exports of the region is agriculture, fisheries, and herbs, minerals manufacturing etc. however the countries are facing the challenges of competitiveness due to high transit and transport cost, political instability, limited use of resources, lack of technology transfer and useand climate change etc.

Competitiveness has been suffered low capacity to diversify production and export.

Various governments and non- governmental organizations have been supporting eco-labelling programs, which cover thousands of products in more than

20 countries. There have also been efforts to standardize environmental labelling scheme at the international level.

Therefore, there are possibilities that carbon labelling, which is a part of eco- labelling, may emerge as significant trade concerns in the years to come (Nanda

&Ratna,2010); and that emissions norms will enter the eco-level criterion in greater measure (OECD & UNESCAP,1997;

CUTS,2005).

2. REVIEW OF LITERATURE

Markets for climate-friendly products and technologies are unlikely to meet such conditions as they are highly concentrated. Such concentration is even higher in particular segments of the industry (Sawhney, 2006). Climate change impacts are going to be varied. In seasonally dry and tropical regions, crop productivity is projected to decrease for even a small increase in temperature (IPCC, 2007). Fluctuations in monsoon and temperature affect the productivity of several crops grown in the region. In the Himalayan nations of Nepal and Bhutan,

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2 it is expected that increased severity and frequency of storms and flooding could aggravate the occurrence of landslides, which, in addition to the danger to life and property, would deposit sediments in agriculture lands or in irrigation canals and stream and contribute to deterioration in the quality of agriculture lands and hence in crop production (Kelkar & Bhadwal, 2007). Carbon labeling is a better alternative than promoting the concept of food miles to address the issue of carbon emissions in international trade (Mullar, 2009). Most energy-intensive sectors face only a modest competitiveness impact – losing on average 1 percent of production to imports – at a price of carbon dioxide at US$15 per ton (Aldy & Pizer, 2009). Since the industrial revolution finance has been a powerful enabler of human progress.

The purpose of the global financial system is to allocate the world’s savings to their most productive uses. When the system works properly, these savings are channeled into investment that raise living standards; when it malfunctions, as in recent years, savings are channeled into real-estate bubbles and environmentally harmful project, including those that exacerbate human- induced climate change (Sachs,2014).

Governments have already agreed to keep global warming below 2⁰C, but have yet to take decisive action to create a low -carbon energy system (Sachs & Du Toit,2015). Investment will be needed in the short to medium term to make the power sector greener, by reducing emissions and switching to renewal energy (ADB, 2017). As for emission trading and carbon pricing scheme, as of 2016, 40 countries had a carbon pricing system in place (World Bank, 2017).

There are three possible broad applications of fintech to green finance:

block chain, applications for sustainable development; block chain use-cases for renewal energy, decentralized electricity market, carbon credits, and climate finance, and innovation in financial instruments, including green bonds (Nassiry,2018).

Climate impact is sensitive which means impact on agriculture and forest- based export trade competitiveness.

Similarly, coastal areas are affecting by rise in sea level that also hurt

infrastructure of port and encroachment of flood which account for high cost.

Therefore, because of climate risk the scenario of export competitiveness seems vulnerable in the south Asia region because of very low production volume of competitive goods export in the enter region, intra region and the world. As these economies rely much on agriculture, natural resources, forestry and fisheries sectors, increased risk of floods and droughts would decrease production in these sectors and exacerbate the conditions of the poor (Fischer et.al.,2005). Small market size has been limited by low level investment and geographically high cost economies.

In order to mitigate and adapt climate risk, promotion of climate friendly goods production and export is necessary strategy. Climate change adaptation can boost up export competitiveness which is the path ways of getting high profitability to poverty alleviation. And it also can pose the export led growth.

Climate change possesses the threat to the south Asian countries since south Asian countries are least contributor to the global warming situation. Countries of south Asia are seemingly vulnerable caused by consequences of climate change. The gap is lack of climate change mitigation and adaptation infrastructures, technology use, climate policy implementation and allocation of green investment fund. Thus, the main aim of the study is to investigate what are the major reasons that the climate change affecting the export competitiveness in south Asia. Export competitiveness of south Asiahas been affecting due to highly dependent on weather conditions in farm and lack of adequate capacity to identify and cope with risk and economic impact of climate change i.e. extreme weather, prolong draughts, heavy rain and floods, severe storms and fluctuations of pattern of monsoon.

India is leading economy in south Asia. And India is center of periphery of south Asia. India and all countries can play catalyst role by applying strategical and integrational climatechange adaptation. Government and all stakeholders have policy to maintain climate change education, climate change potential risks, climate change adaptation

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3 and climate friendly goods production and export competitiveness from south Asia.

The climate change adaptation associated with agriculture sector, energy sector, forest sector, water, health, coastal area, and environmental sustainability.

3. RESEARCH METHODOLOGY

This study has reviewed the literatures on climate change risk, climate patterns, adaptation measures and major barriers.

This study is based on secondary information. So, in this research paper;

sectoral review of various dimensions of physical sectors is followed in this study.

This study is qualitative in nature.

4. ANALYSIS AND PRESENTATION Agriculture, forest and minerals other sectors is the contributor to the export competitiveness.Impact of climate change on agriculture is negative continuously. It is very much emergency to understand.

Weather is changing that has not been compatible to agro production. Large size of population is getting feed from the small area of land which has resulted food insecurity. More and more environment friendly goods have not been produced.

Spread of carbon dioxide level is rising because of industry operation in industrial countries year by year on the other hand. Because of shortage of labor in Mountain, Hills and Tarai, low level production, migration to major Tarai area resulted urbanization. Urbanization has encroached the agro land in south Asia which has reduce rice production and becoming very low levelagro production of Paddy, wheat, millets etc. exposed lower export competitiveness i.e. throughout the south Asian countries, trend seems that youngsters are leaving their local farm and following the abroad migration and immigration.

Similarly, coastal and marine areas are the sector where climate change is affecting in areas of South Asia. It has impact on biodiversity and human lives.

The rise in air and ocean temperature, sea level rise and falls has impact on productivity and production of exportable agro and forest goods export competitiveness market.

Energy security is also a challenge in the region. Hydro electricity is the

source of water. Most of the population demands energy for multi-purpose in the household sector and firms. Use of solar energy is best way to save the environment. But on the other hand, supply sides also have to fulfill all the requirements from the water. Strom, floods, and rise in sea level has affected to generate hydroelectricitypotentialities because in the summer, water level increase and decrease. Hence the production and productivity have been affected by energy shortages. Energy scarcity has been eroded the export trade competitiveness.

Forest has been affected by climate change. Forest needs carbon die oxide. It is a pool of all types of sources.

Global warming has been affecting the bio diversity and the forest. Heat of earth is rising. And south Asia is the part of it where people are cutting trees and stopping oxygen. Similarly, forest-based goods have not been produced by the deforestation in the region which has been reducing the export competitiveness of natural goods at a competitive price.

Plantation could be the best way of climate adaptation and mitigate change consequences.

Climate change has affected on health of the south Asian people. Cholera, dengue, diarrhea and malaria are the diseases caused by climate change.

Dengue is appearing new type of disease in South Asian countries. The healthy body is highly risky in South Asia.

Mortality rate is growing. This has stopped the human being and it does strive. When strives of human being is not productive it is impossible to rise productivity of people. Because of this cause, export competitiveness will be killed along with knowledge, ideas and creativity.

Water unavailability is the cause of climate change. It has greater impact on hydroelectricity generation, agriculture production and created problem of irrigation in south Asia. In the summer season, water level increases and in winter water level decreases this has hampered climate change adaptation taken by policy makers and people of south Asia. Consequently, export competitiveness battered in the region.

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Table 1: Climate Impacts on Macroeconomic Aggregates Cumulative percent change from baseline, (2010-2050)

Source: Asian Development Bank&UKaid, 2014 Table 1 reveals that the climate impacts on macroeconomic aggregates. GDP is changing very sharp. South Asian countries are more agro based with the high price. It seems that import is higher in the region and low-level export competitiveness. Climate change has been decreased GDP due to lack of competitive exportable items in the region.

Environmentally responsible and climate friendly product of export competitiveness in South Asia is serious concern. In the very rapid increase in such a climate condition, wholesale and retail sectors of crude petroleum products, machinery, capital equipment, transport and communication equipment,

electrical wares, chemicals, iron, glass and metals, food and beverage, tea, coffee, tobacco, jute, pashmina, fisheries, rice, other food items and etc. are the major dollar earner products in South Asia.

These products are associated with transport and industry sector. Transport and industry sectors are also producing greenhouse emissions. Construction of road in the rural areas has become a caused to happen landslide and deforestation. Hence export trade needs to manage, considering supply change and low carbon climate resilient in South Asia promoting robust, diversified and competitive export of goods.

Table 2: Real GDP Impacts of Climate Change in South Asia Cumulative percent change from baseline, 2010-2050

Source: Asian Development Bank&UKaid, 2014 The table 2: exposes real GDP impact of climate changes in South Asia. Real GDP components change as per the land scenario which is mix up of crops, water, land, energy price, agro products. GDP is changing very sharp. South Asian countries and other countries are suffering from the average climate change adaptation. Energy price and agriculture productivity have not positive impact on climate change. In south Asia, low level value adds cannot contribute to climate change situational issue.

Good governance, rampant corruption, and transparency are the major concern

to reduce wide spread poverty of South Asia. Nonetheless, countries have the high potentiality to fight against consequences of climate change, poverty, unemployment, and deprivation. In order to achieve the high rate of economic growth, it is important to upgrade the welfare of the people and build effective, accountable and inclusive public institutions. Inclusive growth depends upon creating better opportunities for education and infrastructure of climate change.

Scenerio:land Real GDP output Exports Imports Consumptions Consumption Price index

Bangladesh 3 12 5 4 8 25

India 4 27 8 5 1 5

Nepal 12 13 12 17 11 8

Sri Lanka 6 25 6 5 2 4

Other low-income Asia 4 22 5 2 2 2

other high -income Asia 1 20 1 2 1 1

All Asia 2 12 5 1 3 3

Crops Water land EnergypriceAgro. prod

Bangladesh 1.1 2.2 3.2 11.4 6.8

India 0.9 2.1 3.9 21.9 3

Nepal 3.7 7.7 12 20.3 16.4

Sri Lanka 1.9 4.3 6.1 20.4 17.9

Other low-income Asia 1.3 2.7 4 12.6 9.5

other high -income Asia 0.4 0.9 1.4 41.6 0.7

All Asia 0.9 2.2 2.4 16.8 4.3

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Table 3: Industry Value Add (% of GDP)

Country/Year 2000 2010 2016

Bangladesh 23.314 26.144 28.766

Bhutan 35.991 44.588 43.463

India 31.044 32.424 28.845

Maldives 15.037 10.168 11.232

Nepal 22.132 15.634 14.76

Pakistan 23.326 20.575 19.363 Sri Lanka 27.318 29.678 29.592

Afghanistan NA NA NA

Source: World Bank, 2016

The table 3 presents industry value adds in percentage of GDP. Industry value added growth of South Asian countries needs to improve by developing industrial infrastructure and market access as well.

For a long time, the countries of South Asian region experienced economic stagnation which also manifested in low GDP contribution from industries. This was mainly due to the import-substitution policy adopted by the government. South Asian countries should begin redirecting their economic systems to adopt economic liberalization and open-door policies.

Furthermore, both real and nominal openness has raised the industrial productivity output in the SAARC countries. Hence, Green industrial productivity, green investment, human resource, climate education and training need to be addressed by the government, national and international partners, and private sectors proactively. Still, green industries are not well functioning they don’t have large scale productive capacity of SAARC countries. It needs bilateral and multilateral integration for climate change adaptation among the countries.

Table 4: Development GAP in south Asia

Countries

Access of electricity % of population

2014

Account at a financial institution% of

age 15+ (2014)

Commercial Bank Branches

per 100,000 adults 2015

Government expenditure on education % of

GDP 2015

Health expenditure %

of GDP 2014

Afghanistan 89.5 10 2.3 3.3 8.2

Bangladesh 62.4 29.1 8.4 1.9 2.8

Bhutan 100 33.7 15.4 7.4 3.6

India 79.2 52.8 13.5 3.8 4.7

Maldives 100 12.1 5.2 13.7

Nepal 84.9 33.8 8.9 3.7 5.8

Pakistan 97.5 8.7 10 2.6 2.6

Sri Lanka 92.2 82.7 18.6 2.2 3.5

Source: World Development Indicator, 2016 The table 4 shows development GAP in south Asia. South Asian people are living in a room of poverty, inequality, and unemployment. The realization of South Asian countries at current time is lack of financial resources as well as inefficient financial intermediation. Planned allocation of resources is an important task for the days to come. Besides, planned allocation of resources has not been meeting the targeted goals due to lack of policy implementation. In South Asia, there is a high gap of financial development. Actually, financial development is synonymous to the overall development of the region. Financial

resource mobilization plays vital role to the implementation of developmental agenda of sustainable development and climate change adaptation. Green fund utilization is a very need and urgency for resilience of ecosystem.

5. CONCLUSIONS

The export competitiveness can be obtained by the climate change adaptation in the systematic way. In south Asia, investment is very low to combat global warming. Infrastructure development, investment in environment friendly goods, clean energy, scientific use of minerals resources, management of

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6 renewal energy, urban plantation and technical assistance to the agricultural and industrial firm are major incentives to the stakeholders. Adaptation of climate actions could be breakthrough for export competitiveness when international cooperation and collaboration take place with sufficient fund allocation in South Asia. All countries should have integrated channel to work for climate adaptation and export competitiveness. Scientific research and periodic plan are necessary to improve sustainable climate change adaptation for export competitiveness.

Urban areas’ all cities of South Asian countries should be financed for green city to reduce carbon. There must be the concern of the policy makers in South Asia climate change risk and uncertainty.

When export competitiveness takes place, income increases which can bring capacity to adapt climate change endanger safely.

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