Modelling the impacts of climate change on the Indian economy

The Indian economy is vulnerable to a host of climate change impacts. For effective policy response, it is critical to understand where the impacts will be most severe. This modelling exercise uses India-specific estimates from the econometric literature to build a bottom-up structural model which demonstrates how the Indian economy reacts under different climate change scenarios. Several findings emerge. First, the economic impact of death due to climate change is not as severe as one may expect; the death is concentrated amongst the elderly and the young who are not active members of the labour force. In the agriculture sector, impacts are potentially very severe but can be mitigated through structural transformation and labour reallocation. Lastly, by far the biggest impact comes from temperature-induced reductions in labour productivity. This seems to suggest that India has large gains from ensuring its working environments are climate-controlled.