Predicting the Storm Ahead: Investing in the Atmosphere for a Better Future

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By Shama Shafiq

Bangladesh’s geographical location has directly placed it in the crossfires of climate change. The low-lying delta ecosystem which subsists on a network of rivers has left our country vulnerable to natural disasters like tropical cyclones, floods, and tidal surges. Germanwatch, a non-profit research organization, in its 2018 Global Climate Change Risk Index over the period 1997-2016, ranked Bangladesh sixth among the countries most affected by climate change.

While the physical impacts of climate change e.g. typhoons are quite evident and cause visible destruction, the economic impacts seem inconspicuous but can wreak serious havoc in monetary terms. And in the long run, climate change may bring about irreversible economic damage ranging from unreliable agricultural production, frequent floods inundating surrounding lands, persisting poverty, to a reduction in the national GDP.

The sobering reality of the situation becomes tangible by putting a number on the plethora of economic losses due to natural disasters – “the direct annual costs from natural disasters to the national economy in terms of damages to infrastructure and livelihoods and losses from forgone production have been estimated at 0.5% to 1% of GDP”. Although these statistics stresses the actuality of the relationship between Bangladesh and climate change, it cannot account for the tragedies and the loss of lives engendered by past natural disasters.

While there are apt actions that can be taken to hinder destructive forces of climate change, financing them is the opening move. Climate finance – financing via national, regional and international entities for climate change mitigation – is the preliminary weapon in the arsenal of the battle against climate change. A few mentionable international institutions aiding Bangladesh in climate finance are – Green Climate Fund (GCF), Global Environment Facility (GEF), Adaptation Fund, Least Developed Countries Fund (LDCF), Adaptation for Smallholder Agriculture Program (ASAP), and Global Climate Change Alliance (GCCA) among others. With the cooperation and assistance of the international and financial institutions, the Government of Bangladesh is armed to take proper actions to curb climate change. Thus, in response to the adverse economic effects, the Government of Bangladesh in association with the Finance Division has decided to allocate a significant amount of the national budget to the ministries that are to tackle the fallout of climate change. The ministry of finance has published the second annual Climate Protection and Development: Budget Report (2018-2019), delineating the distribution of resources.

Climate Financing for Sustainable Development: Budget Report provides a synopsis of the monetary actions that are to be taken to address climate change in the fiscal years of 2018-2019. This Budget Report encompasses twenty ministries and their respective climate change concerning allocations. The following are the twenty ministries that have been included in the report – Ministry of Environment and Forests; Ministry of Water Resources; Ministry of Agriculture; Ministry of Fisheries and Livestock; Ministry of Disaster Management and Relief; Rural Development and Cooperatives Division; Ministry of Housing and Public Works; Ministry of Women and Children Affairs; Energy and Mineral Resources Division; Local Government Division; Ministry of Chittagong Hill Tracts Affairs; Ministry of Primary and Mass Education; Ministry of Land; Ministry of Industries; Health Services Division; Power Division; Ministry of Food; Secondary and Higher Education Division; Ministry of Social Welfare; Road Transport and Highways Division.

Source: Finance Division, Ministry of Finance

According to the Budget Report, the cumulative budget allocation of these twenty ministries accounts for 45.84% of the total national budget of FY2018-19, and out of this 45.84%, 8.82% is pertinent to climate change. From FY 2014-15 to FY 2018-19 the total CC relevant percentage increased slightly by 0.19 percentage point for these ministries. The climate-relevant allocation for operating budget decreased from 11.62% in FY 2014-15 to 9.48% in FY 2018-19 while that for development budget increased from 5.37% to 8.26% over the same period. In this time span, the resultant increase of the climate-relevant allocation is 0.75% of the GDP of FY 2018-19, from TK. 10,113.39 crore to TK. 18,948.76 crore.

The report also presents the distribution of allocation for each thematic area. It shows that among the six thematic areas, the maximum allocation was made to Food Security, Social Protection, and Health, followed by Infrastructure and Comprehensive Disaster Management.

Working in tandem with the government, businesses are likely to play a major role in transitioning Bangladesh towards a low-carbon and climate-resilient economy, benefiting from the necessity of climate-smart infrastructure and technology. Increased fiscal budget designated towards climate change will prompt potential investments. The climate budget report will bring lucrative investment opportunities in climate-smart technologies, allowing business owners to account for the climate risks looming over their business models.

The Government of Bangladesh is cognizant of the fact that unless and until proper procedures are implemented Bangladesh is doomed to be a casualty in this war against climate change. Intent on developing comprehensive plans, policies, and strategies, the government is also allocating resources to build climate resilience.

Bangladesh is heavily dependent on nature to meet its demands. Agriculture and fishery among others have become this country’s main sources of livelihood. While the prediction of a few degrees change in temperature may seem trivial right now, the reality of that prediction begs to differ. If appropriate actions are not taken to address these concerns, Bangladesh may face catastrophic calamities both in the physical and economic realm. It is absolutely crucial to confronting the complications of climate change, not only to sustain a stable economy and attract foreign investments, but also to ensure our survival as a nation.

*Sources: Climate Financing Budget Report 2018-19, World Economic Forum, UNDP Bangladesh
*Photography By Din M Shibly

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