projected threats are to Indian cities from climate change, and how they might best
adapt to such expected changes. Given half of the world’s population started to live
in cities in 2007, it is no exaggeration to say that the battle against climate change
will be won or lost in cities. Since cities have high concentration of population
density and economic activity, they are more vulnerable to climate change. India’s
cities are characterized by high density of population, housing stock, and poor
infrastructure, which make them vulnerable to climate change. Given the most
valued infrastructure is also located in cities than elsewhere, the economic and social
costs of climate change will be much higher in cities. So climate change has impacts
on the physical assets used within cities for economic production, on the costs of raw
materials and inputs to economic production, the subsequent costs to businesses, and
thus on output and competitiveness. For instance, at India’s sub-national level, an
annual Gross State Domestic Product (GSDP) compression of about 2 % has been
estimated for Gujarat, of which drought makes up 57 %, cyclone and storm surge,
12 %, and inland flooding, 5 %, over a 100-year time horizon (Revi 2008). A recent
report using data collected over 193 years shows that since the 1960s, there has been
a dip in India’s annual rainfall. For instance, in the plains of Kerala, peak rainfall
declined from at least 3700 mm received in the 1920s and 1930s to around 2800 mm
in the 1960s, a fall of 24 %. In the plains of Punjab, there is a similar fall, from
1100 mm in the early years of the twentieth century to around 687 mm now a
decrease of 37.5 %. Part of this has been attributed to global warming (http://www.
livemint.com/2008/08/17233753/India8217s-fluctuating-rain.html).
Hence, it is important to understand the economic impacts of climate change in
India’s cities. As the literature review will show, such an attempt has been made in
a limited context. Given the significance of climate change, economic importance
of cities and lack of adequate research in India’s context, in this paper, I deal with
climate change impacts that are linked to market transactions and directly affect a
city’s value of output produced. I examine the impact of climate change which
manifests in temperature differences and rainfall on city-level output in India.
I estimate the impacts of temperature differences and rainfall on Indian cities’
output—both agricultural and non-primary.
I estimate city output regressions for India’s cities using several approaches.
Since only growing areas are usually designated as towns, to get rid of this selection
bias, I estimate the output of districts that are larger geographical areas than cities,
which is similar to the approach Beeson et al. (2001) take. I estimate the
non-primary output of cities as dependent on rainfall, temperature differences and
other socio-economic characteristics determining city-level output such as its size,
human capital, infrastructure, economic base, and regulations affecting urban land
use. Further, using a similar approach, I estimate the agricultural (primary) output of
districts as dependent on climate change indicators, along with other factors.
282
K.S. Sridhar
adapt to such expected changes. Given half of the world’s population started to live
in cities in 2007, it is no exaggeration to say that the battle against climate change
will be won or lost in cities. Since cities have high concentration of population
density and economic activity, they are more vulnerable to climate change. India’s
cities are characterized by high density of population, housing stock, and poor
infrastructure, which make them vulnerable to climate change. Given the most
valued infrastructure is also located in cities than elsewhere, the economic and social
costs of climate change will be much higher in cities. So climate change has impacts
on the physical assets used within cities for economic production, on the costs of raw
materials and inputs to economic production, the subsequent costs to businesses, and
thus on output and competitiveness. For instance, at India’s sub-national level, an
annual Gross State Domestic Product (GSDP) compression of about 2 % has been
estimated for Gujarat, of which drought makes up 57 %, cyclone and storm surge,
12 %, and inland flooding, 5 %, over a 100-year time horizon (Revi 2008). A recent
report using data collected over 193 years shows that since the 1960s, there has been
a dip in India’s annual rainfall. For instance, in the plains of Kerala, peak rainfall
declined from at least 3700 mm received in the 1920s and 1930s to around 2800 mm
in the 1960s, a fall of 24 %. In the plains of Punjab, there is a similar fall, from
1100 mm in the early years of the twentieth century to around 687 mm now a
decrease of 37.5 %. Part of this has been attributed to global warming (http://www.
livemint.com/2008/08/17233753/India8217s-fluctuating-rain.html).
Hence, it is important to understand the economic impacts of climate change in
India’s cities. As the literature review will show, such an attempt has been made in
a limited context. Given the significance of climate change, economic importance
of cities and lack of adequate research in India’s context, in this paper, I deal with
climate change impacts that are linked to market transactions and directly affect a
city’s value of output produced. I examine the impact of climate change which
manifests in temperature differences and rainfall on city-level output in India.
I estimate the impacts of temperature differences and rainfall on Indian cities’
output—both agricultural and non-primary.
I estimate city output regressions for India’s cities using several approaches.
Since only growing areas are usually designated as towns, to get rid of this selection
bias, I estimate the output of districts that are larger geographical areas than cities,
which is similar to the approach Beeson et al. (2001) take. I estimate the
non-primary output of cities as dependent on rainfall, temperature differences and
other socio-economic characteristics determining city-level output such as its size,
human capital, infrastructure, economic base, and regulations affecting urban land
use. Further, using a similar approach, I estimate the agricultural (primary) output of
districts as dependent on climate change indicators, along with other factors.
282
K.S. Sridhar