Climate Change Effects in China Exceed the Global Average, Leading to an Annual Average of US $40 Billion in Overall Economic Loss and Damages

China, like many countries, has been feeling the effects of climate change over the past decades in the form of an increase in extreme weather events. Some estimates say that floods, droughts, and storms are incurring direct economic losses of 25 to 37.5 billion USD per year. Other reports place that number at 1% of China’s GDP annually, which is more than seven times the global annual average for the same period. The Ministry of Environment and Ecology’s latest estimate puts the average annual direct economic loss caused by extreme weather and climate events at about 300 billion yuan or roughly 40 billion USD. It also appears that China seems more vulnerable to the environmental changes brought on by climate change: historical data suggests that the average surface temperature in China has increased by 0.9 – 1.5℃ over the past 100 years, with an average increase in the last 60 years of about 0.23℃ per decade. This is almost twice as high as that of the global average. Under different global temperature rise scenarios, China’s average surface temperature is expected to rise higher than the global average. Some future scenarios point to a likely rise of about 4℃ in China versus the 2℃ global average.

The most common manifestations of climate change that cause loss and damage are:

  • Water-related damages to property, production means, loss of livestock or human life, shoreline erosion, and loss of wetlands caused by rising sea levels, storm surges, typhoons, flooding, torrential rains, etc. occur in both coastal regions and China’s hinterland.
  • Heatwave and drought-related loss and damage to crops and livestock increase the instability in agricultural production and cause a decline in the output and quality of grasslands. This includes reduced crop production, such as wheat, paddy rice, and corn; changes in the agricultural production structure; acceleration of the decomposition of organic elements in the soil; expansion of areas suffering from crop diseases and insect pests; an increase of natural fire disasters; and increases the risk of livestock epidemics. While some of the damage may be offset by extended growing periods elsewhere in China, overall changes can significantly influence China’s agricultural output. By 2030, overall crop productivity in China could decrease by as much as 5- 10%. By the second half of the century, climate change could cause reductions in yields of rice, maize, and wheat by up to 37%
  • Heatwave-related loss and damage in industrial production are caused by the closure of factories and mandatory downtime for workers in non-climatized environments. In addition to heat-induced public health issues.

China’s ecologically fragile areas – which are most prone to suffer from the effects of climate change – are mainly located in the arid and semi-arid areas in the North, the hilly areas in the South, the mountainous areas in the Southwest, the Qinghai-Tibet Plateau and the eastern coastal land-water interface areas. These regions are also the most affected by concentrated poverty.

Climate change also affects infrastructure projects and investments that drive up costs in maintaining or even reinforcing them to improve the climate resilience of a place. For example, the acidification of seawater can cause erosion of ports and coastal zones. Cities need to improve their drainage systems because the existing drainage system is not enough to cope with urban flooding. And some studies have shown that if the global temperature rises by one degree, the investment in the Qinghai-Tibet Railway is likely to double because the original construction conditions of the permafrost are no longer applicable.

China’s government has recognized the impact climate change has had and will continue to have on the land and its people. The proliferation of policies, regulations, programs, and pilots ranging from the Carbon Emission Trading System, the 14th Five-Year Plan, the 1+N documents, the National Climate Adaptation Plan, electrification of the transport system, and many more illustrate the sense of urgency behind China’s decarbonization efforts. At the same time, China’s government continues to consider the economic development of the country and energy security of equal priority. Therefore, a sustainable and climate-resilient development path to increase adaptation and mitigation should include clean energy and green transport, better urban planning, healthier food systems, universal health coverage, and enhanced infrastructure. To this end, the Ministry of Environment and Ecology and 16 other state agencies have in June this year, released a strategy to build a climate-resilient society by 2035. The Adaptation Strategy 2035 considers ecological, social, and economic dimensions of climate risk and adaptation. This strategy places particular importance on “Strengthening Climate Change Monitoring, Early Warning, and Risk Management”, reflecting the importance of monitoring and observing climate change, implementing early warning systems, strengthening impact and risk assessment, and planning emergency disaster prevention and mitigation. It guides the adaptation and mitigation of urban and rural habitats also sensitive secondary and tertiary industries such as finance, energy, tourism, and transportation.

In addition, such policies are supported by efforts to implement a sustainable and green financing strategy to fund and realize projects aiming to accelerate China’s double carbon goal of peaking carbon emissions before 2030 and reaching carbon neutrality by 2060. The Climate Investment and Finance Association (CIFA) was established in August 2019 under the Ministry of Ecology and Environment of China. The agency works as a think tank platform encompassing representatives from government, financing organisations, enterprises, academia, and other institutions to support policymaking and standard setting for green financing.


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This Post was submitted by Climate Scorecard China Country Manager Annette Wiedenbach


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