1. Socio-Economic Scenarios & Climate Change in India Purnamita Dasgupta Institute of Economic Growth, Delhi, India & Johns Hopkins University, USA (Visiting Prof.) 1

2. Objectives Develop alternative socio-economic scenarios that take into consideration a sustainable development objective for India Focusing on agriculture as a key sector 2

3. Methodology Key markers of socio-economic vulnerability Including Geographical (inter-state variation and coastal location), Demographic (inter-state population distribution) and Coping vulnerability (income differentials and access to education, infrastructure) Socio-Economic variables impacting the above are then interacted in a dynamic simulation model Model provides: (a) alternative development pathways through short to medium term projections over (b) varying time scales (c) key parameters which can be influenced to achieve desirable outcomes for decreasing vulnerability, increasing adaptive capacity. 3

4. 4 Construct alternative socio-economic scenarios, using simulation modeling Stock and flow diagrams; model construction is done to have enhanced understanding of the inter- relationships between variables Three types of variables in the model: stock, flow and converter; Stocks - show the present state; Flows – variables that change the stocks over time; converters explain the flow

5. 5 Each relationship is specified by a mathematical equation Model is simulated; run with empirical data (using parameters /data for variables in the equations) and re-visited to improve initial results. (VENSIM software) The parameters and assumptions can be varied; sensitivity analysis is done.

6. 6 Dynamic model – shows how system is likely to change over time build in the limitations to this growth (climatic factors, other production constraints) Include the capacity to overcome these through adoption of new strategies (technological and policy interventions e.g. increased efficiency of water use)

7. Gross Domestic Product Poverty Reduction Food security Unemployment Reduction Access to Basic Services Sectoral GDP Share of Agriculture Sector Food grain Production 7 Conceptual Frame – Economy and Agriculture Module

8. 8 Area under Food grain  Profitability  Technology  Climatic Factors  Irrigation  Other Socio-Economic Factor  Share of Primary Sector  Education  Infrastructure Food Production Population Per Capita Production Conceptual Frame: Dynamic Simulation of Food grain Production

9. 9 Gross Domestic Product Poverty Reduction Food Security, Unemployment Reduction, Acess to Basic Services Sectoral Gross Domestic Product Share of Agriculture Sector Area under Foodgrain area change due to change in profitability factor change in relative profitability Non irrigated area food grain irrigated area foodgrain change in area foodgrain Proportion of land irrigated food production Yield (irrigated) Yield (nonirrigated) Per capita production Population in2

10. System Equations The mathematical structure is as follows: Land Food (t) = f (Land food(t-1), Change in Land food) Change in Land Food = f (Change in Area due to change in Relative Profitability, Change in Relative Profitability, technology factor) Proportion of land irrigated = f (Initial value, Time) 10

11. System Equations [Contd.] Irrigated land under food crops =f (Land Food, Proportion of land irrigated) Non-irrigated land under food crops =f ( Land food, non- irrigated land food crops) Food production = f(Irrigated land under food crops, Yield from irrigated food, Non irrigated land under food crops, Yield from non irrigated food) Per capita production =f (Food production, Population) 11

12. Subsidiary Equations Area under food grains = f (relative profitability, rainfall, irrigation, educational infrastructure, relative share of primary sector, urbanisation) Relative profitability = f (relative profitability in past period) Yield = f (trend, change in technology, change in temperature) 12

13. 13 Base year 2004-05; Time series data on major food and non-food crops and related variables for 10 states; 35 years from 1970-71 to 2004-05 Major food crops – paddy, wheat, coarse cereals, pulses. For profitability: All costs in cash and kind including mark up of 10% for managerial functions (opportunity cost); weighted revenue to cost ratio.

14. 14 Existing secondary data and information collected from government and other agencies both at the national and state level (Census, NAS, Agri. Statistics, Cost of cultivation, UN and RG’s population, district handbooks) Parameter values from existing studies, expert consultation Standard Statistical and econometric techniques for subsidiary equation estimation; qualitative insights Data and Data Analysis

15. 15 Scenarios A: Reference – no climate change impacts; no major deviations from trend growth rates; current expectations on GDP, population growth B : Optimistic Scenario – higher GDP growth rate, urbanisation; A: Climate Change constrained growth scenario (temperature, precipitation); no intervention B: Growth with adaptation to Climate change (temperature, precipitation)

16. 16 Model Runs At the All India level : Corresponds to socio-economic imperatives of managing public goods, overall sustainability and economic growth At the regional / state level: Regional variations : income/wealth, land holding patterns, productivity, urbanisation, differentiated climatic impacts

17. Assumptions / Constraints – GDP – 9% till 2010, 8% 2020s, 7% 2030s; 6% thereafter – shares in 2030 – agriculture 15%, industry 30%, services 55% – Poverty reduction by 10% (16-17% BPL) by 2012; kept at 5% 2030 onwards – Urbanisation: 40 – 45% in 2030; 50% by 2050 – 100% literacy and 100% access to basic educational and infrastructure services by 2030. 17

18. Factors Characterising Vulnerability Per capita availability of food grains Proportion employed in non-agriculture/agriculture Per capita income 18

19. Emerging Scenarios Time scale from current time period till 2030, 2040, 2050, 2071 Longer term Scenario – uncertainties 19

20. Base Line Values for India (2004-05) Area under food grains (million hectare)120 Proportion of irrigated area under food grain0.44 Irrigated Area under food (million hectare)53.04 Average Yield in food grain in irrigated area(kg/hectare)3031 Average Yield in food grains in non-irrigated area (kg/hectare) 1158 Gross cropped area (million hectare)190.42 Gross irrigated area (million hectare)80 Net sown area (million hectare)141.14 20

21. Base Line Values for India (2004-05) Contd. Cropping intensity1.35 Average growth rate of yield (1994-95 to 2005-06) 1.49% Decadal change in cropping intensity (1995-96 to 2004-05) 0.023 Population (in million)1095 Poverty Ratio27.50% Sectoral Shares in GDP Primary: Secondary: Tertiary 22.4 : 24.03 : 53.56 Urbanisation27.80% Educational infrastructure index1.124 21

22. 22 Variable Reference Scenario Optimistic Scenario GDP growth rate (2020-2030) 7 %8 % Unemployment Rate 1% Income Poverty (Percentage BPL) 5% Sectoral Shares in GDP Primary: (Secondary + Tertiary) 0.15: 0.850.10:0.90 Per capita Food Grain Production 187.16 kgs203.25kgs Urbanisation 0.450.50 Access to education and infrastructure 100% Socio-Economic Scenarios for the Indian Economy, 2030

23. Uncertainty Issues TFP, technological progress Limiting – cap values : land availability, irrigation potential, population, relative international prices Turning points – thresholds : where these lie and extent of certainty of occurrence Quality Assurance Face Validity through repeated iterations – expected and consistent signs and directions of flows Historical behaviour tests Reality checks with extreme values for parameters 23

24. 24 All India Foodgrain Production

25. Per Capita Foodgrain Production 25

26. Scenarios A1:Rapid economic growth and rapid introduction of new and more efficient technology, low population growth, substantial reduction in regional differences in per capita income. A1B: Balanced emphasis on all energy sources. 26

27. AIB Data Computation Data provided at district level, with observation points for each state. The bigger the state, the more the observation points Available as Monthly and Daily observations Three time periods: Baseline 1960-1990, Middle 2021-2050, and, Future 2071-2098 Monthly observations filtered and extracted for Rainfall, Minimum Temperature, Maximum Temperature Average annual and seasonal rainfall and temperatures calculated across districts Compiled for each state for the three time periods 27

28. 28 Relative Changes in Temperature (2°C or above, Base Year 1960-1990) State203020402050 Andhra Pradesh++ Gujarat ++ Haryana + Karnataka Madhya Pradesh + Maharashtra Punjab + Rajasthan + Uttar Pradesh + West Bengal+ ++

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31. State Level Per Capita Foodgrain Production: Reference Scenario 31

32. 32 State Level Per Capita Foodgrain Production: Optimistic Scenario

33. Some Conceptual Concerns Developmental goals well defined for short term (e.g. MDGs); taken care of in setting the time frames and targets (e.g. literacy, poverty, access to basic amenities) Adaptation Costs – implies short and medium term cover for derailment of the economy from the desired time path Socio-economic modeling limitations beyond 2030. Advantage – CC data available, disadvantages – too much uncertainty for socio-economic context (fat tailed pdf with higher probability on extremes, difficulties in cost benefit analysis) Adaptation costs in terms of directions of change, mostly for the long run. 33

34. Foodgrain Production: 2071, 2100 34

35. Relative Change in Foodgrain Production State Name 2030 relative to 2004-5 2071 relative to 2030 2100 relative to 2071 Andhra Pradesh+++ Gujrat+++ Haryana+++ Karnataka+++ Madhaya Pradesh++- Maharastra++- Punjab+-+ Rajasthan++- Uttar Pradesh+-- West Bengal+++ India+-- 35