The Asia and Pacific region has based its development strategy on a very intensive use of fossil fuels. Consequently, poor air quality affects the daily life of millions of inhabitants of Asia's cities. This poses significant problems for the region's future well-being, especially in the context of how vulnerable it is to the impacts of climate change. At stake are the region's economic development achievements since the second half of the 20th century and improvements in living standards. Climate change may reverse the public health achievements and economic progress of Asia over the last 50 years. A business-as-usual scenario, in which global mean temperature increases by over 4 degrees Celsius by the end of this century, will have very negative consequences for Asia, including prolonged heat waves, coastal sea-level rise, and changes in rainfall patterns that affect human health. From 1996 to 2015, six countries out of the world's ten most affected by extreme weather events in the form of severe heat waves, typhoons, rainfall—were in Asia. For these reasons, efforts must be made to place the Paris Agreement consensus scenario, in which global warming is limited to 1.5–2.0 degrees Celsius above preindustrial levels (which would still have significant negative consequences), on top of the policy agenda. The problem is that the level of public concern about climate change is lower in Asia than in most other regions.

In 2017, the Asian Development Review brought together a group of scholars interested in Asia's climate change. Eight of the papers presented at the conference were selected for this special issue on The Climate Change Challenge to Asia's Development. The articles highlight the need for concrete and rapid actions to adapt to climate change.

Deschenes uses cross-country panel data for 1960–2015 to discuss evidence on the relationship between extreme temperatures and mortality in 16 Asian countries. He finds that 1 additional day with a mean temperature above 90 degrees Fahrenheit, relative to 1 day with a mean temperature in the range of 70–79 degrees Fahrenheit, increases the annual mortality rate by about 1%. Deschenes also provides predictions of the impact of climate change (through its effect on temperature and rainfall) on mortality for the 16 Asian countries: while climate change would lead to a modest 4% increase in the annual mortality rate across the 16 countries in the sample over the 2020–2039 period, the impact over the years 2080–2099 would be a much larger 45% increase, which is equivalent to the decline in mortality rates in Asia during 1960–2015.

Costello's paper addresses a critical question for the world's largest fishing region: should Asian countries pursue fishery management reforms or does the prospect of climate change weaken the case for reform? Many Asian fisheries are languishing under outdated management regimes and open access. Estimates put the per year losses of Asian fisheries at $55 billion as a result of inefficient management. Climate change will probably make things worse. Costello analyzes 193 of the most widely harvested species of fish in Asia. Results indicate that about 55% of Asian fisheries will experience reductions. He concludes that, for many Asian fisheries, there is a strong case for adopting fishery management reforms. These could increase the present value of fisheries by 30% and that of food provision by 21%, even under impending climate change.

Jin and Zhang analyze the economic implications of adverse health outcomes as a result of air pollution caused by particulates with aerodynamic diameter ≤2.5 μm (PM2.5). Estimates indicate that 1 million people died in the People's Republic of China (PRC) in 2015 as a result of pollution derived from excessive PM2.5. This study uses an integrated exposure-response model to estimate the total cost of PM2.5 mortality and the benefits of a reduction in mortality caused by PM2.5 in the urban areas of the PRC's 300 major cities. The analysis, using 2016 data, indicates that the total cost of PM2.5 mortality in major cities was almost CNY1.2 trillion. They argue that the aggregate benefit of mortality reduction from a uniform 10 μg/m3 decrease in PM2.5 concentration in these cities is about CNY141 billion. The authors conclude that all cities in the PRC should reduce PM2.5 pollution to levels below 10 μg/m3.

Arief, Roos, and Horridge evaluate the effects of a land moratorium on the conversion of natural forests to land used for palm oil production in Indonesia. Indonesia is the world's largest producer and exporter of palm oil. Deforestation, and the resultant increase in carbon dioxide (CO2) emissions, poses a severe problem. The analysis is based on an interregional computable general equilibrium model of the Indonesian economy. Under the baseline of there being no effort to curb deforestation and carbon emissions, 13.1 million hectares of forest land would be converted into oil palm plantation by 2030, leading to increased CO2 emissions. Under the first alternative scenario, from 2015 onward all land conversion from forest to oil palm plantation would come from managed forests only. There is a decline in CO2 emissions and palm oil output is smaller than in the baseline. The second alternative scenario adds to the previous simulation a payment in return for lower CO2 emissions. Under both scenarios, the moratorium leads to a reduction in Indonesia's growth and welfare. However, international transfers can compensate the welfare loss.

Auffhammer and Carleton study crop diversity as a mechanism to increase resilience to the weather shocks that are likely to increase as a result of climate change. They use a panel data set for 270 districts across India during a period of rapid agricultural change, the onset of the Green Revolution, to test whether shifts at the district level in crop diversification improve adaptation. The empirical results suggest that Indian districts with a more diverse crop mix are indeed more resilient in the presence of droughts. They conclude that diversification mitigates yield losses (physical benefit) in times of drought and weakens drought-induced price shocks. In other words, in drought years, districts with higher levels of agricultural diversity experience higher revenues per hectare. Overall, diversification of crop planting is an effective form of adaptation.

Chen and Xu evaluate the PRC's emissions trading scheme (ETS) pilot projects, which were launched in seven provinces in 2013–2014 and involved 2,012 companies that accounted for a significant percentage of the PRC's emissions. The basis of the ETS mechanism is that individual emitters are allowed to trade their emission allowances. The authors apply the synthetic control method to evaluate whether the program was effective in reducing carbon emissions in each province, finding that success was limited and varied across pilot projects. By province, the most successful were Hubei, Guangdong, and Shenzhen, which reduced emissions from 37 to 60 million tons in 2015; Tianjin did not experience a significant reduction in its carbon emissions. The authors conclude that ETS coverage needs to be expanded beyond petroleum processing, electricity power, and steel. The program was scaled up nationwide in late 2017.

Li and Zhang's paper offers a comparison of the ETSs introduced by Japan, the PRC, and the Republic of Korea. Together, the three countries accounted for one-third of the world's emissions in 2016. Comparisons are made in terms of emission targets and allowances, sectors covered, allowance allocations, monitoring, reporting and verification, compliance and enforcement, and offset markets. The authors also discuss the possibilities for cooperation on carbon markets among these three countries, which would be an important achievement for global climate governance and joint efforts to address regional air pollution concerns. Cooperation can be achieved either by linking well-designed and well-performing markets within the region (e.g., cities like Shanghai and Beijing with Tokyo and Saitama), or by linking carbon markets with similar trading systems.

Finally, Coxhead and Grainger use a general equilibrium model of a small open economy to explore some of the channels through which a fossil fuel subsidy reduction affects welfare and income distribution. Many Asian countries (mostly oil exporters) have used fuel subsidies to help the poor (some countries cut them after the 2014 decline in energy prices), although it is not clear whether the benefits are ultimately offset by negative effects such as the promotion of carbon-based energy sources. To discuss the distributional effects of a subsidy reduction, the authors use data from Viet Nam. Their analysis indicates that (i) a subsidy reform raises the relative prices of nontradables, while the burden of higher consumer prices in the nontradable sector will fall more on wealthier households since they tend to spend more on services, which are nontraded; and (ii) the poor will be substantially affected if rising energy costs reduce profitability and output in traded sectors that intensively employ less-skilled labor. Thus, the overall net distributional impacts of a fuel subsidy change are ambiguous.

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