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Tackling climate and pandemic risk in Asia for the world

Asia’s role in developing a sustainable response to both COVID-19 and climate change will be critical in saving lives and livelihoods—both in the region and beyond.
Oliver Tonby

Advises oil and gas, energy, and industrial clients on strategic, development, and operations issues; member of Singapore’s Future Economy Council

Serves as Asia’s coleader and Japan’s leader for McKinsey Sustainability—the firm’s global client service platform to help all industry sectors achieve net zero emissions by 2050—and leads the Chemicals and Agriculture Practices in Japan

As the world battles the acute impacts of COVID-19, another defining challenge of this period – climate change – continues to pose significant risks for our environment, health, and livelihoods. The two phenomena may be playing out on different timespans, but are strikingly similar in many of their economic and social impacts. Moreover, Asian decision-makers must tackle both together, building systemic resilience and fostering positive longer-term outcomes for humans and our systems.

Asia was the source of the COVID-19 outbreak and is also at the epicentre of climate change, accounting for almost 50 percent of global CO2 emissions in 2018. It was first to see its health systems and economies attacked by the virus, and has been a leader in mitigation efforts, locking down cities as the pandemic has swept across the continent. The recent lockdown in India may lead to a 45 percent GDP contraction in the second quarter, according to some estimates.

Many of these same locked-down cities are on the front line of climate change, facing increasing flood, typhoon, and heat risks that may significantly impact livability and workability, food systems, physical assets, infrastructure services, and natural capital. Australia this year saw record-breaking temperatures and drought that science tells us will become four times more likely if temperatures rise by 2 degrees Celsius as a result of human-made climate change. Bangladesh has seen significant increases in rainfall over recent years, amid more heavy precipitation days and fewer consecutive dry days. Studies have shown that climate change intensifies natural hazards or increases their likelihood. In China, the 2017 Hunan province floods affected 7.8 million people and resulted in $3.55 billion of direct economic losses, including severe infrastructure damage. Researchers estimate that climate change made the floods twice as likely.

Tackling climate and pandemic risk in Asia for the world
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Absent mitigation efforts, both pandemics and climate change will have significant impacts in Asia over the coming years. Researchers expect pandemics to increase in frequency and severity, given underlying trends in land use change, agricultural practice, and urbanization. In parallel, climate models and basic physics predict that further warming is “locked in” over the next decade, and that global temperatures will likely continue to increase for years after. Under a higher-emission scenario, global temperatures will rise to 2.3 degrees celsius above pre-industrial levels (+0.5/-0.3 degrees) by 2050, compared with 1.1 degrees at present. By 2030, up to 200 million people in India will face a 5 percent annual probability of a heat wave that exceeds the survivability threshold for a healthy human. That number could rise to 310-480 million and a 15 percent probability by 2050. Meanwhile, the likelihood of severe hurricanes in coastal areas of China, South Korea, and most of Japan will probably triple over the next 30 years.

Viral and climactic hazards are increasing and will have similar destructive and unpredictable impacts. Both are systemic, in that their effects propagate fast across an interconnected world, thus multiplying risk. They are non-stationary, meaning past distributions are rapidly shifting. Equally, both are nonlinear, creating disproportionate impacts as critical thresholds are breached, and are regressive — hitting the poor hardest. On their current trajectories, both will overwhelm our limited efforts to adapt.

Tackling climate and pandemic risk in Asia for the world
We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: McKinsey_Website_Accessibility@mckinsey.com

The similar impacts of COVID-19 and climate change imply that there may be shared remedies, from optimizing systems performance in the short term to building resilience over time. Indeed, one insight to have emerged from the outbreak is that behavior changes that protect health may also reduce climate risk, at least temporarily. People have responded to COVID-19 by travelling less and using more digital solutions and e-commerce. A tentative estimate from CarbonBrief says the net impact could be a 5.5 percent drop in global emissions this year, which would be the largest decline on record. Indeed, many people have noticed the positive impacts their actions have had on the environment. The satellite images of vanishing pollution in China are a case in point.

Building resilience will be a common thread in defending lives and livelihoods. As governments invest trillions of dollars to prevent economic collapse during the pandemic, it makes sense to direct resources toward sustainable, clean, and safe systems. By leveraging technology and design thinking, these may reduce health and climate risk. For example, the next generation of buildings could be both energy efficient and smart in their design, which will mitigate the risk of viral infections even as they give back power to the grid.

Over the longer term, another common remedy would be to address the underlying drivers of increased risk. The trajectory of temperature rises will be dependent on the cumulative amount of greenhouse gases that humans emit and the mitigation actions they take. Asia’s role here will be critical. Its fast-growing economies must manage the industrialization process and raise standards of living without an exponential rise in emissions or epidemics. Despite accounting for a large proportion of global emissions, Asia’s economies are still modest emitters on a per capita basis today. India produces just 2 tonnes per person annually, compared with the US’s 16.6 tonnes per person and the EU’s 6.7 tonnes. Likewise, a future of increased pandemic risk requires a preemptive review of the impact of changes in land use, demographics, and agriculture.

The good news is that Asia is already leading the world in developing a sustainable response – for example, renewable energy investment. A next area of opportunity is infrastructure, both physical and digital. Asia will need to invest $1.7 trillion annually up to 2030 to maintain its growth momentum. Over the next 20 years we expect that more than half of global infrastructure spending will be in Asia, as growth accelerates and manufacturing shifts from China to frontier and emerging economies. Decisions relating to infrastructure, therefore, will make a huge difference to the emissions pathway globally, and likely to pandemics as well.

COVID-19 has made the world a different place, with policy makers and organizational leaders required to plan more effectively for systemic risks, amid a surge in public demand for a healthier environment. This provides an incentive to think carefully and invest to redesign systems to mitigate both health and climate risks. It is incumbent on policy makers and business leaders to properly assess risk, adapt to risk that is locked in, and mitigate for the future. It may be that more is possible than was previously thought.

This article first appeared in Financial Times. Read more insights from the McKinsey Global Institute on climate risk and response.

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