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Here’s why the poorest countries in Asia are most at risk from climate change

Climate change will affect all countries in Asia, but those with lower levels of per capita GDP will suffer most because their economies rely more on outdoor work and natural capital. And as it gets hotter, people won’t be able to work outdoors as much.

Different types of socioeconomic impacts identified across the ‘Four Asias’ show why the poorest countries are most at risk from climate change (Chart).

Chart: We identify different types of socioeconomic impacts across the 'Four Asias'

First-order Asia1 impact only, by 2050, by country,1 (based on RCP 8.5)

Types of socioeconomic impacts show why the poorest countries are most at risk. Impacts are categorized in four different types of countries in Asia: Frontier Asia, Emerging Asia, Developed Asia, and China.
Livability and workability Food systems Physical assets/infrastructure Natural capital
Share of population that lives in areas with nonzero annual probability of lethal heat waves2 Annual share of effective outdoor working hours affected by extreme heat and humidity in climate-exposed regions Water Stress3 Annual probability of >10% decline in yield of 4 major crops4 Annual share of capital stock at risk of riverine flood damage5 Share of land surface changing climate classification6
Frontier Asia
Bangladesh High risk increase High risk increase Risk decrease Moderate risk increase High risk increase Moderate risk increase
India High risk increase High risk increase Risk decrease High risk increase High risk increase High risk increase
Pakistan High risk increase Moderate risk increase Risk decrease Moderate risk increase Moderate risk increase Moderate risk increase
Emerging Asia
Cambodia Moderate risk increase High risk increase Risk decrease None or slight risk increase High risk increase Moderate risk increase
Indonesia None or slight risk increase High risk increase Risk decrease None or slight risk increase Moderate risk increase High risk increase
Laos Moderate risk increase High risk increase Risk decrease None or slight risk increase High risk increase None or slight risk increase
Malaysia None or slight risk increase High risk increase Risk decrease None or slight risk increase Risk decrease None or slight risk increase
Myanmar Moderate risk increase High risk increase None or slight risk increase None or slight risk increase High risk increase None or slight risk increase
Philippines None or slight risk increase High risk increase Risk decrease None or slight risk increase Moderate risk increase Moderate risk increase
Thailand Moderate risk increase High risk increase Risk decrease None or slight risk increase Moderate risk increase None or slight risk increase
Vietnam High risk increase High risk increase Risk decrease None or slight risk increase High risk increase High risk increase
Developed Asia
Australia None or slight risk increase Moderate risk increase High Risk increase Risk decrease Risk decrease Moderate risk increase
Japan None or slight risk increase Moderate risk increase Risk decrease Risk decrease None or slight risk increase High risk increase
New Zealand None or slight risk increase High risk increase Risk decrease Risk decrease Risk decrease Moderate risk increase
South Korea None or slight risk increase Moderate risk increase Moderate risk increase Risk decrease None or slight risk increase High risk increase
China
China High risk increase Moderate risk increase Risk decrease Risk decrease None or slight risk increase High risk increase

Notes

Note: See Technical appendix, Climate risk and response: Physical hazards and socioeconomic impacts, McKinsey Global Institute, January 2020, for why we chose RCP 8.5. Projections based on RCP 8.5 CMIP 5 multimodel ensemble. Heat-data bias corrected. Following standard practice, we typically define current and future (2030, 2050) states as average climatic behavior over multidecade periods. Climate state today is defined as average conditions between 1998 and 2017, in 2030 as average between 2021 and 2040, and in 2050 as average between 2041 and 2060.

1For our analysis in this report, we look at 16 countries that account collectively for about 95% of Asia's population and GDP: Australia, Bangladesh, Cambodia, China, India, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, Pakistan, Philippines, South Korea, Thailand, and Vietnam. Collectively, these 16 countries make up 54% of global population and one-third of global GDP.

2We define a lethal heat wave as a 3-day period with maximum daily wet-bulb temperatures exceeding 34°C wet-bulb. This threshold was chosen because the commonly defined heat threshold for human survivability is 35°C wet-bulb, and large cities with significant urban heat island effects could push 34°C wet-bulb heat waves over the 35°C threshold. These projections are subject to uncertainty related to the future behavior of atmospheric aerosols and urban heat island or cooling island effects.

3Water stress measured as annual demand for water as share of annual supply of water. For this analysis, we assume demand for water stays constant over time, to measurement of impact of climate change alone. Water stress projections for arid, low-precipitation regions excluded due to concerns about projection robustness.

4Rice, corn, soy, and wheat; distribution of agricultural yields modeled by Woodwell using median of nitrogen-limited crop models from AgMIP ensemble. Note that this analysis focuses only on likelihood of yield declines (vs yield increases) since it focuses on risks from climate change. See text of report for discussion of potential benefits. Countries grouped for some analyses to ensure modeling robustness.

5For estimation of capital stock at risk of riverine flooding, we used country-level urban damage risk indicator from WRI Aqueduct Flood Analyzer 2019 under business-as-usual scenario (RCP 8.5, Shared Socioeconomic Pathways 2) and existing levels of flood protection. Risk values calculated based on expected values, ie, probability-weighted value at risk.

6The biome refers to the naturally occurring community of flora and fauna inhabiting a particular region. For this report, we have used changes in the Köppen Climate Classification System as an indicative proxy for shifts in biome.

Source: Rubel and Kottek, 2010; Woodwell Climate Research Center: World Resources Institute Aqueduct Global Flood Analyzer; McKinsey Global Institute analysis

McKinsey & Company

To read the report, see “Climate risk and response in Asia,” November 24, 2020.