Abstract
Environmental Economics looks at how economic activity and policy affect the environment and provides a framework for thinking about issues like climate change, nuclear power, recycling, traffic congestion, etc. The economic criterion for the level of resources to be devoted to pollution abatement considers matters in terms of abatement costs and environmental benefits, without considering how these are distributed across society. There is the case of international environmental policy problems, where country’s actions – to pollute or to control pollution affect the interests of other countries. The international policy agreements on global climate change and other environmental problems are required where the environmental effects spread beyond national boundaries. Poverty and climate shocks create a double burden. Poverty drives exposure to climate hazards. These, in turn, reinforce and prolong poverty. The climate crisis is fundamentally changing global poverty. It has left more people than ever at risk of poverty and less likely to escape it. Inequalities have worsened while prospects for sustainable development recede. Climate shocks continue to grow in frequency and intensity, leaving a lengthening trail of human suffering and deprivation. As one of the world’s fastest-growing economies, India has demonstrated an unwavering commitment to reducing emissions while promoting economic growth. India significantly expanded its role as a central knowledge hub for development through South-South Cooperation.
This paper is intended to draw a road map stressing on three basic areas – the evolution of the environmental challenges, its relation with the poverty, how the climate hazards reinforces and prolongs the poverty cycle and how the different parts of the world are affected by that and thirdly discuss about the international agreements on cooperation to avert the man-made effects on climate change and how India is contributing to the global efforts towards environmental protection.
Keywords – Environmental Economics, abatement, climate change, Poverty, Cooperation
Introduction
Environmental Economics looks at how economic activity and policy affect the environment and provides a framework for thinking about issues like climate change, nuclear power, recycling, traffic congestion, etc. The economic criterion for the level of resources to be devoted to pollution abatement considers matters in terms of abatement costs and environmental benefits, without considering how these are distributed across society. There is the case of international environmental policy problems, where country’s actions – to pollute or to control pollution affect the interests of other countries. The international policy agreements on global climate change and other environmental problems are required where the environmental effects spread beyond national boundaries.
The environmental policy uses basically two types of instruments – Command and Control that the countries use in the form of laws and other regulatory processes to require changes in polluters behavior and the other is through market mechanisms like environmental taxes and emissions trading.
A double burden: Poverty and climate change
Poverty and climate shocks create a double burden. Poverty drives exposure to climate hazards. These, in turn, reinforce and prolong poverty. This interconnectedness is a defining characteristic of the Anthropocene, an era in which human activity has so fundamentally altered the Earth’s systems that environmental and social problems can only be resolved together.
The UNDP 2025 report states that most people in poverty are exposed to at least one climate hazard; many confront several at the same time, especially in sub-Saharan Africa and South Asia. Lower-middle-income countries have the highest shares and numbers of people in poverty exposed to such risks. The intertwining of climate and poverty risks is likely to intensify in the future. By the end of this century, countries expected to experience the greatest temperature hikes are those that already have higher multidimensional poverty levels. This report makes a compelling case for addressing a double burden that may only worsen. It is time to move from recognizing the risks to resolving them.
Climate hazards are more common for the poor
Of the 1.1 billion poor people, 887 million live in regions experiencing at least one of four climate hazards: high heat, drought, floods and air pollution. They include 608 million exposed to high heat, 577 million to air pollution, 465 million to floods and 207 million to drought. Many poor people face overlapping climate hazards: 651 million face two or more hazards and 309 million people three or four. Some 72.2 percent of poor people who are exposed to any climate hazard live in middle-income countries (641 million) and 61.8 percent in lower-middle-income countries (548 million). Upper-middle-income countries have fewer poor people in absolute terms. But their exposure to climate hazards is disproportionately high—91.1 percent of poor people (93 million) in these countries face at least one climate hazard. In low-income countries, the share is 61.3 percent (246 million). In countries with low or medium HDI values, 77.8 percent of poor people (792 million) confront at least one climate hazard. In high human development countries, 82 percent of poor people (94 million) are exposed.
Across world regions, exposure to climate hazards is uneven. South Asia and sub-Saharan Africa have the largest number of poor people living in subnational regions affected by climate hazards (380 million and 344 million, respectively). While South Asia has driven global progress in reducing multidimensional poverty since 2005–2006, the region is the most exposed to overlapping climate hazards. Almost all poor people in South Asia (99.1 percent) live in regions affected by at least one climate hazard, while 59 percent (226 million) are exposed to three or four climate hazards. Countries with higher current poverty levels will likely experience greater average temperature increases. Under a high-emissions scenario, countries with the highest levels of multidimensional poverty could experience 37 more high heat days per year by 2040–2059 and 92 more by 2080–2099.
Despite poverty reduction, South Asia faces climate challenges. Except for Afghanistan, South Asia has shown strong poverty reduction, with the largest number of poor persons leaving poverty than any region. In 2005–2006, 55.1 percent of people in India were poor. The share plummeted to 16.4 percent in 2019–2021; roughly 414 million people left poverty. In 2014, 30.5 percent of people in Bangladesh were multidimensionally poor. This fell to 11.5 percent in 2022, with 28.7 million people exiting poverty. In Nepal, 58.3 percent of people were poor in 2006; by 2022, the proportion had dropped to 16.4 percent, with 10.6 million people leaving poverty. These momentous reductions—often propelled by pro-poor subnational trends—have driven global progress in reducing multidimensional poverty. South Asia’s success has given hope to many other nations that fast poverty reduction is possible, even in large countries and lower-middle-income, least developed and low-income economies. Not only that, but progress is feasible at scale and with the poorest benefiting first and most.
Yet a sobering reality is that concurrent climate hazards buffet people who remain in poverty in South Asia. About 99.1 percent of poor people (380 million) are exposed to one or more climate shocks, 91.6 percent (351 million) to two or more, and 59 percent (226 million) to three or four in the same year. This is far higher than any other world region, suggesting that South Asia must once again chart a new path forward for the developing world, one that balances determined poverty reduction with innovative climate action.
More heat ahead for the poorest countries
Meeting goals for long-term poverty reduction requires understanding how climate risks evolve over time. Climate projection data help to foresee how poor people globally may experience temperature increases in the decades ahead. Based on country-level projections of annual average temperatures for the periods from 2040–2059 and 2080–2099,31 countries with higher MPI values are expected to see greater hikes in the average number of days with maximum temperatures above 35°C. Countries with the highest poverty levels are projected to have 37 additional high heat days annually by 2040–2059, and 92 more by 2080–2099, under a high-emissions scenario. These numbers are much higher than for countries with the lowest poverty levels, which are expected to see increases of 24 days by 2040–2059 and 62 days by 2080–2099, under the same emissions scenario.
Responding to overlapping risk requires prioritizing both people and the planet, and above all, moving from recognition to rapid action. Aligning poverty reduction, climate mitigation and adaptation, and ecosystem restoration makes it possible for resilient communities to emerge and thrive, with no one left behind, especially on the front lines of a warming world.
The economics of climate change
At the 1992 Earth Summit in Rio de Janeiro more than 150 countries made a commitment to avert the man-made effects on climate change by signing the UN Framework Convention on Climate Change This was in response to the growing scientific evidence from the intergovernmental panel on climate change (IPCC) on the rising levels of greenhouse gases in the atmosphere due to human activity that had a potentially dangerous effect on global climate. Further negotiations led to the signing of the Kyoto protocol in 2012 where the signatories agreed to a 5.2% cut in emissions by 2012 measured against 1990 levels. The effects of global warming and climate change was not only limited to rise in global temperatures but also uneven distribution of rainfall, climate instability, drastic effects on the viability of agriculture, instability in climate patterns, increased frequency and severity of extreme events like cyclones, hurricanes, floods, forest fires, etc.
Some of the major sectors with higher emissions are the thermal power sector, iron and steel, cement, chemicals, etc due to significant carbon emissions from burning of fossil fuel. The transport sector has substantial and growing emission and a range of possibilities for reducing emissions from road transport and aviation. Carbon abatement in agriculture and forestry could include the possibility of planting new forests as carbon ‘sinks. Reduced energy use by private households could also contribute considerable emissions reduction.
Ideally international agreement needs to encompass all countries but getting all countries to sign the agreement is difficult. A non-signatory avoids any abatement cost. Also, countries may sign and take little effective action. Reaching a comprehensive global agreement is also complicated by the great differences between countries. Some countries are much more vulnerable than others to climate change, especially low-lying countries which are at risk of sea level rise, and countries whose current climate provides high agricultural yields which could be at risk if the climate becomes more instable. On the other hand, some countries may even benefit from modest climate change.
The most crucial difference between countries is in the consideration of per capital emission. In 2002, the energy related carbon dioxide emission was 4 ton per head across the world, whereas it was three times (11.7 tons) in the industrialized members of OECD and barely half (2.2 tons) in the developing countries. The emission in USA exceeded 20 tons per head.
Asking countries to cut emissions by equal percentages is also unrealistic because that would leave the developing countries largely energy constrained for their development needs. Also developing countries might observe that they are being asked to contribute to solving a problem that they have not created through their past emissions. An alternative might be making all countries to agree to same capita carbon budget say 4 tons per head that would permit some growth as well as emissions growth while concentrating all abatement cost in the richest industrialized countries. But the chance of richer countries to agree to this is a challenge because they may perceive the agreement to cost more than benefits. Thus, the obstacles to reach a successful climate change agreement is real and substantial.
The 2015 Paris Agreement was drafted and opened for signature on Earth Day (April 22) in 2016. The agreement is a legally binding international treaty on climate change. Currently,194 countries and the European Union have ratified the Paris Agreement. This treaty’s primary mission was to keep the increase in global average temperature to below 2oC above pre-industrial levels and strive towards limiting the temperature increase to just 1.5oC above pre-industrial levels.
The US retreat from climate action has not halted all global emissions-cutting efforts. Investment in low-carbon energy is far outpacing spending on fossil fuels. Renewable energy sources accounted for more than 90% of new power generation capacity last year and, in much of the world, are now the cheapest source of new electricity.
China is increasingly shaping the green transition. Though it remains the world’s top coal consumer, its emissions appear to have peaked last year. This month, the Chinese electric vehicle makerBYD surpassed Tesla in electric vehicle sales, while Chinese firms now produce more than 80% of the world’s solar panels and about 70% of wind turbines, giving them dominant control over clean energy supply chains.
India: Accelerating Development Through South–South Cooperation
As one of the world’s fastest-growing economies, India has demonstrated an unwavering commitment to reducing emissions while promoting economic growth. In 2025, India achieved a 67.5% reduction in Hydrochlorofluorocarbon (HCFC) production and consumption, fully meeting its commitments under the Montreal Protocol.
Efforts to expand sustainable energy access gained significant momentum. Through the GEF Small Grants Programme (GEF SGP) and UNDP’s Decentralized Renewable Energy (DRE) initiative, supported by the Government of Japan, clean energy solutions reached communities across Telangana, Madhya Pradesh, Assam, Meghalaya, and Tamil Nadu. Nearly 1,802 renewable energy systems were installed, supporting both productive activities and essential community services. These included improved cookstoves, solar lighting, induction cookers, solar-powered incubators, vermicomposting units, and large-scale biogas installations, bringing clean, reliable energy to households and communities.
These interventions not only replaced fossil-fuel-based systems and improved energy access. They also gave people more time, safer and cleaner homes, and new opportunities to earn and support their families, showing how climate action can directly improve everyday lives while reducing emissions. At the same time, a new five-year initiative on e-waste management, supported by GEF and implemented by UNDP, in partnership with the Ministry of Electronics and Information Technology (MeitY), will strengthen the environmentally sound management of one of the country’s fastest-growing waste streams.
India is restoring its landscapes and strengthening resilience through a community-driven approach to ecosystem restoration. In 2025, community led initiatives restored over 8,500 hectares of degraded land, ensuring that more than 63,000 people could withstand climate shocks while securing their livelihoods. India’s approach increasingly places women at the forefront of biodiversity protection. Over 300 Women Climate Champions mobilized 4,000 Self Help Groups to lead local adaptation, while 2,358 women farmers adopted climate-resilient practices. These efforts were supported through partnerships with the Green Climate Fund, GEF SGP and the Gates Foundation, ensuring that environmental gains were inclusive and sustained.
Strengthening Disaster and Urban Resilience
As urbanization accelerates, India is pioneering proactive financial and institutional resilience to manage climate-induced risks. In 2025, UNDP worked with the National Disaster Management Authority (NDMA) to design a Natural Catastrophe Risk Insurance Pool, a key recommendation of the XVth Finance Commission, aimed at pooling resources from the central and state governments to support post-disaster reconstruction.
State-level resilience was further strengthened in Bihar, Nagaland, Uttar Pradesh, Himachal Pradesh, and Maharashtra through scientific risk assessments. In parallel, states such as West Bengal and Karnataka took a significant step by designing Climate Finance Facilities to mobilize investments for resilience. Urban environmental challenges were addressed through evidence-based approaches. With support from the Lacuna Fund, UNDP India developed a hyperlocal pollution dataset in Patna and Gurugram, drawing on citizen science and societal intelligence to enable more targeted interventions to reduce air pollution and protect public health.
COOPERATION: STRATEGIC APPROACH TO INCLUSIVE AND SUSTAINABLE DEVELOPMENT
India has emerged as a proactive leader in South-South Cooperation (SSCC). These initiatives aim to foster inclusive economic growth and institutional capacity across partner countries in Africa, Asia, and Latin America. India has launched two key South-South platforms—the International Solar Alliance (ISA) and the Coalition for Disaster Resilient Infrastructure (CDRI), the latter engaging 39 countries and 7 organizations to promote resilient infrastructure.
Green Energy & Climate Resilience
Through initiatives like the ISA, India supports renewable energy, climate-smart agriculture, and climate resilience, especially for Small Island Developing States (SIDS).
India’s SSC is region-specific, aligning interventions with local contexts:
• South Asia: Connectivity, education, health, and humanitarian aid.
• Africa: Agriculture, solar energy, digital health, and vocational training.
• Pacific & Oceania: Emphasis on climate adaptation, disaster resilience, and e-governance—epitomized by the Forum for India–Pacific Islands Cooperation (FIPIC). At the 2023 FIPIC Summit in Papua New Guinea, India pledged support to 14 Pacific Island Countries through healthcare centres (Jan Aushadhi Kendras), solar energy projects, digital infrastructure, scholarships, and capacity-building initiatives.
• Caribbean & Latin America: Renewable energy, biotechnology and disaster preparedness.
• Southeast & Central Asia: Fintech, trade facilitation, and capacity building.
Conclusion
The climate crisis is fundamentally changing global poverty. It has left more people than ever at risk of poverty and less likely to escape it. Inequalities have worsened while prospects for sustainable development recede. Climate shocks continue to grow in frequency and intensity, leaving a lengthening trail of human suffering and deprivation. Climate-related disasters pushed around 32 million people from their homes and communities in 2022 alone. Poverty, once seen as mainly a standalone socioeconomic concern, is now inextricably linked with planetary pressures. Without ambitious efforts to mitigate climate fallout, the number of people in extreme monetary poverty could nearly double by 2050.
Global warming is a global problem. Emissions contribute equally whether it is a ton of carbon Dioxide emitted from USA, Europe, China or India. Similarly, the damage experienced by any country is a function of global emissions. Individual country’s emissions or abatement affect the level of climate change damage they experience only through their impact on the concentration of greenhouse gases in the global atmosphere. The global nature of problem calls for corresponding global action if the risk of catastrophic climate change is to be tackled effectively. The Kyoto protocol in 1997 was the first coordinated international action binding emissions reduction targets for industrialized countries but United States stayed outside that agreement. The United States has officially exited the Paris climate agreement for the second time, cementing Donald Trump’s renewed break with the primary global venue to address global heating. The move leaves the US as the only country to have withdrawn from the pact, placing it alongside Iran, Libya and Yemen as the only countries not party to the agreement. While it will not halt global climate efforts, experts say it could significantly complicate them.
In 2025, India significantly expanded its role as a central knowledge hub for development through South-South Cooperation. India is a highly diverse country exposed to significant climate and environmental risks. India is tackling climate risks through integrated solutions that safeguard ecosystems, strengthen livelihoods, reduce vulnerability and support low-carbon growth
Bibliography
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- J.M.Roberts and Odd Arne Westad, The Penguin History of the World, Penguin Books
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