While numerous countries around the world fear the humanitarian and economic crises climate change is expected to bring, Mongolia — and to a lesser extent Russia and several other CEE/CIS countries — will reap significant economic benefits from a modest rise in global temperatures, a new International Monetary Fund (IMF) study finds. Mongolia is the clear outlier; the IMF forecasts that the country’s per capita output will grow by just under 1.4 percent in case of a 1 degree Celcius increase in temperatures. More broadly, the CEE/CIS region as a whole is set to benefit disproportionately from hotter temperatures. The same 1 C increase would boost the economies of a total of 13 countries across the region, more than half of the 22 countries worldwide that the IMF anticipates will benefit. They include Russia, where a 0.83 percent increase in per capita output is expected if temperatures rise 1 C, along with Belarus, the Baltic states, Kazakhstan and Kyrgyzstan.

Mongolia in particular is a country of extreme temperatures. Ulan Bataar has the dubious distinction of being the world’s coldest capital — beating the capitals of Canada and Kazakhstan — and temperatures range from above 40 C in the Gobi desert in summer to below minus 40 C on winter nights. In such extreme cold temperatures, also seen in parts of Russia and Kazakhstan, economic activity is inhibited in winter. Construction sites sit idle, transport is interrupted and — despite specially adapted technologies — industries such as mining are also affected. In addition, warmer, wetter weather, as forecast in the IMF study, could make it possible to grow a greater volume and variety of crops in countries like Russia — which has already become the world’s top exporter of wheat this year. The melting of the polar ice cap, albeit a mounting catastrophe in global terms, is also seen by some as good news for Russia, whose ships are now able to navigate Arctic waters. This will also help open up exploration of the Arctic continental shelf, where substantial energy reserves still lie untapped. Recognising the potential of the Russian Arctic, Moscow plans to spend 209 billion rubles (3.4 billion euros) in the region over the next three years, with state and commercial companies are pledging billions more. President Vladimir Putin acknowledged this in an interview with CNBC this spring. “What I’m about to say may be unpopular… Climate change brings in more favourable conditions and improves the economic potential of [the Arctic] region,” he told the news channel. In other countries in the CEE/CIS region, the impact is likely to be insignificant, and none are expected to experience a fall in output. This is similar to the situation in most of Europe and North America, but in stark contrast to other world regions. Africa is set to be the worst affected, while a fall in output is also forecast in Latin America, the Middle East, the Indian subcontinent, Southeast Asia and Australasia. This means most countries worldwide and the vast majority of the world’s population would be negatively impacted. “Close to 60 percent of the world’s population currently resides in countries where an increase in temperature would likely lead to such pernicious effects. By the end of the 21st century, this number is projected to rise to more than three-quarters of the global population,” the report says. “Higher temperatures hurt economic activity in hot countries through many channels. They lower agricultural output, reduce the productivity of workers exposed to heat, slow investment, and damage health,” it warns. Many of the countries in the affected region are low income, making it harder for them to adapt to climate change.



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