The Political Economy Of Climate Change In South Asia

By Farwa Aamer

As South Asia faces the escalating impacts of climate change, the region’s ability to respond effectively hinges on more than just access to climate finance and technical solutions. A critical yet often underexplored dimension is the political economy that shapes climate action across the region. The socioeconomic, political, and institutional challenges that pervade South Asia — rooted in diverse governance structures, entrenched inequalities, and varying levels of development — pose significant barriers to the formulation and implementation of effective climate policies. Understanding how these factors interact to either support or hamper climate resilience is essential for advancing sustainable development and designing and implementing policies that address the environmental challenges while also promoting socioeconomic resilience in the region.

South Asia’s economic development relies heavily on sectors like coal, agriculture, and manufacturing, which are significant contributors to greenhouse gas emissions. These sectors are deeply entrenched in the region’s economies and political landscapes, making it difficult to transition to low-carbon alternatives. Political leaders often face pressure from powerful industry lobbies to prioritize short-term economic growth over long-term environmental sustainability. The reliance on coal, for instance, is driven by its role in energy security and employment, particularly in countries like India, where the coal industry wields considerable influence over policy decisions. In Pakistan, the coal sector employed around 100,000 workers in 400 coal mines in 2022.[42]

However, we have seen some positive developments. India committed to increasing the share of non-fossil electricity generation capacity to 50% by 2030,[43] and at COP26 in Glasgow, Indian Prime Minister Narendra Modi announced India’s plans for reaching net zero emissions by 2070.

Political leaders in South Asia often operate within short-term electoral cycles, prioritizing immediate economic gains and popular policies over long-term climate strategies. This focus on short-term results can lead to the underfunding of climate initiatives or the implementation of policies that are economically expedient but environmentally harmful. This year has seen key political transitions in South Asia. Although climate change and energy transition remain urgent priorities, economic and political instability in the region will require new governments to focus policy action on these “primary,” issues first, potentially putting climate policies on the back burner.

Another significant barrier is weak institutional capacity, which undermines the effectiveness of climate policies. Corruption, bureaucratic inefficiencies, and a lack of technical expertise encumber governments’ ability to enforce regulations, manage climate funds, and implement adaptation and mitigation projects. These institutional weaknesses are exacerbated by overlapping responsibilities among government agencies, resulting in policy incoherence and delays in climate action. In water governance, for example, the absence of robust river basin organizations and regional frameworks limits coherent, cooperative policymaking for climate action across the region. The region also faces a lack of coordination between federal/central and provincial/state level governments, which impacts policy implementation. Furthermore, the region’s most urgent resilience needs are at the local level, where both financing and institutional capacities remain weak.

Geopolitical tensions and historical mistrust among South Asian countries also deter cooperation on a regional scale, even though climate change and water stress are recognized as shared challenges that demand coordination and collaboration between governments.

The region is home to a number of climate-vulnerable populations, such as those in rural or marginalized communities, who often lack the resources to adapt to climate impacts or influence policy decisions. This social stratification limits the political will to implement inclusive climate policies, as the needs of the most vulnerable are frequently overshadowed by the interests of more powerful economic and political elites. As a result, discriminatory climate policies exacerbate existing inequalities, further entrenching the political economy barriers to effective action. For example, in realizing its net zero goal, India’s government will also have to navigate the transition of about 70% of the approximately 2.6 million people employed in coal mining.[44]

With that in mind, the project’s final climate action roundtable focused on the “Political Economy of Climate Change in South Asia.” The roundtable discussion delved into the challenges and opportunities of formulating and implementing climate policies and advancing resilience in South Asia while navigating political economy barriers. Participants provided valuable insights into policymaking processes, offering critical lessons and strategic recommendations for advancing climate action in South Asia. The following are some key takeaways:

• Climate policies should be embedded in development priorities: In South Asia, where development challenges are pressing, participants emphasized that successful climate policies should be framed as solutions to immediate concerns like energy access, infrastructure, and economic growth to enable broader support for climate policies. As seen with India’s National Solar Mission,[45] the focus on energy security and access, rather than purely emissions reduction, allowed for political and social acceptance, eventually leading to its successful implementation.
• Policy sequencing is crucial: Climate policy implementation is a long-term process that requires strategic sequencing. For instance, China’s emissions trading system took two decades to build,[46] following the growth of renewable energy and gradual environmental regulation. South Asian governments should plan phased rollouts of climate policy to allow time for economic sectors to adapt. Participants noted that political economy is not static – as policies are implemented, the environment evolves and new policies become possible. For example, a country can start with incentive-based policies (e.g., renewable energy subsidies) and build toward more complex measures (e.g., carbon pricing).
• Address distributional impacts: Policymakers must evaluate the distributional impacts of climate policies, considering how different sectors (food, energy, consumer goods, etc.) and population groups will be affected. As South Asia transitions away from coal dependence, climate policies must address the social and economic effects on vulnerable communities. Financial compensation alone is not enough; it must be paired with strong job creation in alternative industries plus support for local community development. This applies to both energy transition and sustainable agriculture initiatives. Participants agreed that this comprehensive approach will make climate reforms more acceptable to the public and ensure a just transition.
• Build public trust: Policies that affect prices or livelihoods, such as subsidy removal or carbon pricing, often face resistance unless trust is established through early delivery of benefits and transparent governance. South Asian governments should build trust by ensuring visible short-term benefits (e.g., improved public services, job creation) from climate policies. Early and transparent communication about the long-term benefits of reforms (e.g., improved health outcomes) can also help gain public support. As governments change hands, there should be a renewed focus on full transparency and ensuring a strong commitment to achieving climate goals remains.
• Managing perceptions and developing positive framing: When designing climate policy processes, perceptions of policy impacts matter even if those perceptions sometimes diverge from the likely actual impacts. Working with those public and political perceptions in mind, governments must find means of positive communication and overall framing of the policy — one that emphasizes co-benefits, compensatory policies, and transparency — to garner wider acceptance and achievable results.
• Improve climate governance, cross-sectoral coordination, and local community engagement: Participants shared that effective reform requires coordination across all relevant government ministries (agriculture, health, environment) and decision-making levels (federal, state). As new climate reforms are considered, the federal policy community should support building the capabilities of local and regional governments to manage and implement climate transition policies effectively. This includes providing training, technical support, and financial resources. In addition, taking a decentralized approach to climate policy implementation would allow local governments to tailor solutions to their specific contexts and needs, enabling a more successful implementation. Participants added that bringing together multiple stakeholders — local governments, civil society, private sector, coal workers, and farmers, among others — will help build political support for future climate policies. Policymakers should focus on gathering and promoting evidence from the ground up, leveraging knowledge of communities directly affected by environmental degradation and subsidies. Highlighting these voices can help reshape the political narrative and provide a more compelling and inclusive case for reforms.

 (Published by the Asia Society Policy Institute in Collaboration with the World Bank South Asia Region.)