Climate change could cost Nigeria up to trillions in stranded assets especially if government fails to take critical measures now ahead of imminent global actions. This is according to an Agora policy report on “Climate Change and Socio-Economic Development in Nigeria” launched on Wednesday in Abuja.
Asset stranding is the process of collapsing expectations of future profits from invested capital (the asset) as a result of disruptive policy and/or technological change.
Already, many countries have outlined different timelines of between 2030 and 2050 to begin their phase out of fossil fuel usage. Norway has already commenced the process, while China is due to start any time in the near future.
The report notes that as the world attempts to achieve net-zero carbon emissions and penalise climate-unfriendly investments and activities, vast quantities of recoverable fossil fuels will have to remain underground in order to stabilise the global climate and energy-intensive equipment will have to be retired at a quicker pace in favour of less carbon-intensive ones.
“With this transition, therefore, many assets will become stranded,” the reports emphasizes.
“It is hard to accurately calculate the economic cost of climate change in Nigeria but available estimates suggest a cumulative of up to $100 billion by 2020 and $460 billion by 2050.”
In 2006, the World Bank assumed that between 2-10% of Nigeria’s Gross Domestic Investment and about 40% of official development assistance would be sensitive to climate change.
Despite these consequences, there are concerns that government is not paying significant attention to climate change and it’s consequences.
The report further notes scientific evidence which indicates that Nigeria is experiencing rapid climate change with figures suggesting the situation will get worse with time.
Since the 1980s, for instance, the temperature over Nigeria has risen significantly, and climate projections show a significant increase in temperature across all ecological zones in the next few decades.
Based on the results of various climate model scenarios published in Nigeria’s Third National Communication and Nigeria’s Climate Risk Profile, temperatures across the country are expected to increase by 2.9°C to as much as 5.7°C by end of the century.
Nighttime temperatures, currently between 20°C and 27°C, are expected to increase by as much as 4.7°C, as the impacts of climate change manifest in rising temperatures, variable rainfall, increases in the frequency or intensity of some extreme weather events, such as floods and droughts, and rising sea levels.
“A more recent estimate indicates that without climate-proofing Nigeria’s economy and society through concrete adaptation action, it is estimated that climate change will cost the country between 6% and 30% of its GDP by 2050, equivalent to a cumulative loss of $100-460 billion.
“In addition, estimates for losses in the country’s priority sectors (agriculture, water resources, health and transport), without adequate mitigating measures are at $3.06 billion annually from 2020 which is expected to rise to about $5.50 billion in 2050.10 Without climate-proofing, an expected project life of 30 years could be truncated to 20 years,” the report adds.
Climate change is also compounding poverty challenges in Nigeria and impeding the attainment of Sustainable Development Goals (SDGs) by compromising the country’s economic development through multiple and compound negative impacts.
According to the report, Nigeria is very vulnerable to the impacts of climate change as much of its agricultural sector, which contributes about 24% to its GDP, is rain-fed and climate-sensitive. Other sectors of the economy such as health, transportation, energy, and water resources are also vulnerable to the impacts of climate change.
Agriculture is one of the sectors most sensitive to global warming in Nigeria and a major source of climate-induced economic loss in the country.
The reports also raises fears that some areas in the northern part of the country, the decline in yield in rainfed agriculture could be as much as 50 percent. Increased warming trends will also make the storage of root crops and vegetables challenging for farmers without access to refrigerators, thereby increasing the already high level of post-harvest loss.
In 2021, the Global Hunger Index ranked Nigeria as 103rd out of 116 countries. Climate change could contribute towards further worsening these realities, the report warns. Given that Nigeria has 35 million children under the age of five, of which 12 million are stunted, with 23.5 million being anaemic owing to poor nutrition, the threat posed by climate change has the potential to further worsen the situation.
Climate change will also worsen water-scarcity challenges in the country, the report also observes, citing a World Bank prediction of a possible 25% drop in the amount of water available in Nigeria by the year 2050.
“This will significantly affect water supply for agriculture, industry, and home consumption. Reduced water availability will also pose severe threats to irrigation agriculture, industrial activities, and domestic water supply, threatening the livelihoods of farmers/labourers (employment) and GDP.”
The report also projects that climate change will alter Nigeria’s coastlines, result in displacement of hundreds of thousands of people and possibly the submergence and disappearance of local communities.
Calculations show that the potential increase in sea levels due to global warming, known as accelerated sea-level rise (ASLR), for Nigeria ranges from 0.5 to 1 metre.
“This would result in the radical alteration of Nigeria’s coast line. A shoreline retreat of 100 metres is expected by the year 2060, with worst-case scenarios predicting erosion rate of up to 600 metres by the year 2060. With ASLR of about 1.0 m (in no development and no mitigation/adaptation measures scenario), about 75% of the delta could be lost. Capital values at risk could be as high as US$17.5 billion.”
Other areas of possible impact include flooding which represents one of the most widespread and recurring impact of climate change in the country, increase in malaria burden in the country, among others.
It also observes that rather than focus on the significant threats to economic development, Nigeria should embrace the opportunities which climate change presents like economic diversification and competitiveness, energy security, and sustainable development.
While it commended government for recognizing the challenge that the climate crisis poses to the country’s development, and the need to address the challenge
for national sustainable development, it however, worries that action has not kept pace with pronouncements and pledges.
“Transitioning to a green economy in the presence of abundant fossil fuels
and gas is a complex endeavour that requires careful planning, stakeholder engagement, and a commitment to sustainable development.”
In terms of policy recommendations, the report notes that Nigeria needs to synergise and align its various policies and declarations on climate change with its national needs, deepen institutional capacity for climate action and the legal framework, ensure adequate climate funding and a just and fair energy transition, increase the level of public awareness for climate change, as well as pursue a collaborative approach to low-carbon development future
Government may also consider strengthening integrated agriculture, forest, and water management, creating the conditions for resilient cities and infrastructure, and enhancing national capacity for climate-induced disaster risk management.
Speaking at the Policy Conversation, Waziri Adio, Founder of Agora Policy regretted that climate change still does not rank very high on government’s policy agenda and among the citizens.
He emphasized that the burdens of shifts in climatic conditions are already upon the country, listing for instance, the rise in temperature, irregular raining patterns, near perennial flooding across the country, the increasing threats of desertification as already having negative impacts on food production, food security and food inflation, and on water; health and productivity; energy and infrastructure; and on the conflicts that continue to multiply partly on account of vanishing natural resources.
According to him, additional reasons for greater urgency is that Nigeria is a resource-intensive but ironically energy-poor country.
He further warned that global transition away from fossil fuels poses grave threats to government revenue at all levels and the capacity to provide the much-needed power for homes and industries.
“Our capacity to fight poverty and achieve the SDGs and to increase national productivity and competitiveness may be further compromised,” he added.