Climate Change – Chasing Tales

Half Dust, Half Deity

In Tolkien’s legendarium, when the world had not yet begun, there was Ilúvatar. And this being had thoughts.

He gathered around him the Ainur, who were great spirits born of his thoughts, and proposed to them a theme for a song. And the Ainur sang. And it was in this music that the world was made: In Tolkien’s world, every mountain, every sea, every creature that would ever live, first existed as sound sung by an Ainur before it existed as matter.

One of the Ainur, Melkor, decides he’s the main character and introduces his own theme of loud, clashing dissonance which overwhelmed those singing around him. Melkor is later called Morgoth, which means something like Black Foe/ Black Tyrant, etc. by inhabitants of the created world.

Among the Ainur who shaped the world was also one named Nienna. She is barely present in the stories. She doesn’t fight battles or forge alliances or make beautiful things. She weeps- for every wound that the world has suffered in the marring of Melkor, for every act of destruction and cruelty, for every beautiful thing broken. “So great was her sorrow, as the Music was played, that her song turned to lamentation long before its (the song’s) end, and the sound of mourning was woven into the themes of the World before it began.” So that world was not just full of the destruction of beauty, but sorrow that the beauty was destroyed.

Discord is built into Tolkien’s world from the very start, and thanks to NIenna’s tears, so is sorrow.

Like Arda (the name of the created world), grief and sorrow are also human inheritances in our own world. This is a piece about grief. About why it is rational to feel it, and what it means that we do.

The World As We Found It
Middle Earth in the Third Age, where those of you who have seen the films join us, is a world past its prime. The great civilisations of the First and Second Ages have drowned, literally: Beleriand, the continent where the most extraordinary events in the history of that world took place, lies under the sea. Númenor, the island kingdom of the greatest Men (Tolkien chooses to call humans “Men”) who ever lived, was swallowed by the ocean in a single Manwë-induced catastrophe (Manwë is another Ainur). What remains of Middle Earth is diminished. Smaller. The Elves, beings of extraordinary beauty and power, some of whom knew the light of the Two Trees before the Sun existed, are leaving to the Undying Lands, because Middle Earth no longer has a place for them, and Middle Earth is the poorer for every ship that departs.

Morgoth’s (and now Sauron’s, the Dark Lord of the films’) forces of darkness are another matter. Orcs swarm the land. These are creatures who were once, according to the darkest reading of the mythology, Elves themselves: captured by Morgoth in the earliest ages, broken and corrupted and remade into something that could only destroy. This is perhaps the most unbearable grief in the whole of the legendarium: that which marches against the light was once of the light.

After the earliest wars against Morgoth, the Valar^{(the Valar are just the Ainur who chose to enter Arda)} retreated to Valinor and raised the Pelóri: vast mountain walls, separating their paradise from the rest of the world. They lit it beautifully. They built their undying lands and their great cities and their gardens, and they waited.

Five wizards were sent to Middle-earth to help in its hour of need. Only one, Gandalf, is doing what he was sent to do at this point in the story.

And the fate of the world rests on two hobbits who don’t know the way to Mount Doom.

This is the world Tolkien gave us. A world of accumulated loss, diminishment, and long defeat, and yet one in which the gardener plants his seeds, a hobbit who can barely walk is lifted on the shoulders of his friend, and the Elf-queen gives her own place on the last ship to a wounded Ring-bearer.

The question the entire mythology is built around is not will everything be saved? It won’t. It is: given that everything will not be saved, what do we do?

The State of the World
It is April 2026. The climate negotiations that were supposed to matter have produced agreements that are being honoured approximately as well as climate agreements usually are. The Arctic is warming at four times the global average rate. We crossed 1.5°C of warming as an annual average, which was supposed to be the line we held. We did not hold it.

In the last two years, wars that did not need to happen have consumed resources- human, material, carbon- at rates that would take careful stewardship years to offset. A single large bomb releases roughly the equivalent of several tonnes of CO₂, along with countless precious lives. Sustained military campaigns run the carbon arithmetic in the wrong direction for months. The people conducting these campaigns are not calculating the carbon budget. They are not thinking about it at all.

There is a particular kind of worker in the climate space, the person who runs the numbers, writes the briefings, builds the advocacy campaigns, pushes the policy frameworks through institutions that move like glaciers, who is experiencing something that researchers have only recently begun to properly name. It is called ecological grief, or climate grief, or solastalgia: the distress caused by environmental change in one’s home environment, or by the knowledge of what is coming.

But there is a specific intensification of this grief that I haven’t seen named as clearly: the grief of watching your careful work be casually undone by forces that are not only larger than you but entirely indifferent to the values that animate your work. The grief of the long game player watching short game players wreck the board.

What Grief Is
Grief is the emotional response to loss. Not only death, but the loss of anything that held meaning: a relationship, a capacity, a future you had imagined, a world that was supposed to get better. Psychologists have mapped its stages, though the stages are less sequential than the famous model suggests and more like weather systems that arrive and depart without warning. What they agree on is this: grief that is not processed does not disappear. It persists.

And recovery? What is that? In my world it has been the finding of a way to live in the world as it now is, rather than as I wanted it to be.

The alternative, which is grief refused, grief undischarged, is Denethor staring into the palantír, Fëanor immolating his entire family through an incredible oath, the calculation that seems to say: what is the point?

How Grief Finds Us
Grief arrives in different sizes, and I’ve sometimes made the mistake of thinking the small ones don’t count because the large ones exist.

There is my small, almost laughable, grief of watching a cricketer I have loved for years approach the end. It is the grief of watching a supernova– a colossal, luminous explosion that outshines entire galaxies, and knowing this is the most beautiful thing you’ll ever see.

There is the shocking, thick grief of parents who get ill, and the long months of nursing them back. The frustration and then grief of a body that breaks and must be patiently rebuilt, mixed with the fear of never knowing whether it will ever be strong again. The grief of friendships that reveal themselves, over time, to have been one-directional until you realise you are alone in a forest of echoes.

And then there are the large griefs: the moral grief of watching the planet, our home planet, the one we are all on together, be treated carelessly, by people with bombs and profit margins and no particular interest in the carbon arithmetic. The grief of the person who has spent years trying to build something careful, and watches someone careless undo it in an afternoon.

There is the grief of truly understanding that all lives are not equal.

These are not the same grief. But they are made of the same material. The seed is identical: the feeling of watching something you love deteriorate. Whether through willful destruction, or through the natural arc of a mortal and magnificent thing approaching its end, the emotional structure is the same. Something that mattered is being lost. I cannot stop it.

Tolkien and the Grief of the Ecosystem
Tolkien watched his England disappear in his lifetime. The industrial revolution had been doing its work for a century before he was born; by the time he was writing the Lord of the Rings, the countryside he loved was being consumed by machines and efficiency and the imperatives of the modern world. He was not subtle about his feelings. Mordor is an industrial wasteland. Saruman’s Isengard, a factory (“all trees cut down, the ground torn up, holes dug and walls built, wheels turning and fires burning.”).

But his most precise and most moving portrait of ecological grief is the Ents. They are the last of their kind, and they know it. And so they decide on valour. A last stand perhaps not as outwardly desperate as as the Battle for Helm’s Deep, but certainly the last stand of an elder race that knows it’s dying out.

The Ents’ march on Isengard is not optimism. Treebeard does not believe they will win. “We may help the other peoples before we pass away.” He marches because the alternative- to remain in the forest while the forest is destroyed- is not really an alternative at all. Not for something that loves trees the way Treebeard loves trees.

The Valar Behind Their Mountains
But here is the thing about Tolkien’s world that I find simultaneously the most angry-making and the most Earth-like: the Ainur, the great powers who sang the world into being, who shaped it, who knew its design from the beginning, largely withdrew.

Meanwhile, in Middle Earth, Elves were being captured and broken into Orcs. Men were waking into a dark world with Morgoth’s shadow already over it and no one to explain otherwise. The careful, beautiful work of creation was being systematically unmade, and the ones with the power to act were behind their mountains, weaving threads into histories.

But think now of the Ents, who knew they were the last of their race, and the Ainur, the most powerful beings on Arda, and think of courage. Because from where I am, one of them has it.

What Happens When We Cannot March
Not everyone marches. Not immediately. Sometimes never.

Some grief freezes. Thranduil closed his borders for centuries after watching his father charge too early at Dagorlad and die, taking half his people with him. His grief became policy: we will not march in someone else’s war again. This is a completely comprehensible response to a real wound. It is also a kind of diminishment: the Wood-Elves withdrew from the wider world, and something was lost.

Some grief burns. Fëanor made an Oath in his grief and rage that he could not keep and could not escape, and it consumed him and his children.

Some grief numbs. Théoden, under Wormtongue’s influence sat in his hall and diminished.

Other grief brings rage: think Éomer when he thought his sister brave but dead.

And some grief simply stops the hands.

I have not written anything for a while, have I? Not because I think the climate doesn’t matter. Not because I have run out of things to say. But because there are days when the question arrives and I do not have an answer: what is the point of writing carefully about carbon budgets when a bomb drops and takes a week of the planet’s annual carbon budget with it?

This is not Fëanor’s burning. It is not Thranduil’s closed borders. It is nothing spectacular. It is something more mundane: a grief that has not yet found its form. I am grieving the planet. And I am grieving the particular loss of believing that careful work accumulates, that each article, each brief, each advocacy conversation adds to something, and then watching that accumulation be casually interrupted by forces that are not careful and are not interested in being careful.

I don’t understand why I try. Why any of us do.

Nienna’s Gift
Tolkien, as usual, comes to the rescue.

In Valinor, the paradise the Valar had walled off behind their mountains, they had made two Trees that lit their world with golden and silver light. In what is a very on-brand act of ecoterrorism, Morgoth and a giant spider destroyed them. Nienna wept at the loss, as usual, and Yavanna sang. And from Yavanna’s song and Nienna’s tears together, came what became the Sun and the Moon. The Trees still died. The loss is real and permanent and not undone. But the grief, held and witnessed rather than refused or weaponised, made something new that otherwise could not have existed, and this is Tolkien’s and Nienna’s true gift: hope.

Endurance in hope means something harder and more honest: the capacity to remain present to the grief, to witness it fully, and to continue making things anyway. Because the making is what we are. Because Maglor threw his Silmaril into the sea and walked the shores of the world and kept singing, and the singing mattered even without resolution, even without an audience, even without an ending. Because even when there is nothing else, there seems to be hope.

Nienna is also, remember, the teacher of Gandalf. The most consequential figure in the salvation of Middle Earth learned everything that mattered from the Vala known mostly for her tears.

Because understanding is the first step to acceptance. So: I understand that I am grieving. I understand that the grief is rational, that it would be stranger not to grieve the things I have lost, and the things we are all in the process of losing. I understand that grief unprocessed doesn’t go away. It waits.

The trees died. The Moon still rises.

And I tell myself, grief is not the end of meaning. It is the proof that meaning once existed, and might still be made again. And so we remain, half dust, half deity.

Sources
No sourcing for this. I’m dust today.

Feeding India through the oncoming climate catastrophe

NB: (I seem to be writing these every post these days) I’m a climate… intersectionist, at best. If you’re a specialist and I’ve got something wrong, please do tell me. Basically my national security post got me interested in this.

Our food crisis under climate change is not one problem but several interacting ones: unstable monsoons, collapsing groundwater, nutrient-depleted soils, declining crop nutrition, pest expansion, and institutional systems built for a climate that no longer exists. It is possible to produce record harvests and still raise a malnourished generation, and India is getting dangerously close to discovering what that looks like.

The deeper problem is that India’s agricultural system still optimises primarily for calorie tonnage in a climate where nutrient density, ecological resilience, and hydrological sustainability increasingly matter more, because:

Elevated CO₂ and erratic monsoon → plants close their stomata to conserve water, so fewer minerals travel from soil to grain (the transpiration blockade), while depleted soils have less to offer in the first place → record harvests, but falling nutrition: more calories per plate, less zinc, less iron, less protein per gram → a population already short on protein eats food that is becoming shorter on protein with every degree of warming → food-insecure households face stunting and malnutrition → the same people are simultaneously being asked to do more physical work, not less: more pest management, more manual intervention as weather becomes erratic, malnourished women carrying nutrient-deficient pregnancies through harder seasons → faster physical burnout and growing intergenerational nutritional debt → greater humanitarian crises.

Why?

Because India’s agricultural calendar is built around the southwest monsoon (June to September). About half of our net sown area is rain-fed¹ ², and the IPCC’s Sixth Assessment Report³ ⁴ flagged increasing monsoon variability over South Asia⁵ as a high-confidence finding- this does not necessarily mean less total rain, but that the rain that does happen is more erratic in timing and more violent in intensity⁶: longer dry spells mid-season, more intense precipitation events at either end (it was literally hailing in Delhi a couple of days ago??!!⁷).

Secondly, heat stress is already biting into our agricultural yields even before water variability matters. For example, India lost an estimated 4-5%⁸ of its wheat yield, with losses of up to 10–25% in some districts⁹ ¹⁰, to the 2022 heat wave which arrived weeks ahead of historical norms and struck during grain-filling^{(the stage of grain development at which nutrients and carbohydrates are transferred into the developing grain}¹¹⁾ when the grain is most vulnerable¹².¹³ Without adaptation, several Indian crop‑model studies project that rain‑fed rice yields could fall by around 20% by mid‑century and approach halving by 2080 under high‑warming scenarios¹⁴, while even irrigated rice loses a few percentage points as heat stress intensifies. And that is before accounting for the groundwater that irrigates it running out.

Heat and water stress together could push food production in India down by 16.1% by 2050 in the worst-case scenario, against a global range of 6-14%, making India among the most exposed large economies on the planet.¹⁵ ¹⁶

The air
A landmark 2014 study published in Nature found that wheat grown under elevated CO₂ conditions contains 9.3% less zinc and 5.1% less iron than wheat grown under current atmospheric concentrations.¹⁷ Protein concentrations fall too, across C₃ grains and legumes, which is the category that includes wheat, rice, barley, and most pulses.¹⁷ A comprehensive 2025 meta-analysis synthesising data from approximately 59,000 samples across 43 food crops confirmed the pattern: elevated CO₂ produces food that is increasingly caloric and decreasingly nutritious¹⁸, with the most pronounced losses in zinc, iron, and protein. The researchers put it starkly: our food is becoming more calorie-rich, but less nourishing. The nutrient decline under elevated CO₂ is thought to result from multiple interacting mechanisms such as reduced transpiration, carbohydrate dilution (“more starch, same minerals”), altered nitrogen metabolism, reduced photorespiration effects in C₃ plants, and soil nutrient dynamics.¹⁹

For India, where rice and wheat together constitute the dietary backbone of over a billion people, this is not a theoretical concern. One modelling study projects that, by 2050, elevated CO₂ could reduce the effective global availability of protein, iron and zinc by roughly 15-20% compared with a world that had the same yields but today’s CO₂ levels, with South Asia among the hardest‑hit regions.²⁰ ²¹ A 2018 estimate put the human toll at 175 million people tipped into zinc deficiency and 122 million into protein deficiency by 2050, not because they eat less, but because the food they eat is less nutritious.²²

India already has 194 million undernourished people²³, 53.7% maternal anaemia²⁴, and the world’s highest child wasting rate²⁵. The CO₂ nutrition penalty lands on a population that has almost no buffer.

The soil
A February 2026 ICRIER report on soil health estimates that fewer than 5% of Indian soils now test high in available nitrogen and only around a fifth have adequate organic carbon.²⁶ Decades of intensive monocropping, overuse of urea-based fertilisers, and residue burning²⁷ have stripped soil of the microbial richness that makes nutrients bioavailable in the first place.²⁸ The fertiliser efficiency ratio (the kilograms of crop produced per kilogram of fertiliser applied) has collapsed: agronomists estimate that where farmers once got roughly 10 kilograms of grain per kilogram of fertiliser nutrient in the early Green Revolution years, recent ICAR data put the response at barely 9–11 kilograms, despite much higher application rates, with even lower returns in many intensively farmed districts.²⁹

Fertiliser
India’s agricultural soil now has too much nitrogen. This is because India’s subsidy regime makes urea artificially cheap, while phosphatic and potassic fertilisers are sold under a looser, nutrient‑based subsidy.³⁰ ³¹ The result is a skewed application pattern: against a recommended N:P:K ratio of about 4:2:1, India’s actual consumption is closer to 9-11:4:1 nationally, and far more distorted in some states, meaning fields are drenched in nitrogen and starved of other nutrients.³² ³³ Over time, this imbalance has produced “sick soils”: micronutrient deficiencies, rising salinity and alkalinity, and low organic carbon that together reduce fertiliser efficiency and yields.³⁴ ³⁵

The excess nitrogen does not vanish; it washes into groundwater and surface water as nitrate, where studies in Punjab, Bihar and elsewhere now find wells regularly exceeding WHO safety limits, with blue‑baby syndrome and cancer risks for rural families who drink that water, and when the fertiliser pours into river systems, they act like fertiliser for algae.³⁶ ³⁷ ³⁸Over time this creates eutrophication: thick algal blooms, oxygen‑starved stretches of water, mass fish kills, and sometimes toxin‑producing cyanobacteria that make surface water unsafe to drink.³⁹ ⁴⁰ ⁴¹

The water
Underneath that soil, India’s water table is in freefall.⁴² India is the world’s largest consumer of groundwater for agriculture, with groundwater accounting for 60% of all irrigation supplies.⁴³ A study published estimated that groundwater depletion could reduce crop production by up to 20% nationally, and by up to 68% in regions with the lowest projected future groundwater availability.⁴⁴ A 2024 IIT Gandhinagar study found that weakening summer monsoons, itself a consequence of climate change, are accelerating this depletion.⁴⁵ The warming climate is simultaneously drying the monsoon that recharges our aquifers and increasing the evaporative demand that empties it. By 2080, the rate of groundwater depletion could triple if current trends hold.⁴⁶

Dairy and livestock
India’s nutrition system does not run on crops alone. A significant share of protein, fat, and micronutrient intake comes from milk and other animal-sourced foods, produced largely by smallholder households rather than industrial systems.⁴⁷ ⁴⁸ But this too sits under climate stress. Heatwaves reduce milk yield and fertility in cattle and buffalo, while increasing disease susceptibility and mortality risk.⁴⁹ ⁵⁰ At the same time, fodder availability is becoming more erratic as monsoons destabilise and common grazing lands degrade, forcing farmers to rely on more expensive or lower-quality feed.⁴⁷ ⁵¹ The result is a quiet squeeze: rising input costs, falling productivity per animal in extreme years, and a nutrition buffer that becomes less reliable exactly when crop-based nutrition is also deteriorating.⁵²

The Sea
India is the world’s third-largest fish producer, and for hundreds of millions of coastal and riverine families, fish is the primary protein source.⁵³ ⁵⁴ This source of food is also under stress. The Bay of Bengal is warming, and a 2025 study found that both extreme and weak monsoon conditions, both of which climate change makes more likely, reduce surface food availability for marine life by around half in some simulations, thus disrupting the plankton base that the entire food chain runs on.⁵⁵ ⁵⁶ Inland, erratic monsoons dry out ponds and silt up rivers, destroying the small indigenous fish species that rural families harvest.⁵⁴

The biology⁵⁷ ⁵⁸
There is a biological dimension to this that rarely makes it into climate or food security writing: women are born with all the eggs they will ever have. Every oocyte is already present at birth, formed inside the mother’s uterus before the daughter herself is born. The nutritional environment of the womb may influence those developing oocytes at a molecular level.⁵⁹ ⁶⁰ Researchers studying developmental and epigenetic effects increasingly suspect that severe nutritional stress during pregnancy can alter patterns of gene regulation in ways that may extend across generations.⁶¹ So, a malnourished pregnant woman does not only affect her child’s development. Emerging evidence suggests some nutritional stresses may also influence gene regulation across multiple generations through the oocytes already forming in her developing fetus.⁶²

India’s 57% anaemia rate for women of ages 15-49 is not⁶³, therefore, only a present-tense health crisis, but a multi-generational nutritional debt, and children bear the next wave. India’s approximately 37 million⁶⁴ stunted children will be the workforce of 2040–2050 with permanently reduced cognitive and physical capacity from the malnutrition of their first thousand days. The climate disruption is projected to peak in the same window.⁶⁵ These are not separate problems.

Pestilence
As temperatures rise, the geographic ranges of many insect pests are shifting poleward at rates measured in the tens of kilometres per decade⁶⁶ ⁶⁷, with new climate envelopes allowing species to colonise regions where they previously could not overwinter. In practical terms for India, this means crops in the Indo-Gangetic Plain, including wheat, rice, vegetables, are increasingly exposed to pests and pathogens for which they have evolved no resistance.⁶⁸ ⁶⁹

The consequences are already visible on the ground. Farmers across Maharashtra report that pink bollworm, absent for nearly 12 years, has returned, with repeated pesticide applications the only available response.⁷⁰ ⁷¹ Meanwhile warming temperatures in Rajasthan have produced up to ten pest attack events in a single year, up from historical norms.⁷² Roughly speaking, each additional degree of warming allows many insect pests to shift their ranges by hundreds of kilometres polewards and tens of metres uphill.⁶⁷ For crops bred to local pest profiles over centuries, that is a radically destabilised environment.

The response of farmers in a system with weak extension services⁷³^{(systems that bridge the gap between scientific research and farmers, providing training, technical advice, and information}⁷⁴⁾ and limited credit access⁷⁵^{(because without access to easy credit, poorer farmers are unable to fund access to the knowledge and methods of pest control)} is almost always the same: more pesticide. This adds cost, further degrades soil microbial life, and to round everything off, impairs the very biodiversity in soil and water systems that would otherwise offer natural pest suppression.⁷⁶ ⁷⁷ It is also why traditional and heritage varieties of seeds and plants, which carry broader genetic resistance shaped by long regional exposure, become more valuable as pest ranges shift.⁷⁸

Pollinators
A significant share of the plant food Indians need more of, including vegetables, fruits, oilseeds, and pulses, depends on pollinators to set seed.⁷⁹ ⁸⁰ Climate change disrupts this through what ecologists call ‘phenological mismatch’⁸¹: as temperatures rise, plants flower earlier while pollinator life cycles shift at a different rate, so the flowering window and the pollinator activity window stop reliably overlapping. A study published in 2025, drawing on 120 years of specimen records, documented a significant increase in local extinction risk for flowering plants driven precisely by this kind of bee-flower mismatch.⁸² ⁸³

Concrete
A study using satellite data found that from 2001 to 2010⁸⁴, agricultural land lost to urbanisation was concentrated in districts with high agricultural suitability.⁸⁵ Over the two decades from 1991 to 2011, roughly 1.59 million hectares of prime farmland was converted to non-agricultural use.⁸⁶ ⁸⁷

As that peri-urban agricultural belt disappears, food has to travel further, which makes India’s chronically underdeveloped cold chain more critical and more energy-intensive.⁸⁸ ⁸⁹ Agriculture gets pushed onto marginal land such as hillsides, arid zones, or areas with thin soils, which are, almost by definition, the land most vulnerable to the climate shocks described everywhere else in this piece.⁸⁵ ⁹⁰ ⁹¹

Ownership gap⁹² ⁹³ ⁹⁴ ⁹⁵
As farming becomes less viable men migrate to cities for other work. What remains is increasingly managed by women. Around 80% of rural women in India are now engaged in agriculture; they handle roughly 70% of all farm tasks. However, just 11-12% of agricultural landholdings were registered in women’s names. Without a land title, you are not, legally, a farmer in India: which means no PM-KISAN payments⁹⁶, no crop insurance, no institutional credit, no access to most government agricultural schemes.

Cold Chains– I’ll be writing on this soon. Also, India’s future food resilience depends partly on reliable electricity expansion, because refrigeration⁹⁷, irrigation pumping⁹⁸, fertiliser production⁹⁹, and transport¹⁰⁰ are all energy-intensive.

One bright spot
India’s community seed banks now collectively steward at least 887 traditional varieties across 71 crop species, documented across 15 states in a 2025 CSE report.¹⁰¹ ¹⁰² These varieties are locally adapted, which means they have been shaped over centuries by the specific soils, monsoon patterns, and pests of their regions. Many are more drought-tolerant, flood-resilient, and nutritionally dense than their commercial replacements.¹⁰³

India has the world’s largest formal gene repository, the National Bureau of Plant Genetic Resources.¹⁰⁴ ¹⁰⁵ However, formal conservation and living seed systems are not substitutes for each other. The first preserves genetic material. The second keeps knowledge, practice, and biodiversity alive in farming communities.¹⁰⁶

What we can do
The solutions are not mysterious, if even I can suggest them.

Fix the cold chain. India has roughly 8,000 cold storage facilities¹⁰⁷, most of which store potatoes. Decentralised solar cold storage at the Farmer Producer Organisation level would reduce post-harvest losses, currently between 30–40% for perishables¹⁰⁸, and stabilise supply in the face of erratic weather.
MSP reform toward climate-resilient crops.¹⁰⁹ Millets, pulses, and oilseeds are might be more drought-tolerant, more nutritionally diverse, and less susceptible to CO₂-driven nutrient dilution than rice and wheat.¹¹⁰ Moving minimum support prices to signal farmers toward these crops is the only thing that moves production at scale. Promotional campaigns without price signals don’t work.
Fund and legally empower community seed banks. The CSE report’s estimate of 887 traditional varieties across community banks is a fraction of what has already been lost. Seed sovereignty is food sovereignty. Legal recognition, technical support, and sustained funding for community seed banks, including unrestricted rights for farmers to save, exchange, and sell traditional varieties, is one of the highest-return investments India can make in long-run food resilience.
Recognise women as farmers by activity, not land title. Shift the legal definition from landowner to tiller (which is politically highly improbable of course, but well… do something to improve the actual worker’s access to funds and education).
Reform fertiliser subsidies toward soil health. The current subsidy architecture, which gives 80%+ subsidies to urea while leaving phosphorus and potassium significantly less supported, has produced the soil crisis India now has. Rebalancing toward nutrient-balanced fertilizers, funding soil health cards, and incentivising organic matter restoration is not optional. It is the prerequisite for everything else.
Integrate nutrition tracking into agricultural statistics. A rice crop that produces 20% fewer tonnes at 10% lower protein content per grain is a double failure, but it shows up as one number in production statistics. Climate adaptation schemes, crop insurance frameworks, and agricultural research all need to track nutrient density alongside yield.

What makes this moment so consequential is not any single pressure, but their convergence: Soil that is already depleted produces crops that are already less nutritious. Those crops are grown in a system structurally dependent on groundwater that is already running out. The monsoon that was supposed to recharge that groundwater is becoming more violent and less predictable. And rising CO₂ is simultaneously reducing the nutritional content of the crops that do grow. Each layer of stress compounds the others, and into that situation, add: crops that become less nutritious as CO₂ rises, yields that fall under heat and monsoon stress, and a dairy system that loses productivity precisely as temperatures climb.

For India, feeding people must come before reducing agricultural emissions, but ignoring emissions is not cost-free. Every degree of warming tightens the constraint a little further. India’s record food grain production figures and its catastrophic localised harvest failures have begun to coexist in the same season- the 2025 October monsoon that damaged crops across Maharashtra and Karnataka in the same year production statistics showed record outputs.¹¹¹ That coexistence will become more common, and more violent.

India is obsessed with “Record Production” (the headline numbers). But if those tonnes of grain are nutritionally hollow (due to the CO₂ penalty) and the soil is just a medium for urea-driven growth, we are effectively inflating our food stats. We are producing more food but less nourishment.

We cannot grow our way out of this climate crisis. But we can build a food system that is robust enough to feed its people through the disruption ahead. The alternative is to find out, a generation from now, in the health data of children not yet born, what it cost not to have done so.

Sources

(I cannot figure out where the extras are, so here are four more sources than what I can find in my article above)

Risk – IX: Microlives to Micromorts, or why risk makes so little sense

The previous posts in this series examined how risk operates in energy markets, social systems, national security, and military infrastructure. This one asks why do humans fail to act on risks we can measure, price, and see coming?

I was once trying to explain risk as a concept to my students, and to demonstrate it, confidently asked- okay, would you sky dive? Because reader, I would not throw myself out of a plane. I had forgotten there was an army officer in that class, who stuck a pin to my example by casually answering yes. Yes he would indeed jump out of an airplane, no problem Ma’am.

We were both being entirely rational too, and that is the problem with communicating risk to humans. Everyone perceives risk through the sieve of their lives and personalities. We are surrounded by risk data. We have extraordinarily sophisticated tools to measure, price, and manage some types of risk. And yet, individually and collectively, we routinely ignore the risks that will actually kill us, panic about risks that likely won’t, and remain completely unmoved by risks that threaten the existence of life on our beautiful space rock.

Units
Risk resists measurement. Therefore, it naturally repels measurement units.

We tried anyway.

Ronald Howard, a Stanford engineer, created a unit called micromort in 1989: a unit equal to a one-in-a-million chance of death.¹ The prefix is simply the metric micro-, which means one millionth attached to the word mortality. One micromort is a tiny, almost abstract sliver of the possibility of dying. But the power of the unit is in comparison. So, riding a motorcycle for 9 kilometres costs 1 micromort (UK data)¹, running a marathon costs about 7 micromorts, and skydiving once– just one more micromort at 8². Climbing the Everest: somewhere in the region of 37,000 micromorts, which means your odds of dying even on a successful ascent are roughly 1 in 27.³ ⁴ The numbers are drawn from epidemiological ^{(relating to the study of how diseases spread, who gets sick, and why, within a specific population}⁵⁾data, which just means that you take the population who did an activity, count deaths, and divide. They are approximations, not laws, and they vary by country, era, age, and fitness. But it’s something concrete. Certainly I wouldn’t have thought my aversion to falling would be comparable to my aversion to running.

The second was David Spiegelhalter, Cambridge statistician who invented Microlives in 2012.⁶ One microlife is half an hour of life expectancy, derived by dividing a roughly 57-year adult lifespan into one million equal parts. Every microlife you spend is thirty minutes of your future, gone. It measures the relationship between an individual’s habits and their lifespan, so the daily choices they make and how long they are likely to live.⁷ Longitudinal studies (the kind that follow the same person over many years) have found that watching an extra hour of television is akin to burning up half a microlife, but smoking two cigarettes equals two. You can earn two back with twenty minutes of moderate exercise though.⁸

A micromort measures acute risk. The word “acute” comes from the Latin acutus, meaning sharp, or sudden. A discrete^{(the statistical word meaning single, or individual}⁹⁾ event with a clear before and after: you jump out of the plane, or you don’t. A microlife measures chronic risk, from the Greek chronos, meaning time. Slow, accumulating, invisible, with no clean moment of crisis.⁶

Mathematics says that for someone in their late twenties with roughly one million half-hours of adult life ahead of them, one micromort of acute risk is almost exactly equal to one microlife, or thirty minutes of expected life.¹⁰

Actuaries
There is, unsurprisingly, an entire profession built around calculating risk.¹¹ These people are called actuaries, and they calculate the probability of death or loss across different groups, and price it. They usually work for insurance companies.¹²

Actuarial science establishes something important: risk that is chaotic at the individual level becomes orderly at scale.¹³ No actuary can tell you whether you will die this year. But they can tell you, with considerable confidence, what percentage of a million people like you will. This is why, when you try to buy term insurance in India, you are asked about tobacco use, your pin code, your gender, your profession, your income- so that a calculation can be made about how likely someone like you is to die soon.¹⁴

This is called risk pooling.¹⁵ Insurance companies accumulate risk from many people because they know the chances of all insured events occurring simultaneously are vanishingly small. It is why premiums are lower for younger people- not because the young are invincible, but because the numbers say they are less likely to die right now than someone older.¹⁶

However, while the mathematics works, it is meant for populations. You are not a population. You are a person. And people are usually terrible at thinking about risk.

Risk Perception
A few years ago, before my life lost its plot, I went to Goa. I’m afraid of heights, so I decided to go parasailing- because I was so afraid of it, but also because I knew the instructor would be up there with me. I was terrified all the way up and while I was in the air, but while descending, I started to enjoy myself. So I went up a second time, and enjoyed that entire redo much more.

I was reminded of this recently when I came across a podcast where a Para SF veteran described the moment of hesitation at the gate before his first jump- not fear exactly, but his rational mind asking: why am I doing this?

Two people, two completely different risk profiles, the same pause. The same risk perception.

The difference between this person and me wasn’t in the physics of the fall. Gravity is an equaliser. The difference lay in the “internal weighting” we gave to the danger. To the officer, the risk was a managed variable, mitigated by years of training and a parachute he knew how to use. To me, the risk was an existential threat, unmitigated and visceral. We weren’t looking at the same event; we were looking at two different versions of the future, shaped by our pasts.

This gap between risk as it exists mathematically and risk as it lives in the human mind has a name in behavioural economics: cognitive bias. There are several that are particularly relevant to risk, and between them they explain most of the grand collective failures that follow. Here’s a short list:

The first is the affect heuristic¹⁷: we judge risk by how something feels, not by its actual probability.
The second is availability bias¹⁸: we judge how likely something is by how easily we can recall an example.
The third, and the most important for what comes next in this article, is psychic numbing¹⁹: The psychologist Paul Slovic spent decades documenting a deeply uncomfortable finding: human compassion and concern do not scale with numbers. We feel genuine, mobilising distress for one identified person in danger. As the numbers grow from ten people, to a hundred, then a million, emotional engagement does not grow with them. It collapses. “The more who die, the less we care,” is how Slovic summarises it.
And the fourth is temporal discounting²⁰: we systematically undervalue future outcomes relative to present ones. A certain reward today is worth more to us than a larger reward next year.

Between 7.1 – 33 Million Dead²¹
These are the people we lost to the pandemic.

Official confirmed deaths from COVID-19 stand at approximately 7.1 million, as recorded by the WHO. Excess mortality estimates (the gap between how many people died and how many would have died anyway) put the real figure somewhere between 14.9 million and 33 million.²² ²³

COVID-19 was, for a large part of the global population, the first time in living memory that ordinary people walked around consciously calculating their own mortality risk. It did not make us more rational. It made us more anxious.²⁴

Research published during and after the pandemic found that prolonged exposure to mortality risk increased temporal discounting²⁴, the bias that makes us prioritise the present over the future. People under pandemic stress didn’t become careful, long-term thinkers- they became more impulsive, more present-focused, more likely to reach for the immediate reward over the future benefit. One study found that greater temporal discounting directly predicted lower compliance with masks and social distancing, the behaviours that would actually reduce risk.²⁵

Psychic numbing compounded this.²⁶ In the early weeks, when COVID deaths were in the hundreds, there was genuine grief, and that specific terror of the unknown. By the time the death tolls reached hundreds of thousands, then millions, our emotional machinery had largely switched off, because our brains cannot hold a million deaths the way they holds one. The numbers became, in Slovic’s phrase, mere statistics.¹⁹

The pandemic taught us something important and uncomfortable: mass risk awareness does not produce mass rational behaviour. It produces mass emotional behaviour- fear, denial, exhaustion, and the very human tendency to make the anxiety stop by pretending, at some level, that the threat is not quite as real as the numbers say. We had all the data. We had the micromort equivalent of a daily death budget displayed on every news channel in the world. And we still, collectively, could not think clearly about it.

Now consider what happens when the risk is neither immediate, nor personal, and communicated about constantly using statistics and numbers.

Our Beautiful Space Rock
Climate change is risk that has been engineered, almost perfectly, to defeat every cognitive tool we have. It is chronic, not acute- there is no single moment of crisis, just accumulation. It is global in scale and feels distant even when it isn’t.²⁷ It is statistical, not personal, because it kills in aggregates, not with faces.²⁸ Its worst consequences arrive in timelines beyond our natural planning horizon.²⁹ And it requires collective action at precisely the moment when individuals are most inclined to discount, deny, and defer.³⁰

To this, add that people often believe that weather is made by the gods, which means both- that we are unable to interfere with it (so no anthropogenic climate change)³⁰ ³¹ ³², and that anything we do is also going to be useless- because it is god’s wish for it to be so³³. To this worldview, even if climate were changing, the right response would be to accept it, because it cannot be changed by humans.

This is the central tragedy of climate risk communication. Climate communication has, for the most part, been built for spreadsheets, not for minds. It relies on scale, statistics, and long timelines- exactly the conditions under which human intuition fails. We communicate climate risk in parts per million, degrees of warming, and deaths by the million, and then wonder why it does not move behaviour.³⁴

Climate change is not just an environmental problem. It is a risk communication problem- more specifically, a chronic risk problem. It is literally a million and one small events all over the planet cascading into one big final boss problem.

Solutions
Here is how I would tackle this problem:

Localise the risk: People respond to risks they have seen, or can imagine happening to people like them. Climate communication that begins at the global level fails; communication that begins with lived, local experience has a chance. In India at least, many communities have experienced climate-origin loss. Start there. Explain climate change to them through their own frame of reference.
Shorten the time horizon: As long as climate change is framed as a 2050 or 2100 problem, it will be systematically deprioritised. Communication that highlights present-day impacts such as heatwaves, air quality, food prices aligns with how we actually make decisions.
Use social proof, not just data: Behaviour is contagious. If we are able to change what one person does, especially someone influential in the community, the rest of the community are more likely to follow. Community-level interventions, whether it is water management, crop choices, or energy use, scale because they are visible, repeatable, and socially reinforced.
Understand that only agency beats risk: People do not act on risks they feel powerless to change. Effective communication pairs risk with action which is specific, achievable, and immediate.

None of this is sufficient. The scale of the problem dwarfs every communication strategy we have. But the alternative- continuing to recite statistics into the void and wondering why nothing changes- is not working either.

I was able to overcome my fear of heights, however briefly, only because I felt empowered to do it, had the means to do it, had the right guidance in the parasailing instructor, and felt motivated about it.

These are inherently human traits.

Those conditions- agency, means, guidance, motivation, are the same conditions under which people act on any risk. And they are exactly what is missing from most climate communication.

Climate risk is the ultimate jump. It is a “god-sized” problem, yes, but it is one that will be solved in the very human terrain of local communities, social proof, and individual agency. We have to stop treating people like calculators that have failed a maths test and start treating them like the both the army officers in this post: individuals who can face immense risk, provided they have a mission, a team, and a plan.

Sources

Risk – VIII: A Hidden Vulnerability- Civilian Infrastructure in War

In October 2023, Sikkim suffered a Glacial Lake Outburst Flood (GLOF)¹, which means that the Teesta River surged after the South Lhonak glacial lake burst, destroying the Chungthang dam, sweeping away 11 bridges, damaging NH-10² ³, and disrupting mobile coverage across northern Sikkim.⁴ Rescue operations were immediately hampered because road access, communications, and power failed at the same time. The government’s own situation reports noted that teams from multiple ministries had to be deployed simultaneously because all three systems had gone down together.⁵ Twenty-three Army personnel were among the missing.⁶ ⁷

In my previous post, I explored how climate change was affecting India’s national security with a broad brush, but while doing this I realised that civilian infrastructure is also, often, military infrastructure. And as everyone knows, India’s well known for the upkeep of her civilian infrastructure, and mild climate, so this post was born.

Systemic failure cascading through civil infrastructure is a danger to Indians and to India’s national security.

What Is Happening
Climate can damage infrastructure in two ways:

Disaster events, which are sudden unforeseen shocks, or the more mundane,
Daily stress due to newer ambient conditions, that among other impacts also compresses the window between maintenance cycles.

The former is usually visible, localised, and patched up through specially sanctioned money.

The Science

Chemistry
Most infrastructure is built from steel and concrete. Climate change affects both through several chemical processes.

Corrosion is the oxidation of steel, which is the process that produces rust. It is driven by a reaction that speeds up as temperature and humidity increase.⁸ Higher ambient temperatures and higher humidity therefore accelerate the corrosion of exposed steel and of steel reinforcement bars inside concrete.⁹ Studies have found that this reduces structural resistance and threatens the safety of buildings and infrastructure.¹⁰ ¹¹
For India’s coastal infrastructure, corrosion is intensified by chlorides from seawater and sea spray. Chloride ions penetrate concrete and break down the protective chemical layer on the steel reinforcement inside it.¹² Once that protective layer is lost, corrosion accelerates. As sea levels rise and storm surges push saltwater further inland, more structures are exposed to chloride-rich conditions than they were originally designed for.¹³ ¹⁴
Carbonation is another process affecting concrete.¹⁵ Carbon dioxide from the atmosphere reacts with calcium hydroxide in concrete, gradually lowering the concrete’s alkalinity. Concrete normally protects embedded steel because its high alkalinity creates a passive film on the rebar. When carbonation reduces that alkalinity, the steel loses that protection and becomes vulnerable to corrosion. Research suggests that under climate change, carbonation can advance much further than expected over a structure’s lifetime, potentially causing corrosion-related failure 15 to 20 years earlier than expected.

Physics
Climate change also affects infrastructure through physical processes.

Materials such as steel, concrete, and asphalt expand when heated and contract when cooled through a process called thermal expansion. Roads, bridges, and railway lines are designed with this in mind, using expansion joints and stress tolerances based on the historical temperature range of the area.¹⁶ When temperatures exceed those historical ranges more often, the materials expand more than expected. This can cause bridge cracking, road deformation, and rail distortion. India’s National Disaster Management Authority identifies all of these as current extreme heat risks.¹⁷
Thermal cycling fatigue is when repeated expansion and contraction over months and years creates cumulative mechanical stress.¹⁸ Tiny cracks form, widen, and eventually reduce the strength of the structure.¹⁹ This is especially important in regions with large temperature swings, including mountain areas where freeze-thaw and heat-cold cycles can be intense.²⁰
Freeze-thaw damage is a physical mechanism relevant to Himalayan infrastructure. Water enters small cracks in concrete or rock-supported structures.²¹ When it freezes, it expands and exerts pressure on the surrounding material.²² Repeated freeze-thaw cycles gradually widen cracks and weaken the structure. Roads, retaining walls, bridges, and tunnels in mountain zones are especially vulnerable to this.²³
Electrical infrastructure is also affected by basic physics. Transmission lines sag more in high heat because the metal expands.²⁴ ²⁵ Transformers and cables become less efficient as ambient temperature rises and can operate closer to their thermal limits for longer periods.²⁶ This reduces efficiency and can shorten equipment lifespan for equipment rated for a maximum ambient of 40°C, a threshold India’s plains now routinely exceed.²⁷
The troposphere, which is the lowest layer of the atmosphere, is getting wetter and more turbulent as climate change increases evaporation and convective activity.²⁸ ²⁹ Water vapour absorbs and scatters microwave signals. This creates what’s called tropospheric delay so that signals from GPS and navigation satellites arrive slightly later than they should because they’re passing through a more moisture-loaded atmosphere.³⁰ For civilian navigation this is a minor annoyance. For precision-guided systems, artillery corrections, or drone navigation that depend on GPS accuracy, accumulated error matters.³¹
Heavier rainfall also causes direct signal attenuation for satellites operating in the Ku and Ka frequency bands³², which are commonly used for broadband and military communications satellites³³. During intense monsoon rain events, which are becoming more intense, the signal can degrade significantly.³⁴ This is called rain fade.³⁵ Climate change is making extreme rainfall events more frequent, which means rain fade events are also more frequent.³⁶

Biology
Climate change changes biological conditions in ways that matter for infrastructure.

Mold and fungal growth increase when warm temperatures combine with moisture and poor ventilation. More humid conditions, heavier rainfall, and more water intrusion into buildings create better conditions for mold on and inside building materials. Mold does not usually collapse a bridge, but it does damage internal building materials, coatings, insulation, sealants, and indoor air quality, and it increases maintenance burdens in buildings.³⁷ The US Army Corps of Engineers identifies hot, humid conditions and climate-linked flooding as important drivers of mold risk in buildings.³⁸ ³⁹
Termites are another biological stressor. Research has found that termite decomposition activity increases sharply with temperature, with one study reporting an almost sevenfold increase for every 10°C increase in temperature.⁴⁰ Warmer conditions can lengthen termite active seasons and expand their range.⁴¹ In India, where termites are already a major issue in many regions, this can increase damage to wooden structures, fittings, and stored materials.⁴²
However, the most important biological effect may be on people, specifically the people who inspect, repair, and maintain infrastructure. Outdoor workers face direct heat stress. Studies from India show that high heat impairs hydration, reaction time, and cognitive performance, and reduces labour productivity.⁴³ One study found heat stress was associated with impaired cognitive function among outdoor workers in northeast India.⁴⁴ Another found significant productivity losses under high heat conditions in southern India.⁴⁵ Broader modelling suggests work performance in India could decline by 30-40% by the end of the century under high-emissions scenarios because of heat stress.⁴⁶ This matters because infrastructure maintenance is done by human beings. If workers can safely spend fewer hours outdoors, inspections are delayed, repairs take longer, and maintenance backlogs grow.

Why This Matters

Think of a bridge. It’s close to the Western front, but maybe somewhere hot rather than cold. Our troops and civilians use it. When war happens, it risks becoming a chokepoint. This is what climate change is doing to that bridge:

Chemistry

Atmospheric CO₂ rises → carbonation front advances through concrete → alkalinity drops → passive film on rebar breaks down
Simultaneously: Monsoon rainfall carries agricultural fertiliser runoff into the river→ sulfates and chlorides enter river water → they penetrate the concrete of bridge piers standing in the river → chloride ions attack rebar from below while carbonation attacks from above
All of this converges in the same steel. Corrosion begins. The steel expands as it rusts, cracking the concrete around it from the inside. The cracks then let in more water and more chlorides. The process accelerates itself.

Physics

Summer temperatures exceed original design range → expansion joints in the bridge deck are stressed beyond tolerance → micro-cracking at joints
Winter cold → contraction → same joints stressed in the other direction
This thermal cycling repeats every year → cumulative fatigue damage accumulates in the deck and in the connections between the superstructure and the piers
Monsoon floods → river scour around the bridge foundations → soil removed from around pier bases → foundations become more exposed, less supported
The cracks from thermal fatigue now provide entry points for the chloride-rich floodwater. The chemical and physical tracks have merged.

Biology

Heat + humidity + monsoon moisture → mold grows on bearing pads, sealants, and expansion joint filler → these materials degrade faster than designed
Summer wet-bulb temperatures rise → outdoor workers hit safe heat limits earlier in the day → inspection teams spend fewer hours on the bridge → the cracking goes unlogged for longer.
Maintenance is scheduled based on the old assumption of X inspections per year. The bridge now needs X+2. It might get X-1.

The military uses the national grid, national highways, ports, telecom networks, and fuel systems because these already exist at national scale.⁴⁷ Building separate military-only versions of all of them would be costly and, in many cases, impractical.⁴⁸

In forward areas, large fixed installations like wind turbines or solar arrays are visible on satellite imagery and can mark out military positions, a very obvious security liability.

There is also a wider internal security reason for treating civilian infrastructure as a national security issue: power failures, water shortages, and infrastructure breakdowns can contribute to unrest and instability. India has already seen public disorder linked to extended power cuts and water disruptions.⁴⁹ ⁵⁰

This means the military will continue to depend on civilian infrastructure in most cases. As a result, strengthening civilian infrastructure is not separate from strengthening national defence.

Each issue discussed in this post is treated in planning as a separate system with separate vulnerabilities. The problem is that they are not experienced separately.

They fail together.

India has a Ministry of Power, a Ministry of Jal Shakti, a Department of Telecommunications, a Ministry of Petroleum and Natural Gas, a Department of Space, and a Ministry of Road Transport and Highways. Each has its own climate resilience concerns, its own planning horizon, and its own budget. What India does not have is any institution whose job it is to look at all of these physical risks simultaneously and ask what their combined failure would cost during war, or during a 26/11-style attack.⁵¹ ⁵²

The cascade matters because the response to any single infrastructure failure can usually be managed: reroute the convoy, use the satellite phone, run the generator. It is when several failures occur in the same region simultaneously that the workarounds stop working. In a conflict scenario, an adversary that understands India’s infrastructure dependencies does not need to attack each system individually.⁵³ A weather event that the adversary did not cause, hitting infrastructure that climate change has already weakened, can achieve the same effect at no cost.⁵⁴ The Sikkim GLOF was not engineered. But the military vulnerability it exposed- an entire strategically sensitive zone simultaneously cut off by road, by communication, and by power- is exactly the condition a competent adversary would try to manufacture.

Sources

Risk – VII: Climate Change and India’s National Security Emergency

NB: I don’t know anything about national security. I’m a climate person now exploring risk and this seems… obvious. This is the toughest thing I’ve ever written.

Siachen is the world’s highest active battlefield, at approximately 6,300 metres above sea level in the eastern Karakoram range.¹ During a complete ceasefire between 2013 and March 2016, 41 soldiers still died there. This is what the glacier costs India in peacetime.²

Now the glacier is melting.

what is climate change
Over time, the atmosphere of our planet has been composed of different material. How much heat is retained by the planet is determined in part by this. If the atmosphere has more greenhouse gases, it will lead to a hotter planet, which leads to cascading effects.

Example: As temperatures rise, glaciers and polar ice sheets melt causing sea levels to rise and threatening to inundate coastal cities, erode coastlines, and displace millions of people. Concurrently, this warming disturbs weather patterns, resulting in more intense heatwaves, devastating droughts, and stronger, more destructive storms and floods. These physical disruptions destroy ecosystems and agricultural productivity, creating severe food and water shortages, while simultaneously expanding the range of pests and diseases that endanger human health. Ultimately, these interconnected hazards damage critical infrastructure, destabilise economies, and heighten the risk of mass migration, poverty, and conflict over declining natural resources.

What are India’s prevalent national security issues
From what I understand, our main national security issues are external aggression, terrorism, and militancy.

Threat multiplier³ ⁴
Climate change doesn’t create new conflicts. It takes every single problem in the list above, such as water, food, borders, internal stability, regional rivalry, and makes it harder to manage, more frequent, and more explosive through resource stress. For example, it tightens the supply of water and food, which increases competition for both, which drives displacement, which destabilises borders and communities, which creates the conditions in which existing conflicts (ethnic, political, territorial) escalate. A drought isn’t just an agricultural event. It is, potentially, a political one, which can always make it a military one too.

Let’s explore how:

I. Internal Security

1. Water
India is the 13th most water-stressed country in the world⁵, and climate-change-driven precipitation changes are projected to worsen this dramatically, with more rain falls in violent bursts, and the moderate, sustained rainfall that actually recharges groundwater becoming rarer⁶. A 2024 peer-reviewed study in AGU Geophysical Research Letters found that monsoon drying combined with winter warming has already caused massive groundwater loss between 2002 and 2021- and that this trend will worsen as irrigation demand rises and recharge declines.⁷ A 2018 Niti Aayog report found that states performing poorly on the water index are home to about 40% of India’s population and account for 40% of its agricultural output, creating a cascading risk for food and economic security.⁸ By 2050, the water crisis is projected to cost India nearly 6% of its GDP.⁹

Similarly, communal tensions in water-stressed regions are increasingly animated by resource competition.¹⁰ As river flows decline and groundwater depletes, communities that share or contest watersheds become sites of conflict.¹¹ The state-level Cauvery riots are a visible example; but beneath the surface, a growing number of smaller, less-reported water conflicts are simmering across India, and their frequency is directly tied to climate variability.

The Cauvery water dispute between Tamil Nadu and Karnataka is a preview of what’s coming. The 2016 riots¹², triggered in large part by what was the worst drought Tamil Nadu had experienced in 140 years¹³, left people dead, millions of rupees in damages, and required significant law enforcement mobilisation. While water disputes between Indian states date back to the colonial era, climate change is ratcheting up the intensity by making droughts more frequent and more severe. he Water, Peace and Security (WPS) partnership’s conflict early-warning tool, which uses machine learning across 15–20 indicators and claims 86% accuracy, has consistently flagged large parts of India and Pakistan as high-risk zones for water-driven conflict.¹⁴

2. Heat
Famously, at the moment the world’s 95 hottest cities are in India¹⁵, rompting Redditors to calculate that you’d need 4.3 million ten-metre tunnels — stacked eighteen rows high across the entire mountain range, ideally with RGB lighting — to reduce India’s temperature by 5°C ^{(Favourite comment: “Would it not be easier to just raise India? Put it on some tire jacks or something? Pixar’s Up but with India maybe?”}¹⁶⁾.¹⁷ ¹⁸

This has an internal security dimension that rarely gets discussed: heat is an economic catastrophe. India’s agricultural workforce, which still constitutes roughly 46%¹⁹ of total employment, is almost entirely outdoor and informal. When a heat event destroys a harvest, it doesn’t just create hunger. It destroys livelihoods, triggers distress migration into already-strained cities, and adds pressure to communities where other tensions already exist.²⁰

3. Food Security
India feeds 1.4 billion people largely through rain-fed agriculture- and rain-fed agriculture accounts for 60%²¹ ²² of all cultivated land in India. This is the singular vulnerability that makes climate change so existential: a disruption of the monsoon is a disruption of the nation’s food supply. And that disruption is already underway.

Erratic rainfall, increased droughts, and more intense floods are reducing crop yields, pushing up food prices, and deepening malnutrition, particularly among the most marginalised communities. Staple crops are losing nutrients as rising CO₂ speeds up photosynthesis while reducing protein and mineral content.²³ Lower yields lead to food scarcity, which leads to price spikes, which lead to social unrest, which is a feedback loop that historically has destabilised governments and ignited conflicts. The most recent example is the Syrian civil war, which multiple studies have linked to a catastrophic 2007-2010 drought that drove 1.5 million Syrian farmers into cities.²⁴

4. Disease
Climate change expands both the geographic range and the seasonal window of vector-borne diseases such as malaria, dengue, chikungunya, and others, by making previously inhospitable environments hospitable to the mosquitoes that carry them.²⁵ As temperatures rise, these mosquitoes move to higher altitudes and higher latitudes: places that were, until recently, simply too cold for them to survive and reproduce year-round.²⁶

This matters for India’s security because the Indian Army already manages significant morbidity from malaria in its northeastern and jungle deployments.²⁷ ²⁸ The Northeast is already one of the most malaria-endemic regions in the country, and it is also one of the most militarily active, with ongoing counterinsurgency operations across Manipur, Nagaland, and Arunachal Pradesh (during World War II in Manipur and Nagaland, malaria casualties far exceeded those from Japanese aggression)²⁹. Climate change will extend both the altitude and the season of that disease burden, moving it upward into Himalayan deployment zones that were previously disease-free, and lengthening the transmission window in zones that already carry it.³⁰

5. Migration
Between 2015 and 2024, 32.32 million people were internally displaced in India due to natural disasters (mostly floods and storms).³¹ In 2024 alone, the figure was 5.4 million: the highest single-year displacement in over a decade.³² Nearly half of those 5.4 million were in Assam, which experienced its most intense floods in more than a decade.³³ Cyclone Dana, which tore through Odisha and West Bengal in October 2024, added another million on top of that.³⁴ The World Bank projects that South Asia could see up to 40 million internal climate migrants by 2050 in a worst-case scenario.³⁵

So where are our people moving? Cities, it seems. This means that people are fleeing climate-stressed rural areas and moving into climate-stressed cities.³⁶ The downstream effects are predictable: “expanding informal settlements, rising unemployment, worsening public health, increased competition for water and space, and communities under pressure in the exact ways that historically precede unrest.”³⁷ Research on climate-induced displacement in India found that discrimination, violence, and the lack of basic amenities in urban areas meant that migrants who arrived seeking economic survival found themselves in conditions of compounded vulnerability.³⁸

Distress migration does not produce stable, integrated urban populations. It produces large numbers of people with very little to lose.

And the thing to note here is that security issues like insurgency and climate change share a common engine: desperation- witnessed as the regions most vulnerable to rainfall variability often overlapping with areas prone to Left-Wing Extremism (LWE).³⁹ ⁴⁰ As climate change degrades agricultural livelihoods and forces displacement, it provides fertile recruiting ground for insurgent movements that thrive on grievance.⁴¹ The relief web analysis on India and climate security explicitly highlights how climate change’s adverse interaction with insurgencies could “create or exacerbate national security threats” across multiple domains.⁴²

II. External Security

1. Water
China is building what will be the largest hydroelectric dams in human history on the Yarlung Tsangpo (Brahmaputra) river in Tibet, near Arunachal Pradesh.⁴³ This dam, alongside several others upstream, would give China enormous water storage capacity and the ability to control the flow of the Brahmaputra into India’s northeast.⁴⁴ During the 2017 Doklam standoff, China demonstrated its willingness to use water coercively by stopping the sharing of hydrological data with India, impeding India’s ability to predict and manage downstream floods.⁴⁵ In fact, no such data has been shared since 2022.⁴⁶

India itself responded to the Pahalgam attacks by weaponising water. On 23 April 2025, forty-eight hours after the Pahalgam attack killed 26 civilians in Baisaran valley, India formally notified Pakistan that the Indus Waters Treaty (IWT) of 1960 was being “held in abeyance with immediate effect”, until Pakistan “credibly and irrevocably” ends cross-border terrorism.⁴⁷ In early May 2025, India physically cut off water flow through the Baglihar Dam on the Chenab River and announced it was planning identical measures at the Kishanganga Dam on the Jhelum- both rivers that under the IWT belonged to Pakistan’s allocation.⁴⁸ Pakistan’s foreign minister called any withholding of water “an act of war.”⁴⁹

What happens when a desperate, water-starved, nuclear-armed Pakistan faces internal collapse that starts affecting its ruling classes? Does it start bombing us? Because Climate change isn’t just about “resource competition”- it’s about state failure, and Pakistan’s per capita water availability has fallen by 83% since 1951.⁵⁰

Water is already a coercive instrument in our region.

2. Heat
We have a coastline of 11,098.81 kilometers⁵¹, with several economically important and culturally vibrant city-civilisations on them. Rising sea levels and intensifying cyclones are putting all of this at risk.

The surface temperature of the tropical Indian Ocean has already increased by 1°C between 1951 and 2015, higher than the global average sea surface temperature rise.⁵² Higher ocean temperature contributes directly to cyclones.⁵³ During Cyclone Hudhud in 2014, the Indian Navy suffered infrastructure damage worth ₹2,000 crore at Visakhapatnam.⁵⁴ Rising seas threaten dry docks, repair infrastructure, and coastal logistics networks. The frequency of very intense cyclones in the post-monsoon period has increased significantly during 2000–2018.⁵⁵ Each such event doesn’t just damage physical infrastructure — it pulls naval and military assets away from their primary strategic responsibilities and into disaster relief, degrading operational readiness.

Meanwhile, sea level rise in the North Indian Ocean accelerated from 1.06–1.75mm per year during 1874–2004 to 3.3mm per year during 1993–2017.⁵⁶ A 2025 study published in Nature Scientific Reports confirmed that Mumbai, Kolkata, and Chennai face “intensified risks across all emission projections” due to their low elevation and high population concentration.⁵⁷ Mumbai has already witnessed the maximum rise in sea levels of any Indian city (4.44 cm between 1987 and 2021), and that figure is projected to increase sharply by 2100.⁵⁸

3. Migration
India shares a 4,000+ kilometre border with Bangladesh.⁵⁹ That’s a long border. Bangladesh is also the world’s seventh most climate-vulnerable country⁶⁰, and climate change is projected to submerge approximately 17% of its landmass, displacing roughly 13 percent of its population by 2050⁶¹.

When Bangladesh floods, its people move north and west- into India. India has already spent billions⁶² constructing border fencing, but field reports from the West Bengal border describe fencing on the Bangladesh side with crossing as compromised⁶³, and crossings are facilitated by narrow canals that cannot be fully monitored.⁶⁴ Migration pressure is unlikely to be evenly distributed- it concentrates in Bengal and the Northeast, regions already marked by ethnic tension⁶⁵, political volatility, and a complex history with Bangladeshi migration dating back to 1971⁶⁶.⁶⁷

What transforms this from a humanitarian issue into a security one is the documented presence of banned militant organisations like Jamaat-ul-Mujahideen Bangladesh near the border⁶⁸– groups that can exploit mass migration events for infiltration.

Climate Trigger	The “Climate” Impact	The “Security” Result	Why it matters for National Security
Glacial Melt	Retreating snouts; unstable moraine; GLOFs (floods).	Tactical Instability	Traditional borders (like the AGPL in Siachen) physically shift; supply routes disappear.
Monsoon Shift	Extreme rainfall or prolonged drought.	Economic Despair	44% of the workforce loses income; rural “desperation” becomes a recruitment tool for insurgents.
Extreme Heat	45°C+ days in the plains and high-altitude zones.	Operational Decay	Soldiers face physiological limits; equipment (engines/ammo) fails; training routines are halted.
Sea Level Rise	Coastal inundation and salt-water intrusion.	Base Degradation	Strategic naval assets (like Visakhapatnam) face infrastructure damage; dry docks become unusable.
Water Stress	Depleting groundwater and drying river basins.	Inter-state Riots	Water becomes a “zero-sum” game; leads to internal unrest (Cauvery) or external “Water Wars.”
Crop Failure	Reduced yields and nutrient loss in staples.	Food Riots	High food prices historically lead to urban instability and the potential collapse of state legitimacy.
Migration	Millions displaced by floods (Assam) or cyclones.	Border Pressure	“Distress migration” creates dense, vulnerable urban slums and pushes people across sensitive borders.
Vector Shift	Mosquitoes moving to higher altitudes.	Morbidity Burden	High malaria/dengue rates in active zones (Northeast/Himalayas) reduce troop readiness.

Cheat Sheet

Military Readiness
The April 2026 Planetary Security Initiative report produced by the Clingendael Institute in collaboration with India’s Institute of Peace and Conflict Studies offers this analysis of how climate change degrades military readiness across four core pillars: personnel, infrastructure, platforms, and equipment.⁶⁹

Personnel: Extreme heat is degrading recruitment pools and training routines. India is already experiencing record-breaking heat events across the Indo-Gangetic Plain, and soldiers training in 45°C heat in Rajasthan or operating in flooded terrain in Assam face physiological limits that reduce performance and increase casualties.
Infrastructure: Naval bases, Himalayan forward posts, and logistical nodes are threatened by sea-level rise, cyclones, and flash floods. The 2014 Kashmir floods, which damaged over 40 km of three-tier border fencing and flood-lighting LoC fencing⁷⁰, are a preview of a recurring problem.
Platforms: Extreme temperature fluctuations and humidity degrade armour, engines, and vehicles. The US military has already begun designing vehicles for higher heat and cold tolerance- India must follow suit.⁷¹
Equipment: Ordnance and ammunition have defined storage and operational temperature ranges. A changing climate expands the operational environments beyond these ranges.

Climate change is also squeezing the defence budget from two directions. India already spends about 5.6% of its GDP managing climate change impacts- a share expected to grow.⁷² A Stanford University study found that climate change had a negative 31% impact on India’s GDP per capita from 1961 to 2010.⁷³ Defence spending as a share of GDP has declined steadily, falling below 2 percent in 2024–25 for the first time in over a decade.⁷⁴ As climate disasters redirect more public spending toward relief and rehabilitation, the defence budget will face even greater compression, precisely at a time when India faces two active, nuclear-armed rivals on its borders.

Despite all this evidence, India’s strategic doctrine has been slow to formally integrate climate change into its national security framework. The 2008 National Action Plan on Climate Change (NAPCC)⁷⁵ and the Prime Minister’s Council on Climate Change were early institutional steps, but as a 2024 Tandfonline study noted, India has “remained opposed to discussing security implications of climate change in the UNSC.”.⁷⁶ The Indian strategic discourse, as the Planetary Security Initiative’s 2026 report notes, “remains primarily focused on civilian-centric impacts” rather than hard military readiness⁶⁹, and as recently as March 2026, the Ministry of Defence released its ‘Defence Forces Vision 2047’ — a comprehensive modernisation blueprint that makes no explicit mention of climate change as a security variable⁷⁷.

When the UNSC debate “Maintenance of International Peace and Security: Climate and Security” was convened, India’s permanent representative, TS Tirumurti, voted against a draft resolution in December 2021 on the grounds that it “attempted to securitise climate action and undermine the hard-won consensual agreements” reached at Glasgow COP26.⁷⁸ India’s position, restated across multiple UNSC sessions over 15 years, is philosophically coherent: securitising climate change risks bringing militarised solutions to problems that are inherently non-military in nature;⁷⁹ the UNSC, with its five veto-wielding permanent members who are historically the world’s largest emitters, is not a legitimate forum to decide climate governance;⁸⁰ and the right place for climate action is the UNFCCC, the UNGA, and ECOSOC, which are more representative and participatory⁷⁸.

This is not entirely wrong. The securitisation of climate change at the UN level has real risks- it can be used to justify military interventions dressed up as climate responses, and it gives P5 countries disproportionate control over a global problem they caused.⁸¹ ⁸² India’s resistance carries the moral weight of the Global South.

But there is a distinction that India has repeatedly failed to make cleanly. There is a difference between opposing the international securitisation of climate change (arguing that the UNSC shouldn’t police it) and failing to integrate climate risks into your own domestic security planning (refusing to acknowledge it as a threat to your own military).

India’s 2017 Joint Doctrine of the Armed Forces labels climate change a “non-traditional security issue”⁷⁶, a categorisation that is both technically accurate and practically meaningless, since it places glacier melt in the same administrative drawer as piracy and pandemics⁸³. That framing, non-traditional, therefore not urgent, is the problem.

This is a critical gap. Peer militaries, particularly in the US and within NATO, have been conducting disaster war games, climate risk audits of military installations, and equipment redesign programmes for years.⁸⁴ ⁸⁵ India’s CLAWS has called for the Integrated Defence Staff (IDS) to become the nodal body for climate security planning⁸⁶, and for a “risk-risk” orientation in policy one that weighs the cost of climate inaction against the cost of adaptation (A “risk-risk”⁶⁹ a decision-making approach used to analyze the trade-offs between different risks, specifically comparing the risk reduced by a particular action (e.g., regulation, mitigation) against new risks created by that same action).

So what about Siachen?
ISRO and the Wadia Institute of Himalayan Geology have documented a recession of approximately 800 metres from the Siachen Glacier’s snout over the last 20 years.⁸⁷ As glaciers retreat, the terrain they leave behind is not clean, empty ground. It is unstable moraine^{(Moraine is the debris (rock, sediment, dirt) that a glacier picks up and deposits as it retreats. It is loose, unconsolidated, and structurally unreliable. It also tends to form dams across glacial meltwater, creating glacial lakes that can burst suddenly and catastrophically, these are called glacial lake outburst floods, or GLOFs})⁸⁸ prone to collapse, to sudden flooding, to avalanche patterns that have no historical precedent because the ice that shaped them is no longer there. Old military positions may find themselves sitting on terrain that is physically changing beneath them.⁸⁹ Routes that were stable for decades become lethal. Strategic high points, held at enormous human cost, may shift in their tactical value as the topography itself rearranges.

Can troops continue to serve there? Technically, they currently do despite conditions that would be described, in any other context, as incompatible with human habitation. But the question climate change forces is not just whether they can- it’s whether the positions they hold will still make military sense as the glacier retreats and new terrain emerges. The Army will have to continuously reassess which positions are defensible, which supply routes remain viable and, what seems more frightening to me, which points are downstream of newly forming glacial lakes that could burst without warning.

All over our country, the ground is changing, shifting, melting under our feet. To ignore the security dimension of climate change is to believe that a nation can be “secure” even if its cities are underwater and its breadbasket is a dust bowl, and its soldiers don’t know where to stand. True autonomy in the coming century won’t just be measured by the size of our arsenal, but by the resilience of our resources. If national security is preparing for the worst case scenarios, it is time to acknowledge that climate change is also our war theatre.

Sources

Risk VI – How Disasters Amplify Systemic Injustice

The previous pieces in this series looked at how risk is priced, transferred, and hedged. This one looks at who absorbs it when none of those mechanisms work, and why that’s never random.

When devastating floods hit Kerala in 2018, a Dalit family walked three kilometres to the nearest relief centre at a temple, only to be told they were not allowed to enter.¹ A year later, when Cyclone Fani ravaged Odisha, another Dalit family walked to a relief shelter and was also turned away.¹ ²

Both were excluded by caste.

As activist Sangram Mallick put it: “Your caste determines what kind of treatment you will get during a disaster.”¹

These are often described as failures of disaster response. They are not. They are examples of how disaster response works.

Environmental stress (floods, heatwaves, droughts, cyclones, etc.) appears neutral, but its effects are not. Repeatedly, across countries and across hazards, harm clusters along pre-existing social lines: caste, race, gender, income, disability, age. The World Meteorological Organization puts it plainly:³ inequality and disaster vulnerability are “two sides of the same coin.” Climate change, in this sense, is not an external shock landing on a functioning system. It is a multiplier applied to a system that is already unequal.

To understand how that multiplication works, it helps to look at disasters not as singular events, but as a process, one that unfolds in three stages:

Who is exposed before the event.
Who is able to survive during it.
And who is able to recover after it.

I. Pre-Event: Who is placed in harm’s way
Across contexts, marginalised groups are systematically pushed into what are, in effect, sacrifice zones- places that are cheaper precisely because they are more dangerous.

In India, research published in the journal Demography found that marginalised caste groups experience 25–150% higher heat exposure at work than dominant caste groups, even after controlling for income, education, and geography, a pattern the authors described as “thermal injustice.”⁴ Separately, a 19-year study published in the journal Temperature found that India recorded nearly 20,000 heatstroke deaths between 2001 and 2019, a figure researchers say is an undercount given systemic underreporting.⁵

The same structural logic appears elsewhere. In the United States, racially segregated housing patterns have concentrated Black communities in urban heat islands with less tree cover and higher exposure to extreme temperatures.⁶ ⁷ Indigenous communities, displaced from ancestral land through colonial processes, are now disproportionately located in areas more exposed to climate hazards such as drought, wildfire, and extreme heat.⁸

Income reinforces this exposure. A global study of 573 flood events found that higher inequality within a country correlates with higher flood mortality, and that the protective effect of economic growth disappears once inequality is accounted for.⁹ So GDP growth appears protective in simple models but that effect vanishes when inequality is held constant: for the more than 80% of workers in low- and lower-middle-income countries employed in the informal sector, exposure is not just about where they live, but how they work.¹⁰ In Delhi, daily surveys of informal workers during peak summer showed that each 1°C increase in wet-bulb^{(Wet bulb temperature is the lowest temperature air can reach by evaporating water into it. It measures how effectively sweat evaporates to cool bodies, thus accounting for both heat and humidity. Unlike standard temperature, high wet bulb temperatures mean sweat cannot evaporate, making it difficult for the body to cool down, because high humidity means sweat cannot evaporate as easily.)}¹¹ temperature reduced earnings by 19%, with losses reaching 40% during heatwaves.¹² Medical expenses also rose 14% per degree, reaching 25% on heatwave days.¹² For them, heat is not a background condition, it is a direct constraint on survival.

II. During the Event: Who absorbs the shock
When a disaster hits, it does not affect everyone equally. It interacts with existing vulnerabilities, whether physiological, social, and/ or economic, and amplifies them.

For many women, the danger is not only environmental but social. A systematic review across 15 countries found that disasters increase violence against women through three pathways: economic entrapment, unsafe displacement environments, and shifts in household power dynamics.¹³ After Hurricane Katrina, intimate partner violence among displaced women in Mississippi nearly tripled within two years (went from 12.5% to 34.4%).¹³

Displacement itself often creates conditions where harm becomes easier. Camps without lighting, locks, or private sanitation are not just inadequate—they are enabling environments.¹³

For people with disabilities, the barriers are more immediate. In the 2011 Great East Japan Earthquake, persons with disabilities were twice as likely to die.¹⁴ Across disaster types globally, this ratio ranges from two to four times.¹⁵ The reasons are rarely mysterious: evacuation systems that assume mobility, communication systems that assume visibility or hearing, shelters that assume independence.¹⁵

Age compounds vulnerability in different ways. During the 2021 Pacific Northwest heatwave (United States), a majority of those who died were over 65¹⁶: in Oregon alone, approximately two-thirds of the 107 confirmed heat deaths were over that age.¹⁷ Physiological factors, such as reduced thermoregulation, chronic illness, play a role, but so do structural ones: isolation, dependence on caregivers, limited access to timely information.

For informal workers, the choice during a disaster is often binary: stop working and lose income, or continue working and risk physical collapse. A salaried worker may retreat indoors. A day labourer cannot.¹²

The disaster, in other words, does not create vulnerability in the moment. It exposes how unevenly the capacity to withstand shock is distributed.

III. Post-Event: Who is able to recover
If the disaster itself reveals inequality, recovery is where it becomes entrenched.

A 2023 IMF working paper found that income inequality increases after severe disasters across both advanced and developing economies, particularly when shocks are repeated or coincide with downturns.¹⁸ Recovery is not a reset to equality, it is an underlining of pre-existing societal furrows.

This underlining, in the form of aid, often follows the logic of the market. Systems designed to restore property values tend to benefit those who already have property, while offering little to those who do not.¹⁹ The result is that those with assets recover faster and more fully, while those without fall further behind.

At this point it is important to ask what allowed the wealthy asset-owner to build their initial wealth? There are many who truly come from nothing- including no social status, but there are many who do benefit from at least their social background, such as a poor person who nevertheless benefits from a high caste status, or a person who has exactly the same background and qualifications as another, but benefits from their gender or sexual identity.

Migration is one of the clearest outcomes of this gap. Research has shown that marginalised caste groups in India are significantly more likely to be displaced by climate impacts, with many becoming vulnerable to trafficking and forced labour during that process.²⁰ Globally, climate change is expected to displace tens of millions by mid-century, with the most vulnerable populations facing the highest risks during movement and resettlement.²¹

Food security follows a similar pattern. Global assessments show that the majority of the world’s population already lives in countries below the average food security threshold, and warming scenarios are expected to push hundreds of millions more below it.²² Economic growth offers only limited protection, because it raises income (usually along socially-accepted lines⁹) without fundamentally strengthening resilience.²³

Recovery, then, is not simply about rebuilding what was lost. It determines who has the resources to face the next disaster—and who does not.

Isn’t disaster indiscriminate?
It is often said that disasters do not discriminate.

If that were true, their impacts would be randomly distributed.

They are not.

Across countries, across hazards, and across time, the same pattern repeats: those who are already marginalised face greater exposure, suffer greater harm, and recover more slowly. Even major risk models have historically failed to account for these differences, despite extensive evidence that social inequality drives disaster outcomes.²⁴

This consistency is the point. The pattern is not incidental, it is structural. The cycle is Inequality → Disaster → Unequal Recovery → Deeper Inequality → Next Disaster

When that Dalit family in Kerala was turned away from a relief centre, the issue was not access to a building. It was access to protection itself- who is considered entitled to it, and who is not.

Climate change is often framed as a shared crisis. But its impacts are not shared equally, and its costs are not distributed randomly. They follow the structure of the system they move through.

Disasters do not redraw those lines. They deepen them.

Sources

E-waste – I: The Problem

I’ve worked for a couple of projects on e-waste and e-waste recycling, and I wanted to revise that and see what’s going on in the space, so here is a series of posts about these topics.

In 2022, the world generated 62 million tonnes of electronic waste. Only 22.3% of that waste was properly recycled. By 2030, we’re on track to hit 82 million tonnes annually—while our recycling rate is projected to drop to 20%.¹ ² The gap between what we’re throwing away and what we’re recovering isn’t just an environmental problem. It’s an economic disaster not even bothering to hide, and yet few pay attention. That 62 million tonnes of waste contains an estimated $62 billion worth of recoverable materials—gold, silver, copper, rare earth metals—currently rotting in landfills or being processed in unsafe conditions.²

EEE
E-waste, according to the European Union’s WEEE (Waste Electrical and Electronic Equipment) Directive, is “equipment which is dependent on electric currents or electromagnetic fields in order to work properly”.³ India’s E-Waste Management Rules 2022 define it as “electrical and electronic equipment, whole or in part discarded as waste by the consumer or bulk consumer as well as rejects from manufacturing, refurbishment and repair processes”.⁴ The US Environmental Protection Agency divides e-waste into ten broad categories:⁵

Large household appliances: refrigerators, air conditioners, washing machines
Small household appliances: toasters, coffee makers, vacuum cleaners
IT equipment: computers, laptops, monitors, printers
Consumer electronics: televisions, smartphones, tablets, gaming consoles
Lamps and luminaires: LED bulbs, fluorescent tubes
Toys: electronic games, remote-controlled cars
Tools: power drills, electric saws
Medical devices: blood pressure monitors, glucose meters
Monitoring and control instruments: thermostats, smoke detectors
Automatic dispensers: vending machines, ATMs

And critically, this includes batteries of all types:⁶

Alkaline and zinc-carbon batteries: the everyday AA, AAA batteries we use in remotes and toys
Lithium-Ion batteries (Li-ion): found in smartphones, laptops, electric vehicles—these have high energy density and long life, but are highly reactive and flammable
Lead-acid batteries: used in vehicles and industrial applications—low cost but heavy and toxic
Nickel-cadmium batteries (NiCd): known for consistent performance but containing toxic cadmium

Why should we recycle e-waste?
Why not? Electronics contain both valuable materials and dangerous ones, and throwing them away is economically silly and environmentally irresponsible. For one, recovering gold produces 80% less carbon emissions than primary mining.⁷ Recycling lithium-ion batteries instead of mining new metals reduces greenhouse gas emissions by 58-81%, water use by 72-88%, and energy consumption by 77-89%.⁸ ⁹ ¹⁰ If we extend the lifespan of existing devices—through repair, reuse, and high-quality refurbishment—we drastically reduce the need to manufacture new ones.

Hazard
Electronic devices are chemical cocktails. Circuit boards, batteries, and screens contain an array of hazardous substances:¹¹ ¹² ¹³

Lead: damages the nervous system, kidneys, and reproductive system. Particularly harmful to children’s developing brains. Found in cathode ray tubes (those old bulky TVs and monitors) and soldering materials.
Mercury: a potent neurotoxin that accumulates in the body, causing neurological and developmental issues. Present in flat-screen displays, fluorescent lamps, and some batteries.
Cadmium: linked to kidney damage, lung cancer, and bone disease. Found in rechargeable NiCd batteries, old CRT screens, and printer drums.
Chromium (specifically hexavalent chromium): a recognized carcinogen that can cause lung cancer, respiratory issues, and skin irritation. Extremely soluble, so it easily contaminates groundwater.
Brominated flame retardants: used in plastic components to prevent fires, but they release toxic dioxins when burned or heated. These cause hormonal disorders.
Beryllium: found in power supply boxes. Exposure can cause chronic lung disease.

The World Health Organization has identified e-waste as one of the fastest-growing solid waste streams posing serious health risks.¹⁴ When e-waste is dumped in landfills, these toxic materials leach into soil and groundwater. When it’s burned—as happens in much of the informal recycling sector—they’re released into the air as poisonous gases. Studies in communities near informal e-waste recycling sites show elevated rates of respiratory illnesses, cardiovascular problems, neurological disorders, and cancers. Children and pregnant women are particularly vulnerable.¹⁵ ¹⁶

Urban Mining
Electronics are concentrated sources of valuable materials—far more concentrated than their natural ore deposits:¹⁷ ¹⁸ ¹⁹

Gold: one tonne of circuit boards contains approximately 350 grams of gold. To put that in perspective, the gold content in circuit boards is 800 times higher than in natural gold ore. Mining one tonne of gold ore might yield just 5 grams of gold; circuit boards yield 350 grams.
Silver: that same tonne contains about 2 kilograms of silver.
Copper: 120 kilograms per tonne of circuit boards.
Other precious metals: aluminum, platinum, cobalt, palladium, rare earth elements.

To make this concrete: recycling one million cell phones can yield approximately 35,000 pounds of copper, 772 pounds of silver, and 75 pounds of gold. The total value of recoverable materials from global e-waste in 2022 was estimated at $62 billion.¹⁹This is what researchers call “urban mining”—recovering valuable materials from discarded electronics rather than extracting them from the earth.²⁰

If e-waste is valuable, dangerous, and growing, why is it still handled so badly? The answer isn’t technology or awareness. It’s incentives—and the policy instrument meant to fix this problem may be quietly making it worse. In the next post, I’ll unpack EPR (Extended Producer Responsibility) — the policy tool we’ve pinned our hopes on, and why it’s not delivering what it promises yet.

Sources

Financing Climate Solutions – VI: Mechanisms

This is a quick post explaining the various common types of green finance mechanisms.

Financial Instruments¹ ² ³ ⁴ ⁵ ⁶
Before getting into specific instruments, it helps to see that every financial mechanism, at its core, answers the same small set of questions. Whether it is a bond, a guarantee, a carbon credit, or a crowdfunding campaign, the structure is really a way of formalising: who puts money in, who gets money out, under what conditions, over what time horizon, and with what risks attached.

The first design step is to be clear about purpose and users. A mechanism should specify: Who is this for? Is it aimed at sovereigns, cities, large corporates, project developers, households, or small farmers? And what is it trying to achieve—cheap long‑term capital for infrastructure, early‑stage risk capital for new technology, quick payouts after disasters, or a way for individuals to participate in small projects? The same high‑level tool (say, a bond) will look very different if it is structured for a G20 sovereign building a metro system versus a Small Island Developing State financing a mangrove restoration programme.

Then there is the cash‑flow logic: where the money comes from, and how it is repaid. Any mechanism should make transparent:

What is the return? This could be a fixed interest rate, a share of project revenues, a one‑off payout if a trigger event happens, or the sale of carbon credits over time, or any other means of return.
How is the return calculated? For a bond, it is a coupon (interest rate) on the face value; for a carbon project, it might be the number of verified tonnes of CO₂ times a contracted price; for a crowdfunding loan, it might be a fixed annual percentage of the amount invested.
Over what time horizon? Some mechanisms (like grants or one‑year parametric insurance contracts) are short‑term; others (like sovereign green bonds or infrastructure PPPs) can run 10–30 years. Matching the tenor of the finance to the underlying project is a key design choice.

Alongside cash flows, a good mechanism makes risk allocation explicit. Every contract should answer: What could go wrong, and who bears which risk? In climate projects, typical risks include:

Construction risk (the project is delayed or over budget),
Operating risk (it underperforms technically),
Market risk (power prices or carbon prices are lower than expected),
Policy risk (subsidies or regulations change), and, for some instruments,
Physical climate risk (storms, droughts, floods).

Different tools push these risks onto different shoulders: guarantees shift credit risk from banks to public guarantors; blended finance pushes first losses onto concessional funders; results‑based finance pushes performance risk onto the developer; parametric insurance transfers climate shock risk from farmers or governments to insurers. A “good” mechanism is not one where there is no risk (this does not exist), but one where risks are held by the actor best able to manage them.

Because these are contracts, not just concepts, they also need clear rules and triggers. This includes: what counts as success or failure; what data will be used to judge performance; who verifies it; what happens if targets are missed or events don’t unfold as expected (for example, does the interest rate step up, does a guarantee get called, does a results‑based payment simply not happen?). In climate finance, this is where measurement, reporting and verification (MRV) comes in: a mechanism that pays “per tonne of CO₂ avoided” or “per tonne removed” has to say exactly how those tonnes will be measured, by whom, and according to which standard.

Finally, every mechanism needs some thought on governance and alignment. Who decides which projects are eligible? How are conflicts of interest handled (for example, if the verifier is paid by the project developer)? How are environmental and social safeguards built in, so that climate finance does not create new harms? And how does the mechanism align with broader frameworks—national climate plans, sustainable finance taxonomies _{(A taxonomy is just a classification system: a structured way of deciding “what counts as what” and grouping things into clear categories. A sustainable finance taxonomy is a list of economic activities, with detailed criteria, that a country or region has decided will count as “environmentally sustainable” or “transition‑aligned”. The point is to give investors and regulators a common language so they can tell when an investment is genuinely green, and reduce greenwashing. The EU Taxonomy defines which activities (renewables, buildings, transport, etc.) are aligned with EU climate and environmental goals, and sets technical thresholds and “do no significant harm” rules)}⁷, or net‑zero standards? Answering these questions up front helps determine whether the instrument will attract serious capital and be seen as credible.

Once you see these common building blocks—purpose and users, cash flows and returns, risk allocation, rules and triggers, and governance and alignment—the individual instruments in the table below become much easier to understand. Each one is simply a different way of arranging those elements to solve a particular climate finance problem.

A note:

Use‑of‑proceeds instruments (green, blue, transition bonds, green sukuk, most multilateral loans) = money must be spent on eligible activities.8
Performance‑linked instruments (SLBs, some RBCF and AMCs) = money can be used broadly, but cash flows change depending on whether measurable indicators are met.¹

Here’s an explanation of typical green finance instruments:

1. Carbon Credits⁶ ⁹

First: what is a carbon credit? A carbon credit is a certificate that represents one tonne of CO₂ (or equivalent greenhouse gas) either not emitted or removed from the atmosphere. It’s like a “receipt” that a verified climate benefit has occurred somewhere.
How carbon credits work: A project (for example, a wind farm, a forest protection programme, or a direct‑air‑capture plant) is measured against a “baseline” of what emissions would have been without the project. The difference—verified by independent auditors—can be turned into credits. Each credit can be sold to a company or individual that wants to “offset” or compensate for their own emissions.
- Two big families: 1) Avoidance/reduction credits – the project prevents emissions (e.g., replacing coal power with wind, distributing clean cookstoves, avoiding deforestation). 2) Removal credits – the project draws CO₂ out of the air and stores it (e.g., reforestation, biochar, direct air capture with geological storage).
Why it matters: Carbon credits turn climate outcomes into a tradable product. That creates a revenue stream for climate projects, which can unlock financing from banks and investors.

2. Green bonds¹⁰ ¹¹

First: what is a bond? A bond is basically an IOU: an investor lends money to a government or company; in return, the issuer promises to pay regular interest and repay the principal at a fixed date. It’s like a structured loan that many investors can buy.
What is a green bond? A green bond is a regular bond where the money raised is earmarked for environmentally beneficial projects. The issuer commits that the proceeds will go only to qualifying “green” activities (renewable energy, energy efficiency, clean transport, green buildings, etc.), and usually reports on how the funds are used.
How it works in climate projects: Instead of financing “general corporate purposes”, a green bond might finance: a solar farm (emissions avoidance), a mass‑transit rail line (avoidance), or potentially large‑scale reforestation or wetland restoration (carbon removal). The bond itself doesn’t change financially—what makes it “green” is the use of proceeds and the issuer’s transparency and reporting.

3. Blue Bonds¹² ¹³

First: what is a bond? A bond is essentially a tradable IOU. An investor lends money to a government, development bank, or company; in return, the issuer promises to pay regular interest and repay the principal at a set maturity date. It’s a way for issuers to raise large sums from many investors at once.

What is a blue bond in simple terms? A blue bond is a special type of green bond where the money raised is earmarked specifically for ocean and water‑related projects. In other words, it is a debt instrument issued to finance activities that protect or sustainably use marine and freshwater resources—things like healthy oceans, coasts, rivers, and water systems.

Blue bonds are bonds issued by governments, development banks, or other entities to raise funds from investors for marine and ocean‑based projects that generate positive environmental, economic, and climate benefits. They are a “subset” of green bonds, with a narrower focus on the “blue economy”—the part of the economy that depends on oceans and water (fisheries, shipping, tourism, coastal infrastructure, etc.).

What kinds of projects do blue bonds finance? Proceeds must go to clearly defined “blue” uses, for example:

Marine conservation: Expanding and managing marine protected areas, coral reef and mangrove restoration, protection of endangered marine species.
Sustainable fisheries and aquaculture: Transitioning fisheries to sustainable quotas, improving monitoring and enforcement, supporting low‑impact aquaculture that doesn’t destroy habitats.
Coastal resilience and adaptation: Restoring mangroves and wetlands to act as natural flood defences, reducing coastal erosion, protecting communities from storm surges and sea‑level rise.
Water and wastewater management: Improving urban water supply, wastewater treatment, and preventing sewage or nutrient pollution from entering rivers and seas.
Pollution reduction: Cutting plastic leakage into oceans, improving solid‑waste management, and cleaning up polluted waterways.
Sustainable “blue economy”: Supporting eco‑friendly coastal tourism, low‑carbon shipping, and offshore renewable energy (e.g., offshore wind).

Who issues blue bonds?

Sovereign blue bonds: Issued by national governments—Seychelles (2018) was the first, using a US$15 million sovereign blue bond to support sustainable fisheries and ocean conservation.
Development banks and IFIs: Institutions like the World Bank or IFC issue blue bonds or blue loans to finance portfolios of water/ocean projects.
Sub‑sovereigns and corporates: State‑owned utilities, port authorities, or private companies involved in shipping, water utilities, tourism, or fisheries can also issue blue bonds.

How are blue bonds structured financially? Financially, blue bonds work like normal bonds: investors receive periodic interest payments and principal at maturity. What makes them “blue” is: (1) the use‑of‑proceeds commitment to eligible blue projects, (2) adherence to blue/green bond guidelines, and (3) ongoing reporting on how funds are used and what environmental benefits they deliver. Often, multilateral banks or climate funds provide credit enhancements—like guarantees or concessional loans—to reduce risk and make the bond attractive. In the Seychelles case, the World Bank guarantee and GEF concessional funding cut the effective interest rate from about 6.5% to 2.8% for the issuer.

Blue bonds and debt‑for‑nature swaps: In some cases, blue bonds are combined with sovereign debt restructuring. For example, Belize and Seychelles used “blue bond + debt‑for‑nature swap” structures to reduce their overall debt burden while committing to long‑term marine conservation (note: not all blue bonds are tied to swaps—some are plain use‑of‑proceeds bonds with no debt restructuring component)¹² Creditors accepted changes in the terms of existing debt in exchange for conservation commitments, while new blue bonds or blue loans financed marine protection. This hybrid model makes blue bonds especially attractive to small island and coastal developing states that are both ocean‑dependent and heavily indebted.

Why blue bonds matter in climate discussions: Healthy oceans and coasts are crucial for climate mitigation and adaptation: they absorb a large share of global CO₂, protect coasts from storms and sea‑level rise, and support livelihoods in many vulnerable countries. Yet “blue” sectors have historically received little climate finance compared to energy or land‑based projects. Blue bonds offer a way to channel large‑scale capital into the sustainable ocean economy, supporting: (a) mitigation via nature‑based solutions and low‑carbon maritime activities, and (b) adaptation via coastal resilience.

4. Sustainability‑linked bonds (SLBs)¹ ¹⁴

First: difference vs. green bonds. Green bonds restrict how the money is spent. Sustainability‑linked bonds do not; instead, they change the financial terms depending on performance.
What is an SLB? An SLB is a bond where the issuer (a company or government) promises to meet certain sustainability targets—for example, “reduce our greenhouse gas emissions by 40% by 2030.” If the issuer fails, the bond’s coupon (interest rate) usually steps up, meaning the issuer pays more to investors.
How it works in climate: The bond can finance anything (new factories, general operations, etc.), but the issuer is financially rewarded or penalised based on whether it hits climate‑related key performance indicators (KPIs). To reach these KPIs, the issuer might: invest in avoidance (efficiency, renewables, new processes) and/or removal (buying high‑quality carbon removals, investing in carbon capture). For investors, SLBs are a way of tying climate performance to money even when funds are not ring‑fenced.

5. Transition and Climate Transition bonds¹⁵ ¹⁶

First: what is “transition finance”? Transition finance is funding that helps high‑emitting companies or sectors move from “brown” to “green”, even if they’re not green yet. Think of steel, cement, aviation, oil and gas—industries that can’t decarbonise overnight.
What is a transition bond? A transition bond is similar to a green bond, but specifically aimed at financing credible transition activities in high‑emitting sectors—such as replacing old coal plants with much cleaner alternatives, upgrading industrial processes, or adding carbon capture equipment. The money must be used for projects that materially reduce emissions relative to business‑as‑usual. Climate Transition Bonds go a step further, following specific guidelines (e.g., by ICMA) requiring a science‑based transition plan and strong disclosure.
How it works in climate: Proceeds mainly support emissions avoidance (e.g., process efficiency, fuel switching), but can also finance removal‑enabling infrastructure, like CO₂ transport and storage hubs or BECCS/CCS installations on existing plants. The aim is to fund the journey from high emissions to low emissions in a transparent, Paris‑aligned way.

6. Blended finance¹⁷ ¹⁸ ¹⁹

First: what problem is it solving? Many climate projects (especially in developing countries or new technologies like direct air capture) are too risky or unfamiliar for purely commercial investors. Their returns might be fine on paper, but perceived risks (country risk, technology risk, policy risk) scare capital away.
What is blended finance? Blended finance is a structure, not a single product. It combines “concessional” capital from public or philanthropic sources with commercial capital from private investors. The concessional portion takes on more risk or lower returns—through first‑loss tranches, subordinated debt, or guarantees—so that private investors feel safer coming in.
How it works in climate: Imagine a fund where a development bank provides a junior, low‑return tranche, and private investors provide a senior, market‑rate tranche. If things go wrong, the public tranche loses money first, protecting the private investors. This can make renewables in emerging markets, efficiency upgrades, or early‑stage CDR projects bankable. Blended finance is thus a risk‑sharing tool to crowd in private capital to projects that serve the public good but would otherwise be under‑financed.

7. Results‑based climate finance (RBCF)²⁰ ²¹

First: what is results‑based finance? Instead of paying for inputs (like building a plant) or promises, results‑based finance pays only when measurable, verified outcomes are delivered—like “X MWh of clean electricity” or “Y tonnes of CO₂ reduced”.
What is RBCF in climate? In results‑based climate finance, a funder (often a government, climate fund, or development bank) agrees to pay a fixed amount per tonne of CO₂ reduced or removed, or per unit of a climate‑relevant result (e.g., number of clean cookstoves in regular use). Independent auditors verify the results; only then is money disbursed.
How it works in climate: For an avoidance project, payments might be made per tonne of emissions avoided by a renewable plant compared to a fossil baseline, or per hectare of forest not cut down. For a removal project, payments might be made per tonne of carbon actually stored in restored forests or wetlands. RBCF aligns finance with verified impacts, and can complement or substitute carbon credit revenues.

8. Concessional loans & grants²² ²³

First: what is concessional finance? Concessional finance is money offered on softer terms than the market—for example, loans with below‑market interest rates, longer grace periods, longer maturities, or even outright grants that don’t have to be repaid. It is usually provided by governments, development banks, or climate funds.
Grants vs. concessional loans: A grant is money given with no expectation of repayment, often used for project preparation, technical assistance, or to cover parts of capital costs. A concessional loan must be repaid, but on easier terms than commercial loans (cheaper and slower).
How it works in climate: Concessional finance is used to: (a) make marginal projects (like rural solar mini‑grids, resilience infrastructure, or new removal technologies) financially viable; (b) absorb early‑stage risks; and (c) support countries or communities that cannot afford purely commercial debt. It can directly fund projects or be used inside blended‑finance structures to crowd in private capital.

9. Guarantees²⁴ ²⁵

First: what is a guarantee? A guarantee is a promise by a third party (the guarantor) to repay part or all of a loan if the borrower defaults. This third party can be a development bank, a government agency, or a specialised guarantee fund. Think of it as “credit insurance”: it doesn’t provide money up front, but it stands ready to cover losses if something goes wrong.
Types of risk covered: Guarantees can cover commercial risk (borrower can’t pay), political risk (expropriation, currency transfer restrictions), or even certain performance risks of a project.
How it works in climate: Suppose a bank is hesitant to lend to a wind project in a lower‑income country. If a multilateral bank guarantees, say, 50% of the loan, the bank’s risk is effectively halved. That means it is more likely to lend and at a better interest rate. Similarly, future CDR projects might be financed if a public entity guarantees minimum carbon price or offtake payments, making long‑term investments less risky. Guarantees are powerful because a small amount of guarantee capital can unlock a much larger volume of private lending.

10. Multilateral climate funds²⁶ ²⁷ ²⁸

First: what is a multilateral fund? A multilateral fund pools money from many countries (donor governments) and sometimes other contributors, and channels it into projects in developing countries. It is usually overseen by a board representing those countries, and implemented through development banks or UN agencies.
Examples: The Green Climate Fund (GCF), Global Environment Facility (GEF), Climate Investment Funds (CIF), and Adaptation Fund.
How they work in climate: These funds provide grants, concessional loans, equity, and guarantees to support mitigation (emission cuts), adaptation (climate resilience), and sometimes explicit carbon removal (e.g., forest restoration). Because they are backed by governments, they can take on more risk or accept lower returns than private investors. They often act as anchor funders in blended finance structures, or provide results‑based payments to governments and project developers. For many low‑income countries, multilateral funds are the primary external source of climate finance.

11. Debt‑for‑Climate swaps²⁹ ³⁰

First: what is a “swap” in this context? In general finance, a “swap” is an agreement to exchange one set of cash‑flow obligations for another. In the sovereign context here, it’s more like a structured re‑negotiation of debt terms.
What is a debt‑for‑climate swap? A debt‑for‑climate (or debt‑for‑nature) swap is a deal where a country’s existing external debt is reduced, refinanced on better terms, or partially cancelled, in exchange for the government committing to invest in specific climate or conservation projects. Creditors might accept a discount on what they are owed, and the “savings” are ring‑fenced for climate activities.
How it works in climate: For a country heavily indebted and vulnerable to climate impacts, creditors might agree that US$X of debt is refinanced into a cheaper “blue bond” or climate bond, while the country commits to spend a portion of the freed‑up money on, say, coastal protection, forest conservation, or resilient agriculture. This simultaneously reduces debt stress and increases climate investment. Most current swaps focus on adaptation and conservation (i.e., resilience and avoided emissions), but in principle they could also fund large‑scale ecosystem restoration (a form of carbon removal).

12. Carbon pricing & CBAM‑linked flows ³¹ ³²

First: what is carbon pricing? Carbon pricing means putting a price on greenhouse gas emissions through either: (1) a carbon tax (pay a fee per tonne of CO₂ emitted), or (2) an emissions trading system (ETS), where companies must hold tradable “allowances” for every tonne they emit. If they emit less, they can sell spare allowances; if more, they must buy extra.
How this creates finance: Carbon pricing changes behaviour (by making pollution more expensive) and raises revenue for governments. Those revenues can be used to fund climate projects—grants, concessional loans, results‑based schemes, or subsidies for clean technologies.
What is CBAM? CBAM stands for Carbon Border Adjustment Mechanism. It is essentially a system (pioneered by the EU) that charges imports for the carbon embedded in them, so that foreign producers face a similar carbon cost as domestic producers subject to carbon pricing. The idea is to avoid “carbon leakage” (moving dirty production abroad).
CBAM‑linked flows: The money collected through CBAM can, in principle, be channelled back into climate finance—for example, supporting decarbonisation in poorer exporting countries, or buying high‑quality credits. Depending on design, this can steer finance towards both avoidance (clean production) and removal (credit purchases or CDR investments).

13. AMCs for CDR³³ ³⁴

First: what is CDR? CDR stands for Carbon Dioxide Removal—any process that actively takes CO₂ out of the atmosphere and stores it for long periods. This includes natural methods (reforestation, restoring peatlands, mangroves) and engineered methods (direct air capture, BECCS, enhanced weathering, biochar, etc.).
What is an AMC? An Advance Market Commitment (AMC) is a pledge by buyers—often governments or large companies—to purchase a certain amount of a product in the future at a pre‑agreed price, if that product can be delivered with agreed‑upon standards. AMCs were used successfully to accelerate vaccine development: companies invested in R&D and capacity knowing that a market would exist.
What are AMCs for CDR? AMCs for CDR are long‑term purchase commitments for future carbon removals. Buyers say: “If you can remove and durably store CO₂ to standard X, we promise to buy Y tonnes at price Z over the next decade.” This gives CDR developers the revenue certainty needed to secure financing for expensive plants. Without AMCs, many CDR businesses are stuck in the “valley of death” where costs are high and markets uncertain. AMCs therefore are a demand‑side tool to de‑risk investment in new removal technologies.

14. Parametric insurance³⁵ ³⁶ ³⁷

First: what is insurance in general? Traditional insurance compensates you for actual losses incurred: you prove your loss (e.g., damage from a storm), and the insurer reimburses you up to your policy limit, after assessment. This can be slow and administratively heavy.
What is parametric insurance? Parametric insurance pays out automatically when a specified event happens, based on a measurable parameter—such as wind speed above X, rainfall below Y, or an earthquake of magnitude Z or more. Payout is triggered by the parameter, not by proof of actual loss.
How it works in climate: For climate‑related risks (hurricanes, droughts, floods), parametric insurance can provide very fast, predictable payouts to governments, utilities, or farmers. For example, a country might get a pre‑agreed payout if a hurricane stronger than Category 4 passes within a certain distance. A solar farm might receive payments if cloud cover or wind speeds deviate too far from the norm. While this doesn’t directly reduce or remove emissions, it improves climate resilience, protects revenue streams for renewable projects, and makes banks more willing to finance assets in climate‑vulnerable regions.

15. Islamic green sukuk³⁸ ³⁹

First: what is a sukuk? In Islamic finance, charging or paying interest in the conventional sense is prohibited. A sukuk is a Shariah‑compliant financial instrument that is often described as an “Islamic bond”, but technically it represents ownership in an underlying asset or project, and returns are generated via profit‑sharing or lease‑like structures, not explicit interest.
What is a green sukuk? A green sukuk is a sukuk where the underlying assets or projects are environmentally beneficial—for example, a solar farm, a wind park, or a water treatment plant. It must satisfy both: (1) Shariah requirements (no prohibited activities, asset backing, fair risk‑sharing), and (2) green criteria (as defined by taxonomies or standards).
How it works in climate: Governments and companies in Muslim‑majority countries can issue green sukuk to finance renewable energy, clean transport, efficient buildings, or even nature‑based climate projects. Investors receive periodic distributions from project revenues (e.g., electricity sales), not interest, and gain exposure to both financial and environmental returns. Islamic green sukuk expand the pool of climate capital by tapping investors who prefer or require Shariah‑compliant instruments.

16. Crowdfunding platforms⁴⁰ ⁴¹

First: what is crowdfunding? Crowdfunding is when many individuals each contribute relatively small sums of money, usually via an online platform, to fund a project, business, or cause. In return, they might get rewards, interest, profit‑sharing, or simply the satisfaction of supporting something they believe in.
What are climate/green crowdfunding platforms? These are specialised platforms that allow people to directly invest in or donate to renewable energy, energy‑efficiency, conservation, or climate‑tech projects. Minimum investments can be very low (e.g., €10 or INR25), making participation broadly accessible.
How it works in climate: A developer might list a community solar project on a platform; hundreds of individuals fund part of the project and receive a fixed interest payment or share of revenues over time. This model is particularly well‑suited to small‑scale, local avoidance projects—like rooftop solar, community wind turbines, building retrofits—where community buy‑in is crucial. It is less suited (for now) to capital‑intensive, highly technical removal projects, but it plays a powerful role in democratising climate finance and building public support for the transition.

Sources

GHG 101 – III What is a Carbon Negative Nation?

While most countries are trying for “net zero” status (the point at which their greenhouse gas emissions are balanced by removals), there are some that are currently carbon negative: they remove more carbon dioxide from the atmosphere than they emit.

Three nations have achieved this status: Bhutan, Suriname, and Panama.¹

Bhutan, the world’s first officially carbon-negative country, absorbs approximately six tonnes of carbon dioxide per capita through its vast forests, while emitting two tonnes per capita (the nation’s constitution mandates that at least 60 percent of its land remain forested “for all time,” a commitment it reaffirmed at COP15 in Copenhagen in 2009 and again at COP21 in 2016).² ³ Suriname, the most forested country on Earth with 97 percent forest cover, absorbs roughly 8.8 million tons of carbon annually while emitting 7 million tons.⁴ Panama achieved carbon-negative status through a combination of bold energy sector transitions and conservation measures, with 65 percent of its territory covered in forest.⁵

But how do we know how much carbon they emit and how much they remove from the atmosphere? The answer is carbon accounting.

Carbon Accounting
Carbon accounting (also called greenhouse gas accounting) is the systematic method of measuring, recording, and reporting the greenhouse gas emissions generated by activities at the individual, organisational, or national level.

You can read more about it here, here, and also here (this is a technical post) in that order.

Understanding Carbon Negativity
In climate work, experts distinguish between production-based emissions and consumption-based emissions. This distinction can alter whether an entity appears to be carbon positive, neutral, or negative.⁶

Production-based emissions represent what’s emitted physically within a country’s borders. This is the usual approach taken by national greenhouse gas inventories following UNFCCC (United Nations Framework Convention on Climate Change) guidelines. This accounting is relatively straightforward: it estimates emissions from all the oil, coal, and gas consumed within a country by private households, industrial production, and electricity generation.⁷
Consumption-based emissions, are “all the greenhouse gas emissions needed, globally, to satisfy the final demand of residents of this country”. This approach acknowledges that occur in one location to produce goods and services consumed elsewhere.⁸

The standard formula for consumption-based emissions is:⁹ ¹⁰

Consumption-based emissions = Production-based emissions + emissions from imports − emissions from exports

Consider the implications: if the United Kingdom closes its domestic steel industry and begins importing steel from China, UK production-based emissions fall while Chinese production-based emissions rise. Yet from a consumption perspective, those emissions still relate to UK-based consumption—the steel is still being used in Britain, regardless of where it was produced.

The difference between these two accounting methods can be substantial. When accounting for emissions on a consumption basis rather than territorial (production) level, United States emissions increase by 10.9 percent,¹¹ while China’s emissions would decrease by substantially.¹¹ For large European economies, net imported emissions represent 20–50% of consumption emissions;¹¹ in Japan, they account for 17.8 percent, and in the United States, 10.8 percent.¹¹

Accounting methods matter: whether a nation appears carbon negative may depend not just on physical realities but on how boundaries are drawn, what emissions are counted, and how carbon sinks are calculated.

The Macroeconomic perspective
From a macroeconomic perspective, production-based emissions align with a nation’s Gross Domestic Product (GDP). The national income identity expresses GDP as:¹²

GDP = C + I + G + (X − M)

where:

C = household (private) consumption
I = investment
G = government spending
X = exports
M = imports

Production‑based emissions follow the same logic as GDP: they count what is produced within a country’s borders, regardless of where those goods are ultimately consumed. In that sense, a country can run not only a financial trade surplus or deficit, but also a carbon trade surplus or deficit.

This concept is often framed through the Pollution Haven Hypothesis, which suggests that carbon-intensive production tends to migrate to jurisdictions with looser environmental regulations or lower energy costs (often developing nations), while cleaner, service-oriented economies (often developed nations) import the resulting goods.¹³

We can visualize this by mapping carbon flows against the standard macroeconomic identity for the trade balance (X – M):

The Carbon Exporter (Trade Surplus X > M): Countries like China or Russia often function as the world’s “smokestacks.” They run trade surpluses in manufactured goods, meaning their Production-Based Emissions are significantly higher than their Consumption-Based Emissions. They are effectively exporting the “embodied carbon” of steel, cement, and electronics to the rest of the world.¹⁴
The Carbon Importer (Trade Deficit X < M): Service-oriented economies like the UK or US often run trade deficits in goods. Their domestic factories are cleaner (or closed), lowering their territorial emissions. However, their consumption demands are met by imports, creating a “carbon trade deficit”: they consume far more emissions than they produce physically within their borders.¹⁵

This dynamic creates a “Carbon Loophole.” If the UK closes a steel mill to meet a “Net Zero” target but immediately starts importing steel from China, global atmospheric emissions haven’t changed—they have simply moved across a border. This leakage is the primary economic argument for policies like the European Union’s Carbon Border Adjustment Mechanism (CBAM), which attempts to tax the “embodied carbon” in imports, effectively reconciling the difference between production and consumption accounting at the border.¹⁶ ¹⁷

Consumption-Based Emissions
Consumption-based emissions take a fundamentally different approach. They represent “all the greenhouse gas emissions needed, globally, to satisfy the final demand of residents of this country”.¹¹

The standard formula for consumption-based emissions is:¹⁸

Consumption-based emissions = Production-based emissions + emissions from imports − emissions from exports

More specifically:

Production-based emissions: what’s emitted within the country’s borders (the usual UNFCCC inventory)
Emissions from imports: emissions that happened abroad while producing goods and services that residents import and consume
Emissions from exports: emissions that happened domestically to produce goods that are consumed abroad; these are subtracted because they “belong” to foreign consumers in this method

Consumption-based accounting takes care of the problem that CO₂ emissions are mobile internationally through trade. A decrease in one country’s production-based emissions may be more or less directly related to an increase in another country’s emissions if production has simply shifted locations.¹⁹

Implications for Climate Policy and Carbon Negativity
The choice between production-based and consumption-based accounting has profound implications for assessing climate responsibility, setting reduction targets, and understanding whether a nation is truly carbon negative.

Consider again our carbon-negative exemplars: Bhutan, Suriname, and Panama. These countries achieve carbon-negative status through their vast forest cover, which acts as carbon sinks absorbing more CO₂ than their economies emit.

Using production-based accounting, these assessments are straightforward:

Bhutan emits 2 tonnes CO₂ per capita while its forests absorb 6 tonnes per capita
Suriname’s forests absorb 8.8 million tons annually while national production-based emissions are 7 million tons
Panama’s forests and conservation reserves create net carbon sequestration exceeding territorial emissions

But what if we applied consumption-based accounting? These nations, like all countries, import goods and services that embody emissions from production elsewhere.

The question essentially is, while the nation is carbon negative, are its citizens?

This question reveals the complexity of carbon accounting at the national level. A nation might be a net carbon sink based on territorial emissions and removals, yet still contribute to global emissions through its consumption patterns. Conversely, a nation with high production-based emissions might argue that much of its emissions serve to produce goods consumed elsewhere.

Which Accounting Method Should Prevail?
There is ongoing debate among climate policy experts about whether consumption-based or production-based accounting should be the primary basis for climate policy.

Arguments for production-based accounting:

It’s simpler to measure and verify
It aligns with territorial sovereignty and national control
Countries have direct policy leverage over production within their borders
It’s the basis for UNFCCC inventories and the Paris Agreement commitments

Arguments for consumption-based accounting:

It better reflects true climate responsibility
It prevents “carbon leakage” where emissions are simply offshored
It accounts for the full lifecycle of consumption patterns
It can inform more comprehensive climate policies including consumption measures and border adjustments

In practice, most climate policy continues to be based on production-based accounting through UNFCCC inventories, but consumption-based approaches are increasingly used to complement this picture and inform policy discussions about trade, consumption, and global equity.

The Path Forward
For nations aspiring to carbon neutrality or carbon negativity, the journey requires:

Comprehensive measurement following standards like ISO 14064-1 to understand the full scope of emissions across all categories, including often-overlooked indirect emissions.
Clear baseline establishment with robust base year policies and recalculation procedures to enable meaningful tracking of progress over time.
Strategic mitigation through a combination of emissions reduction (shifting to renewable energy, improving efficiency, transforming industrial processes) and removal enhancement (protecting and expanding forests, implementing carbon capture, restoring degraded lands).
Project-level quantification using frameworks like ISO 14064-2 to measure the specific impact of mitigation initiatives, with conservative assumptions and comprehensive accounting of all affected sources, sinks, and reservoirs.
Independent verification following ISO 14064-3 to provide credible assurance to domestic and international stakeholders that reported emissions, removals, and reduction claims are accurate.
Transparent reporting that discloses methodologies, boundaries, assumptions, data sources, and uncertainties, enabling users to understand and evaluate climate claims.
Consistent application over time, with clear documentation of any methodological changes and appropriate recalculations to maintain comparability.

Carbon negativity represents a climate milestone that reflects a fundamental restructuring of an economy’s relationship with atmospheric carbon. Understanding how these countries achieve carbon negativity, helps us understand both, how climate responsibility is allocated in a globally interconnected economy, and what nations must do to achieve carbon negativity.

Risk – III: Pricing Risk

A 40-year-old non-smoker in Delhi faces a measurable probability of dying in the next year. If the 40 year old is a woman, she will have a slightly better chance at life than a male counterpart. If she lives in a wealthy area, her chances are once again better than another woman living in a less privileged location.¹ ² ³

How do we know this? We know this because actuaries work with mortality and health data from millions of people, and build tables that segment risk by age, gender, smoking status, income, and even geography, to price policies accurately.⁴

Types of risk
Over time, experts have classified risk into different types. Here’s a table about the different types of risk:

RISK TYPE	DEFINITION	CHARACTERISTICS	EXAMPLES
HAZARD RISK (Pure Risk)⁵ ⁶	The possibility of loss from natural events or accidents. The oldest, most intuitive kind of risk.	• Unintended—nobody wants them • Objective frequency data—insurers have centuries of records • Insurable—probability and consequence can be estimated from historical data • Cannot create profit—only causes loss	• Fire and property damage • Windstorms and hail • Theft and burglary • Flooding • Liability from personal injury
OPERATIONAL RISK⁷ ⁸ ⁹ ¹⁰	The risk that your business’s internal machinery breaks down. Unlike hazard risk, it’s inherent to doing business—you can’t eliminate it, only manage it. Also cannot be diversified away. Defined by Basel II as: “Risk of loss from inadequate or failed internal processes, people and systems, or external events.”	• Inherent to operations—impossible to eliminate • Non-diversifiable—all firms in an industry face similar operational risks • Hard to quantify—driven by control quality and governance, which are difficult to measure • Multiple sources—spans people, processes, systems, and external events	Process Failures: Accountant enters data incorrectly, leading to wrong financial statements; Wrong calculation of tax liabilities Human Error: Surgeon operates on wrong patient; Employee sends confidential email to wrong recipient; Trader executes wrong order System Failures: Bank’s payment system crashes; Company’s website goes down during peak shopping season; Database corruption losing customer data Fraud: Employee embezzles funds; Vendor submits fake invoices; Internal collusion to bypass controls External Events: Natural disaster destroys office; Key supplier suddenly defaults; Cyberattack from external actor
FINANCIAL RISK¹¹ ¹² ¹³	Risk from changes in financial variables: credit defaults, price movements, or inability to access funds. Encompasses three subcategories.	• Market-driven—determined by supply and demand in public markets • Observable prices—interest rates, bond spreads, stock prices are public • High correlation—multiple financial risks often move together during crises	Credit Risk: Borrower fails to repay loan; Bank faces default Market Risk (Interest Rate, Equity, Currency, Commodity): Interest rates rise, bond portfolio value falls; Stock prices decline; Rupee weakens against dollar; Oil prices spike increasing business costs Liquidity Risk (Asset & Funding): Cannot sell asset when needed (asset liquidity); Cannot raise cash when obligations due (funding liquidity)
STRATEGIC RISK¹⁴	Risk that your business strategy is wrong. Risk from strategic decisions and competitive threats that can derail long-term objectives. Highest impact, but low frequency.	• High impact, low frequency—rare but potentially catastrophic • Long-term consequences—effects persist for years • Cross-functional impact—affects entire organization • Forward-looking—requires anticipating future changes • Not quantifiable—each situation is somewhat unique	Poor Strategy Decisions: Entering unviable new markets; Expanding too quickly into new industries; Pricing strategy that’s unprofitable Competitive Threats: New disruptive competitor; Competitor’s aggressive pricing; Merger of competitors Technological Disruption: Emerging technology makes business model obsolete (e.g., ride-sharing disrupting taxis); Failed innovation or delayed product launches Resource Misalignment: Allocating resources to declining products instead of growth opportunities Market/Industry Changes: Shift in customer needs and expectations; Regulatory changes forcing business model changes
COMPLIANCE & REGULATORY RISK¹⁵	The risk that you violate laws, regulations, or internal policies, resulting in fines, legal action, or reputational damage. The regulatory environment is constantly changing.	• Pervasive—affects all areas of organization • Constantly evolving—new regulations, changing requirements • Penalties escalating—fines and enforcement becoming more severe • Jurisdiction-dependent—different rules in different countries • Partly controllable—you can strengthen controls, but regulatory changes are external	Financial Crimes: Money laundering violations; Bribery and corruption; Sanctions violations Data & Privacy: GDPR violations (Europe); CCPA violations (California); HIPAA violations (healthcare); Customer data breaches Contract & Market Conduct: False advertising; Market manipulation; Insider trading; Misleading disclosures Employment & Safety: Labor law violations; Health and safety violations; Harassment and discrimination Industry-Specific: Healthcare regulations (HIPAA); Financial regulations (Banking Acts); Environmental regulations
REPUTATIONAL RISK¹⁶ ¹⁷	The risk that negative publicity damages your brand, eroding customer trust, investor confidence, investor perception, or ability to attract talent. One of the hardest risks to quantify.	• Hidden until it happens—not visible in normal operations • Disproportionate impact—market values reputation more than the direct financial loss • Self-inflicted worse than external—fraud damages reputation 2x more than accidents • Long recovery time—trust takes years to rebuild • Interconnected—affects customer base, employees, investors, partners simultaneously	Product/Service Failures: Volkswagen emissions scandal (2015): $30B+ in losses, brand destroyed, took years to recover; Boeing 737 MAX crashes: customer confidence shattered; Product recalls damaging trust Ethical/Fraud Issues: Wells Fargo account scandal: reputation destroyed despite being largest bank; Facebook/Meta privacy scandals: customer trust eroded Workplace Issues: Harassment scandals; Discrimination claims; Executive misconduct Environmental/Social: Oil spills; Labor exploitation; Pollution incidents
CYBER & TECHNOLOGY RISK¹⁸ ¹⁹	The risk of losses from disruption or failure of IT systems, data breaches, ransomware attacks, or technology obsolescence. Increasingly distinct from general operational risk.	• Rapidly evolving threat landscape—new attack vectors constantly emerge • Control-dependent—pricing based on current security posture, not history • Insurance available—unlike most strategic risks, cyber can be insured • Industry-dependent—high-risk sectors (finance, healthcare) pay more • Improving controls reduce premiums—strong incentive alignment	Data Breaches: Hackers steal customer information; Personal data of millions exposed; Regulatory fines and lawsuits follow Ransomware Attacks: Criminals lock you out of systems; Demand payment to restore access; Business operations halt System Failures: Software bugs or aging infrastructure cause crashes; Website goes down; Payment systems fail DDoS Attacks: Website flooded with traffic, becomes inaccessible; Business loses revenue during attack Insider Threats: Disgruntled employee steals data; System administrator sabotages operations; Contractor misuses access

Different types of risks

Each of these types of risks attracts different prices. Here’s another table:

RISK TYPE	DEFINITION	PRICING CHALLENGE	KEY INSIGHT
HAZARD RISK (Pure Risk)⁵ ⁶	The possibility of loss from natural events or accidents. The oldest, most intuitive kind of risk.	Relatively straightforward to price because: Historical data is abundant and reliable Frequency and severity are stable over time	Easiest to price. Insurers have vast datasets spanning centuries showing how often fires, floods, and accidents occur. This precision makes hazard risk the most competitively priced and cheapest form of risk insurance.
OPERATIONAL RISK⁷ ⁸ ⁹ ¹⁰	The risk that your business’s internal machinery breaks down. Unlike hazard risk, it’s inherent to doing business—you can’t eliminate it, only manage it. Also cannot be diversified away. Defined by Basel II as: “Risk of loss from inadequate or failed internal processes, people and systems, or external events.”	• Real drivers (control quality, governance, employee skill) are hard to measure • Cannot use simple historical formulas • Basel II uses crude proxy: operational risk capital = percentage of gross income • Limited historical data compared to hazard risk • Outcomes are correlated across firms during crises	Cannot diversify away. When 100 banks all face the same operational risk (say, a payment system cyberattack), they all suffer simultaneously. This systemic nature makes operational risk expensive to accept and pricing it requires judgment, not just formulas.
FINANCIAL RISK¹¹ ¹² ¹³	Risk from changes in financial variables: credit defaults, price movements, or inability to access funds. Encompasses three subcategories.	• Models based on historical data miss tail risk (rare catastrophic events) • Correlation assumptions break during crises (2008 showed this) • Pricing assumes future resembles past • Volatile and difficult to predict	Impossible to price accurately at extremes. Financial risk is driven by market sentiment, which can shift suddenly. Models work 99% of the time but fail catastrophically in the 1% (like 2008), when many risks materialize simultaneously.
STRATEGIC RISK¹⁴	Risk that your business strategy is wrong. Risk from strategic decisions and competitive threats that can derail long-term objectives. Highest impact, but low frequency.	• No historical data for “probability that our strategy fails” • Each strategic decision is somewhat unique • Cannot use formulas or actuarial tables • Outcomes depend on management judgment and execution • Extremely difficult to quantify in advance	Cannot be insured. Strategic risk is almost entirely uninsurable because each company’s strategy is unique. CEOs and boards must accept this risk as part of doing business. Pricing relies on scenario analysis and management judgment, not hard data.
COMPLIANCE & REGULATORY RISK¹⁵	The risk that you violate laws, regulations, or internal policies, resulting in fines, legal action, or reputational damage. The regulatory environment is constantly changing.	• Probability of enforcement depends on regulator priorities (which change) • Penalties are often discretionary and unpredictable • New regulations create retroactive compliance challenges • Conflicting guidance from different regulators • Costs increase with regulatory tightening	Costs are rising fast. Regulators are increasingly aggressive, penalties are larger, and reputational consequences are severe. Organizations must continuously invest in compliance infrastructure (legal teams, compliance officers, audits) as a cost of doing business.
REPUTATIONAL RISK¹⁶ ¹⁷	The risk that negative publicity damages your brand, eroding customer trust, investor confidence, investor perception, or ability to attract talent. One of the hardest risks to quantify.	• Stock price falls MORE than announced loss (2x for fraud, 1x for accidents) • 26% of company value is directly attributable to reputation (one study) • No standard pricing model • Very difficult to quantify until it happens • Historical data limited	Stock market values reputation more than we can measure. When a company announces a $1B fraud loss, stock price might fall 5% ($5B loss in value). The extra $4B is “reputational loss”—the market’s judgment that the company is now riskier. Yet most companies can’t quantify or insure this risk.
CYBER & TECHNOLOGY RISK¹⁸ ¹⁹	The risk of losses from disruption or failure of IT systems, data breaches, ransomware attacks, or technology obsolescence. Increasingly distinct from general operational risk.	• Unlike hazard risk (stable data over decades), cyber threats evolve rapidly • Historical data is unreliable—new attack types didn’t exist 5 years ago • Pricing focuses on current security posture not past incidents • Rapidly changing insurance market (premiums spiked 80% in 2021-2022) • Standardization emerging (ISO 27001, NIST)	Pricing is behavior-based. Unlike traditional insurance (fixed premium regardless of actions), cyber insurance prices based on your current controls. Companies with firewalls, multi-factor authentication, and ISO 27001 certification pay ₹80,000/year. Those with weak security might pay ₹3,00,000 or be denied coverage. This creates powerful incentives to improve security.

Pricing different types of risks

General principles of pricing risk
People react in different ways to risk. Some of us prefer the straight and narrow and others don’t think much of doing things that would be considered too risky by others- think of how some don’t mind skydiving, whereas others prefer their feet firmly on the ground. There are risks associated with both skydiving, and staying on the Earth, but different people like different things.

Therefore, risk can technically be transferred from one person to another. And this can be offered as a business service, for a price.

Now, before we go into this further, please understand that some risks can never be transferred- just that the effect of their impact can be mitigated. People will die, that is life. But by buying term insurance, we can ensure our families don’t suffer financial loss as well as the loss of our love and support. Similarly, living beings get sick- by purchasing health insurance we can just make sure we don’t face financial difficulties if we ourselves get sick in a way that costs a lot of money to fix. We are not transferring the death and decay, we are transferring the financial cost of these events.

1. The Formula²⁰ ²¹
With that out of the way, when someone asks you to bear their risk, you charge them a price. That price is made up of several components:

Price of Risk = Expected Loss + Administrative Costs + Risk Loading + Profit Margin

Where:

Expected Loss is simply: Probability × Consequence. If there’s a 2% chance of a ₹100,000 loss, the expected loss is ₹2,000.
Administrative Costs are the cost of doing business. For an insurer, this includes underwriting (reviewing your application), policy servicing (managing your account), claims processing, and marketing. For a bank, it includes loan documentation, monitoring your creditworthiness, and collecting payments if you default.
Risk Loading is the “insurance premium on the insurance premium.” It’s an extra charge you demand to accept the fact that reality might differ from your expectations. This is where variance becomes critical.²²
Profit Margin is what you keep as profit.

2. Variance

Variance is uncertainty about whether actual outcomes will match expected outcomes. As risk increases, variance often increases faster. Why? This happens because most people will fall closer to the middle of the normal distribution (discussed in the post linked at the beginning of the paragraph), but as risk increases, the number of people who are either that risky or are willing to take that risk are fewer and fewer (few will skydive, more will bungee jump, most will fly commercial). The fewer the number of people to whom a risk applies, greater the chances of variance (because the insurer has fewer people over whom to spread the risk). In other words, the law of large numbers works less effectively with small groups. With 1 million people, outcomes average out predictably, so let’s say you get the same or very similar number of claims every year. With 50 people, you might get zero claims one year and three claims the next—massive volatility.

I just want to be sure this is clear, so here is another example. Suppose two people pool their money every month, and decide that if one of them gets sick, the sick person can to use a certain percentage of the total money pooled (collected) by both of them to pay for the treatment. It is possible that for many years no one gets sick, but it is also possible that one (50%) of the total contributors or both (100% of the total contributors) get sick one day. On the other hand, in a pooled health insurance which has many contributors, say 1 million contributors, if 1 person gets sick, they are 1/1,000,000 of the total number of contributors (or 0.0001% of the pool- much, much less than 50%, right?).

Secondly, higher-risk individuals have more uncertain outcomes—meaning it’s harder to predict exactly what will happen. A skydiver faces multiple possible outcomes with varying probabilities: they could live unharmed, break bones, die from equipment failure, die from a heart attack mid-jump, or face other unpredictable complications. Each outcome has a different probability, making the overall risk calculation more complex. In contrast, a person simply walking on the ground faces far fewer potential causes of serious injury or death, so the range of possible outcomes (variance) is much narrower. Another way of looking at this is that a 30 year old healthy non smoker likely has fewer known causes of death historically than a 70 year old smoker.

This is why insurance premiums for risky people increase disproportionately:

The insurer must hold more capital to protect against bad luck.
A 30-year-old non-smoker with a 0.05% probability of death in a year might have a premium of ₹3,000.
A 60-year-old smoker with a 1% probability of death (20x higher) doesn’t pay 20x the premium (₹60,000). They pay 50x+ the premium (₹1,50,000 or more) because:
- The absolute expected loss is 20x higher.
- The variance around that expected loss is also much higher (more uncertainty about outcomes).

Insurers also worry about correlation—the risk that many claims happen simultaneously. A life insurer pricing individual deaths assumes they’re independent. But if a pandemic strikes, many policyholders might die at once. This correlation risk requires extra capital, adding to the risk loading.²³ ²⁴

Uncertainty
When an insurer lacks information about a particular risk, they will charge more for it, because they do not know how potent the risk is, or how frequently it occurs.²⁵ ²⁶

Suppose a bank is deciding whether to lend to two borrowers, both with self-reported income of ₹10 lakhs per year.

Borrower A: A salaried employee with 10 years of bank statements, tax returns, and employer verification. The bank has rich information about their actual, consistent income.
Borrower B: A self-employed consultant with only 2 years of tax returns. Income has varied between ₹5 lakhs and ₹15 lakhs per year. The bank’s uncertainty about their true ability to repay is high.

Both might have estimated default probabilities of, say, 2% based on available data. But the bank will charge Borrower B a higher interest rate, not because their actual default probability is higher, but because the bank’s uncertainty about that probability is higher.

This principle explains all of the following:

Businesses in developed countries with strong financial reporting get cheaper capital than those in developing countries with weak disclosure.²⁷ ²⁸
Companies listed on stock exchanges get better rates than private companies (more transparency).²⁹
Established firms in regulated industries get better rates than startups in emerging sectors.³⁰

Therefore, the more standardised and measurable a risk, the cheaper it is to price and the lower the price demanded. Insurance for hazard risk (with centuries of actuarial data) is cheaper relative to coverage than climate insurance (with only decades of data).³¹ VaR models for market risk are widely accepted because market prices are observable. But there’s no standard model for reputational risk, so it’s not widely insured.³²

This creates a system where:

Predictable, measurable, insurable risks get priced accurately and competitively.
Unpredictable, hard-to-measure risks are either:
- Not insured at all (like most strategic risk).
- Priced with huge margins because of the uncertainty (like reputational risk).

This is a profound source of inefficiency in capital allocation. Risks that are easiest to measure and quantify get the cheapest pricing and most capital. Risks that are hardest to measure—sometimes the ones that matter most—get starved of capital or don’t get priced at all.

A problem that has emerged from this is that historical models can simply not price tail risks (risks at the corners of normal distributions). An area this affects is climate risk, and its pricing.³³ ³⁴ A different example many of us lived through was the 2008-09 subprime financial crisis. In 2008, banks had calculated that simultaneous mortgage defaults across their portfolio should happen once every few thousand years. Yet it happened in 2007-2008. Why?³⁵

The models went with historical data and assumed:

Housing prices wouldn’t decline nationwide (they always went up historically).³⁶
Unemployment wouldn’t spike across industries simultaneously.³⁷
Banks wouldn’t stop lending to each other.³⁷

But all three happened together, creating a “perfect storm” that the models had assigned nearly zero probability. The tail risk was real; the pricing was wrong. Financial institutions now conduct stress testing—asking, “What if housing prices fell 30%? What if unemployment doubled? What if credit markets froze?“—precisely because historical models miss these scenarios.

Thus, if a financial advisor saying “stocks haven’t crashed in 50 years, so the probability is very low” is engaging in tail risk underpricing, and yet, we do still use the method to price some kinds of risk. The next section talks about this and other methods of risk pricing.

Pricing different risks

Methodology 1: The Actuarial Approach (Hazard Risk)⁴
Insurance companies maintain vast databases of historical claims. For life insurance, they track millions of deaths by age, gender, health status, and lifestyle. For home insurance, they track fire and weather damage claims by location and property type. For auto insurance, they track accidents by driver age, vehicle type, and location. From this data, actuaries calculate frequency (how often does the event occur?) and severity (how much damage when it does?). The math relies on:

Having huge sample sizes (law of large numbers).
Accurate historical data (actuarial tables updated constantly).
Stable risk—the probability of death doesn’t change dramatically over time.

Why this works: Hazard risk has all these properties. Insurers have massive datasets, deaths are well-documented, and the probability of death doesn’t swing wildly year to year.
Why it fails: When underlying assumptions break, actuarial models fail. During COVID-19, mortality rates spiked unexpectedly, and life insurers faced massive losses. The historical tables became temporarily unreliable.

Methodology 2: The Credit Approach (Financial Risk)³⁸ ³⁹ ⁴⁰
Banks estimate the Probability of Default (PD) of a borrower. This comes from:

Credit ratings (developed from historical default rates of companies with similar characteristics).
Credit scores (statistical models predicting default probability).
Loan characteristics (collateral, loan-to-value ratio, term length).

They also estimate Loss Given Default (LGD)—how much money the bank recovers if the borrower defaults. If a borrower defaults on a ₹100 lakh loan backed by ₹60 lakhs of collateral, the LGD is 40%.

The interest rate spread (the premium above the risk-free rate) is then set approximately as:

Interest Rate = Risk-Free Rate + (PD × LGD + Risk Loading) + Liquidity Premium + Other Premiums⁴¹

Other premiums:

Risk Premium	Explanation
Credit Risk Premium⁴²	Compensation for the probability that the borrower defaults and the amount the lender loses if they do (PD × LGD)
Liquidity Premium⁴³	Compensation for holding an asset that is difficult to sell quickly (e.g., corporate loans are less liquid than government bonds)
Inflation Risk Premium⁴⁴	Compensation for uncertainty about future inflation; if inflation is higher than expected, the real value of repayments falls
Term Premium⁴⁴	Compensation for lending money for longer periods; longer loans have more uncertainty about interest rates and borrower circumstances
Currency Risk Premium⁴⁵	Compensation for the risk that exchange rates move unfavorably; relevant when borrowing in a foreign currency
Sovereign Risk Premium⁴⁶	Compensation for political and economic instability in the borrower’s country; reflects country-level risk beyond individual borrower risk
Regulatory Risk Premium⁴⁷	Compensation for the risk that changes in laws or regulations will harm the lender’s position
Prepayment Risk Premium⁴⁸	Compensation for the risk that the borrower repays early (often when interest rates fall), causing the lender to reinvest at lower rates
Concentration Risk Premium⁴⁹	Compensation for lending a large amount to a single borrower or sector, which increases the lender’s exposure
Call Risk Premium⁵⁰	Compensation for the risk that the bond issuer redeems the bond early, leaving investors with reinvestment risk
Event Risk Premium⁵¹	Compensation for the risk of specific one-off events (mergers, leveraged buyouts, natural disasters) that suddenly change creditworthiness
Convertibility Risk Premium ⁴⁸	Compensation for the risk that capital controls or currency restrictions prevent conversion to foreign currency
Transfer Risk Premium⁵²	Compensation for the risk that a government blocks or restricts cross-border payments, even if the borrower wants to pay

Different types of risk premiums that may be charged by banks on loans

Why this works: Credit markets are large and competitive. Banks have decades of default data. Collateral can be valued. PD and LGD can be estimated with reasonable accuracy.
Why it fails: When credit conditions change suddenly (as in 2008), the relationship between PD and actual defaults breaks. A borrower who seemed safe (PD 1%) might suddenly have a 20% probability of default if the economy collapses. This is called “correlation risk”—risks that seemed independent are actually correlated, and they all materialize simultaneously.

Methodology 3: Value at Risk (Market Risk)⁵³ ⁵⁴
When investment banks, traders, and portfolio managers hold stocks, bonds, or other financial assets, they face a fundamental question: “How much could we lose on a bad day?” Value at Risk (VaR) answers this question: “What’s the maximum loss I might suffer with 95% confidence over a given time period (usually one day)?”

Suppose you hold a portfolio of Indian stocks worth ₹1 crore. You want to know your VaR at 95% confidence for one day.

Here’s how you calculate it:

Gather historical data: Look at how much your portfolio’s value changed each day over the past 5 years (roughly 1,250 trading days).
Calculate daily returns: On some days, your portfolio gained 2%. On others, it lost 3%. Most days, changes were small (±0.5%).
Rank all the losses: Sort all the daily changes from worst to best.
- Worst day: -10% (₹10 lakh loss)
- 95% of days: losses were less than -7%
- Typical days: ±1%
Identify the 95th percentile: Find the loss that was exceeded on only 5% of days (the worst 5% of outcomes). Let’s say this was -7%.

Your VaR is ₹7 lakhs.

What this means in plain English:
“Based on historical patterns, we are 95% confident that on any given day, we won’t lose more than ₹7 lakhs. But on 1 out of every 20 days (5% of the time), we might lose more than this—possibly much more.”

How Banks Use VaR:

Banks use VaR for three main purposes:

Setting risk limits: “No trader can hold a position with VaR greater than ₹50 lakhs.”
Allocating capital: “This trading desk’s portfolio has VaR of ₹2 crore, so we must set aside ₹2 crore in capital to cover potential losses.”
Pricing risk: “We need to earn at least 10% return on our ₹2 crore capital (₹20 lakhs per year), so the portfolio must generate returns higher than the risk-free rate by at least this amount.”

Why this works: Market prices are observable and historical data is abundant. VaR is simple to calculate and widely understood.
Why it fails spectacularly: VaR assumes the future resembles the past. When it doesn’t—when a “tail risk” event occurs that’s much worse than historical data suggested—VaR provides false confidence. Black swan events—outliers far beyond historical norms—happen more often in real markets than VaR predicts. This is why sophisticated risk managers now conduct stress tests: “What if housing fell 30%? What if correlation across assets went to 1.0 (everything moves together)?” These scenarios often have probabilities that can’t be estimated from historical data.

Methodology 4: Reputational Risk Quantification¹⁶ ¹⁷ ⁵⁵ ⁵⁶
Reputational risk is one of the hardest to price because reputation damage is:

Invisible until it happens
Subjective (how much is brand trust worth?)
Interconnected (affects customers, employees, investors, suppliers simultaneously)

Yet we know reputation has enormous value because research shows that roughly 26% of a company’s market value is directly attributable to its reputation.⁵⁷ So how do we price something intangible?

The Stock Price Method: When a company announces a major negative event (fraud, scandal, product failure), the stock price falls. But often, the stock price falls more than the announced financial loss. The difference is the market’s estimate of reputational damage.

Reputation Risk Quantification Models that try to systematically price reputation risk:

Identify reputation threats: Product recalls, scandals, poor earnings, social media backlash
Estimate frequency: How often does each type of event happen in this industry?
Model financial impact: Customer loss, revenue decline, employee turnover costs
Quantify total effect: Project impact on profits over 3-5 years

However, unlike life insurance (centuries of death data) or credit risk (decades of default data), reputation damage is:

Context-dependent: The same scandal might destroy one company but barely hurt another
Hard to predict: Social media can amplify or diminish reputational harm unpredictably
Self-reinforcing: Initial reputation damage can trigger customer flight, making things worse

This is why most companies don’t buy reputation risk insurance:

Insurers can’t agree on how to price it
Coverage is extremely expensive when available
Policies have many exclusions

So reputation risk remains largely self-insured—companies must manage it through strong governance, ethical culture, and crisis response planning, but they can’t transfer it to an insurer the way they can with fire risk or credit risk.

Methodology 5: The Security Audit Approach (Cyber Risk)⁵⁸ ⁵⁹ ⁶⁰
Historically treated as operational risk, cyber risk is now often priced separately. Unlike traditional hazard risk (based on decades of historical data), cyber insurance prices risk based on current security posture. Insurers conduct security audits assessing:

Business context: Industry (finance = higher risk), revenue size, number of employees, data sensitivity.
Technical controls: Firewalls, intrusion detection, endpoint protection, multi-factor authentication.
Process maturity: Patch management, vulnerability assessment, incident response plans.
Compliance: Certifications like ISO 27001 or NIST Cybersecurity Framework.
Training: Employee security awareness, phishing simulations.

Unlike traditional insurance (where you pay a fixed premium regardless of your actions), cyber insurance creates incentive alignment. Companies are rewarded for improving security. This is why cyber premiums vary so widely—from ₹80,000 to ₹3,00,000 for similar coverage, depending on security posture, so if the insured company becomes better prepared, its insurance premium can go down. The industry is evolving rapidly. As cyber threats evolve, pricing models are updated. Premiums spiked 80% in 2021-2022 (due to ransomware explosion) but have stabilized as companies improved controls and insurers refined models.

Methodology 6: Scenario Analysis (Strategic Risk)⁶¹ ⁶²
Strategic risk is fundamentally different because:

Can’t be insured—no insurer will cover “your strategy might be wrong”
No historical data exists for “probability our specific strategy fails”
Each decision is unique—your market entry isn’t comparable to another company’s
Outcomes depend on management judgment, execution capability, and competitor actions

Instead of formulas, companies use scenario analysis—imagining multiple possible futures and testing strategy robustness across them.

The Process:

Step 1: Define the Current Strategy: Example: An e-commerce company currently selling books and electronics is considering expanding into furniture delivery.

Step 2: Imagine Alternative Futures (Scenarios): Scenario planning typically develops 3-5 scenarios representing different ways the future might unfold. Assign probabilities to different scenarios and how much loss your company would bear, for example, a company may have a scenario that

Step 3: Calculate Expected Value (With Huge Caveats).

Example:

Scenario A: “Competitive Onslaught”

3 major competitors enter within 18 months
Price war erupts, margins drop 20%
Company loses ₹50 crore over 3 years
Probability: 60%

Scenario B: “Logistics Nightmare”

Delivery complexity exceeds expectations
High return rates (15%)
Company loses ₹30 crore
Probability: 40%

Scenario C: “Weak Demand”

Market adoption slower than projected
Company loses ₹80 crore
Probability: 30%

Scenario D: “Success”

Market responds positively
Company gains ₹150 crore
Probability: 20%

Note: Probabilities don’t need to sum to 100% because scenarios aren’t mutually exclusive—multiple scenarios could occur simultaneously (e.g., you could face both competitive pressure AND logistics challenges).

Expected Outcome = (Probability of Scenario × Impact)

= (0.6 × -₹50cr) + (0.4 × -₹30cr) + (0.3 × -₹80cr) + (0.2 × +₹150cr)
= -₹30cr – ₹12cr – ₹24cr + ₹30cr
= -₹36 crore expected loss

Why this works: Strategic risk isn’t insurable. There’s no historical data on “furniture market entry outcomes” for this specific company. Each strategic decision is somewhat unique. Organizations can’t buy insurance for strategic risk; they must manage it through planning, contingency analysis, and management judgment.
Why it fails: Scenarios often miss the most important surprises. In 2020, COVID-19 wasn’t in most companies’ scenarios. When reality diverges from scenarios, organizations must adapt on the fly. This is why CEOs, not risk managers, bear ultimate responsibility for strategic risk.

Sources

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