The IHDS Forum is a monthly update of socio-economic developments in India by the IHDS research community, based on the India Human Development Survey, jointly conducted by NCAER and the University of Maryland. While two earlier rounds of the survey were completed in 2004-05 and 2011-12, respectively. Fieldwork for the third round was undertaken in 2022-24 and the data is currently being cleaned and processed.
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New research shows forests, wetlands and blue-carbon ecosystems are absorbing far less CO₂ under heat stress, threatening India’s net-zero pathway
When policymakers tally national climate progress, they often balance a country’s emissions with the carbon captured by forests, wetlands, and coasts — nature’s “negative emissions”. The logic appears straightforward: Plant more trees, lock away more carbon, and buy time for the clean-energy transition. But this ledger is now showing red flags. New scientific evidence reveals a critical divergence. A global multi-method study published in Nature Ecology & Evolution finds that terrestrial carbon sequestration weakens markedly during intense warm extremes because plants’ photosynthesis declines faster than respiration. The mechanics may sound technical, but the implication is simple: Heat waves, prolonged high vapour-pressure deficits and drying soils reduce the carbon plants can fix, sometimes abruptly.
This vulnerability was foreshadowed in 2023, when fast-turnaround carbon-budget analyses showed that land and ocean sinks absorbed far less CO₂ than expected — a temporary collapse of the natural buffer that had stabilised atmospheric CO₂ growth for decades. This discovery altered the arithmetic of every climate plan. What previously looked like a margin for slower decarbonisation suddenly narrowed.
India’s story adds another layer. The Global Forest Resources Assessment 2025 (GFRA, 2025) by the FAO ranks India fifth among global carbon sinks, noting that between 2021 and 2025, India’s forests and tree cover absorbed about 150 million tonnes (Mt) of CO₂ per year. These figures reflect successful afforestation programmes and sustained attention to tree cover. But while satellites show India is greening, whether the functional capacity of this expanded cover to absorb carbon is sustainable remains uncertain. We may be adding trees on the map while losing efficiency under the canopy. For a country targeting Net Zero by 2070, this is not a footnote. Treating natural sinks as a stable backstop risks mispricing mitigation, misallocating scarce funds, and under-protecting livelihoods dependent on resilient ecosystems.
Recent research by IIT Kharagpur supports this concern. It finds that forests’ photosynthetic efficiency — the physiological ability of plants to convert sunlight and CO₂ into biomass — has declined in key regions. Heat, drought stress, shifting precipitation patterns and forest fragmentation mean that a hectare of forest today often sequesters less carbon than it did two decades ago. National carbon accounting is measuring area, not output, and risks conflating the two.
Another overlooked asset is wetlands and coastal “blue carbon”. Recent fieldwork in Assam and studies from India’s mangrove belts and seagrass meadows document large, concentrated soil carbon stocks. Some wetlands store tens of thousands of kilograms of carbon per hectare in their soils. Yet, these ecosystems are routinely excluded from mainstream climate accounting, under-monitored and under-financed. Institutional gaps further limit India’s ability to translate this potential into reliable mitigation credits.
Policy blind-spots and net-zero risks
What this means for policy, economics and modelling is both complex and critical.
First, India’s NDCs and domestic targets cannot assume stable sink performance. Ecological and macroeconomic models that treat nature-based removal as a fixed parameter will overstate mitigation capacity and understate the cost of emissions reduction. If a 10–20 per cent decline in sink efficiency occurs regionally — a realistic scenario under heat and drought stress — national emission pathways and carbon-pricing designs shift significantly. Policymakers must stress-test plans against ‘sink weakening’ and consider reversibility risks such as fire, pests and drought. For Computable General Equilibrium (CGE) modellers and Ecologically-Extended Input-Output practitioners, incorporating this stress-test is now an essential modelling task.
Second, the right policy mix is not “more planting” alone. India needs a three-part ARM framework:
India should also operationalise instruments like payments for ecosystem services and ensure climate-proofed restoration funding reflects the risk of reversal rather than rewarding one-off plantation counts.
Third, India must elevate wetlands and blue carbon in national climate policy. Carbon stored in mangroves, seagrasses and wetland soils is real and often durable, yet markets and policy rarely reflect their value. Strengthening institutional capacity for inventory, community stewardship and verified blue-carbon projects would be a high-value, low-regret investment for coastal and riparian communities.
Fourth, as natural sinks show signs of weakening, India should diversify its mitigation portfolio. Feasible technological removals — such as direct air capture pilots and enhanced weathering R&D— should be accelerated, while nature-based solutions remain central for co-benefits including biodiversity, water regulation and livelihoods. Economics must guide the mix: compare marginal abatement costs under varied risk scenarios and factor in social value, not simply the tonnage of carbon removed.
Finally, India’s economic policy must treat forests and coasts as living infrastructure requiring recurrent budgets. Trees are not a one-time capital expense; they need corridors, fire management, water security and community incentives. This means shifting some climate finance from headline plantation targets towards long-term maintenance, monitoring and adaptive management.
A changing global context
This concern is especially relevant in the aftermath of the COP deliberations in Brazil, where countries updated their net-zero pathways. While negotiations rightly emphasise emissions cuts and climate finance, they still largely treat natural sinks as stable assets. The science shows this assumption requires urgent re-examination if global mitigation plans are to remain credible. For India’s climate-policy community and economists who build models to inform decision-makers, key steps include embedding sink-degradation risk into scenario design, expanding land-use modules to account for non-linear sink behaviour, and conducting sensitivity analyses to determine how much additional mitigation or investment is necessary if nature’s removal capacity declines.
Way forward
The story here is not doom but clarity. Nature has bought us time, but it was never an unlimited credit line. India has comparative advantages — large land areas, strong community institutions, expanding blue-carbon opportunities. If economic planners and modellers treat nature as potent but fragile, India can craft resilient pathways that reduce emissions without over-betting on a single, unstable form of removal. The alternative is to discover too late that the balance sheet does not add up — and by then, the costs will be far higher.
The writer is fellow, CGE Modelling and Policy Analysis, NCAER, New Delhi. Views are personal.
India needs a nationwide, real-time groundwater monitoring system with open access to data so communities know what they are drinking and irrigating with
On a sweltering afternoon in Punjab, a farmer lowers his bucket into the well that has sustained his family for generations. The water looks clear, but tests reveal a different story: uranium levels far above the permissible limit. In nearby villages, children suffer skeletal deformities from fluoride-laced groundwater, while families spend what little they earn on hospital visits. What is happening here is not just a public health tragedy; it is an economic calamity unfolding silently beneath our feet.
The latest Annual Groundwater Quality Report (2024) paints a grim picture. Nearly one-fifth of samples from over 440 districts exceed safe contamination limits. In Punjab, almost a third show uranium above permissible levels, with fluoride, nitrate, and arsenic also widespread. India’s dependence on groundwater, with 600 million people relying on it for drinking and most irrigation, makes this a national crisis.
The World Bank estimates that environmental degradation, largely from polluted water and soil, drains India of nearly $80 billion each year, around 6% of GDP. Health costs from unsafe water run into billions annually, while waterborne diseases result in millions of lost working days.
People at risk
The link between contamination and human capital loss is especially alarming. In Gujarat’s Mehsana district, fluorosis has disabled workers, reduced their earning capacity, and plunged households into cycles of wage loss and medical bills. Across the country, diarrhoeal illnesses still kill hundreds of thousands of children under five each year. Beyond these health tragedies, the consequences represent a steady erosion of India’s most valuable resource: its people.
Agriculture, which employs over 40% of Indians, is also under siege. Soil degradation affects nearly a third of the country’s land, with polluted irrigation water accelerating the decline. Heavy metals and residues in groundwater reduce yields and accumulate in crops. Research shows that farms near polluted stretches of water experience a drop in productivity and income.
The risks extend beyond village boundaries. Contamination undermines not only the quantity but also the quality of crops. International buyers are increasingly demanding traceability and safety standards, and instances of export rejections over contamination concerns highlight the dangers of complacency. If such problems spread to staples such as rice, vegetables, or fruits, India’s $50-billion agricultural export sector could face serious losses.
Groundwater contamination also deepens inequality. Wealthier households can buy bottled water or invest in filtration systems, but poorer families cannot. Out-of-pocket expenses already account for most health spending, leaving households with little buffer. In rural areas, dependence on contaminated aquifers traps communities in cycles of ill health, debt, and declining productivity. The damage extends to the next generation, as children growing up with cognitive impairments from arsenic or fluoride exposure face limited prospects for education and employment.
Reckless over-extraction, already more than one and a half times the sustainable limit in Punjab, forces farmers to drill deeper, worsening water quality and increasing fertilizer use, creating a vicious cycle that undermines the long-term viability of agriculture.
Way forward
Yet solutions exist if policymakers act with urgency. First, India needs a nationwide, real-time groundwater monitoring system with open access to data so communities know what they are drinking and irrigating with. Second, enforcement against industrial effluents and untreated sewage must be strengthened; the current weak framework effectively allows industries to pass the costs onto society. Third, agricultural policy must shift away from input subsidies that encourage chemical overuse, towards incentives for crop diversification, organic practices, and micro-irrigation. Fourth, decentralised treatment systems, from community water filters to low-cost purification units, can provide immediate relief to affected villages.
In Nalgonda district, Telangana, community water purification units have provided safe drinking water to villages long plagued by fluorosis, leading to a measurable decline in new cases among children. In Punjab and Haryana, pilot programmes promoting diversification away from water-intensive paddy to pulses and maize have reduced pressure on aquifers, lowered chemical use, and maintained farmer incomes. These successes show that locally tailored interventions can deliver results while broader reforms are implemented.
Finally, stricter export quality checks and farmer training are needed to safeguard India’s reputation in global markets.
Groundwater contamination is not a marginal issue but a hidden economic drain. Unlike water scarcity, which can sometimes be reversed, contamination is often permanent. India faces a choice: continue treating contamination as invisible, allowing short-term gains to impose massive long-term losses, or recognise it as one of the country’s most urgent challenges. To sustain growth and secure its future, India must act decisively.
The poison beneath our feet has been ignored too long. Delay will only raise the price. Half-measures are no longer enough; only bold, coordinated action can prevent this crisis from becoming a national catastrophe.
Dr. Sreoshi Banerjee is Postdoctoral Researcher at the Potsdam Institute for Climate Impact Research (PIK) and Mr. Raktimava Bose is consultant at National Council of Applied Economic Research (NCAER), respectively. Views are personal.
Since the 1997 Asian crisis, financial stability – macro-financial stability more broadly – has been the primary objective of global finance, shaping the work of central banks, finance ministries, the International Monetary Fund and the Financial Stability Board. Today, ‘resilience’ has taken its place.
Authorities no longer promise to prevent crises; they promise to survive them. This linguistic shift reflects a profound institutional change: ‘resilience’ has become the system’s governing principle without acquiring operational meaning.
The usage pattern is unmistakable. The Bank of England’s Financial Stability Report mentioned ‘resilience’ eight times in 2015; by November 2024, the term had become the dominant theme in the text. The IMF’s October 2024 Global Financial Stability report centres on ‘enhancing resilience’. The FSB frames monitoring around ‘the resilience of non-bank financial intermediation’, while the Bank for International Settlements Quarterly Reviews assess ‘market resilience’.
While stability prevails in institutional titles, resilience prevails in policy content. This shift influences the oversight and allocation of approximately $470tn in global financial assets. This has structural implications and affects public accountability.
Origins
Resilience entered economics from ecology. In 1973, C.S. Holling distinguished between engineering resilience – returning to equilibrium – and ecological resilience – adapting to new states. Finance imported the term without clarifying which interpretation applied. The ambiguity permits policy-makers to invoke whichever meaning suits their immediate needs.
As resilience migrated into policy, authorities shifted from promising prevention to pledging endurance (Figure 1).
Figure 1. From stability to resilience
Financial policy paradigms, 2008-2025
| Period | Dominant term | Policy focus | Underlying assumption | Trade-off | Metrics |
| 2008–2014 | Stability/soundness | Crisis prevention; capital rebuilding | Equilibrium restoration | Short-term calm masks fragility | Capital ratios, leverage limits |
| 2015–2020 | Sustainability | Long-term solvency; fiscal prudence | Intertemporal balance | Growth constrained for durability | Debt/gross domestic product, fiscal space |
| 2021–2025 | Resilience | Shock absorption; uncertainty management | Complex adaptive systems | Vagueness reduces accountability | None standardised |
Source: Analysis of central bank annual reports, financial stability reports and IMF, BIS and FSB flagships
The conceptual problem
Stability was measured through capital ratios, liquidity coverage and default probabilities. Resilience has no agreed equivalent.
Three levels of analysis rarely align. Balance-sheet resilience refers to buffers that maintain solvency – measurable but procyclical when firms retrench simultaneously. System-level resilience depends on network structures and common exposures that individual metrics cannot capture. Macroeconomic resilience refers to the economy’s ability to absorb and recover from shocks – often in contrast to micro-prudential tightening. When these three levels diverge, policy signals cancel out.
The result is definitional chaos. One assessment praises ‘macroeconomic resilience,’ while another warns of ‘financial vulnerabilities.’ A third evaluates ‘operational resilience’, a fourth assigns ‘sovereign resilience’ scores: four assessments, four methodologies, no reconciliation.
The theoretical contradiction runs deeper. Holling’s framework recognised that resilience at one level requires disruption at another – forest health needs periodic fires. Finance demands resilience at all levels simultaneously. When institutions collectively raise buffers, credit intermediation contracts are established. Individual prudence generates systemic fragility. Japan’s experience – decades of capital strengthening alongside credit stagnation – exemplifies this paradox.
Measurement failures
Silicon Valley Bank exposed the measurement gap. Prevailing frameworks modelled resilience to credit losses, not digital-speed deposit runs. Although the Federal Reserve described the system as ‘sound and resilient’, US authorities intervened on systemic risk grounds, explicitly invoking the need to protect banking system resilience – defined by capital and liquidity buffers, but tested by velocity and contagion.
The UK’s 2022 liability-driven investment crisis provides another case. Pension funds deemed resilient required £65bn in emergency Bank of England intervention to prevent gilt market collapse.
Shadow banking compounds measurement problems. Non-bank financial intermediation exceeds $70tn. Banks’ NBFI exposures represent significant regulatory capital shares, yet resilience frameworks remain bank-centric. We measure where we regulate, not where risks concentrate.
Other disciplines define resilience operationally. Cybersecurity specifies recovery time objectives against defined threats. Climate adaptation identifies tolerance thresholds for specific hazards. Finance demands resilience to all shocks at all levels – an impossible standard.
Systemic consequences
Treating resilience as a goal rather than a condition creates impossible economics. Every buffer carries a cost. When capital conservation restricts credit extension and universal guarantees weaken market discipline, what builds balance-sheet resilience undermines macroeconomic resilience.
The pandemic exposed these contradictions. Governments and central banks deployed $10tn to support markets. Authorities presented this as ‘proof of resilience’. Yet requiring unprecedented intervention reveals fragility, not strength. Taxpayers absorbed losses while institutions claimed resilience.
Emerging markets face material consequences. Credit ratings based on divergent ‘resilience assessments’ determine borrowing costs. Citizens encounter promises of ‘economic resilience’ without specification – employment protection, price stability or crisis management capacity?
Democratic oversight requires measurable objectives. When authorities redefine success retrospectively, accountability disappears.
Operational requirements
The problem is conflation. Balance sheets require soundness – micro-prudential and static. Systems require stability – macroprudential and dynamic. Economies require adaptation – structural and evolutionary. Merging these concepts creates confusion.
Progress requires three changes. First, establish definitions with corresponding metrics for each level. Second, acknowledge trade-offs: individual soundness may compromise systemic stability; systemic stability may impede economic adaptation. Third, recognise that adaptation requires accepting controlled failures, not preventing all disruptions.
Genuine resilience measurement would specify recovery timeframes (hours or days, not indefinite), functional degradation tolerances (acceptable service reductions), scenario specifications (defined stresses, not general disruption) and finally, explicit trade-offs (growth sacrificed for stability).
Systemic risk, not semantic
Authorities once promised stability through measurable standards. Today, they promise resilience without operational definitions. With $470tn in global financial assets governed by undefined principles, the risk is not semantic but systemic.
The question facing policy-makers is whether analytical discipline can separate what convenience has conflated. Until resilience gains definition, measurement and boundaries, it remains a vocabulary that masks uncertainty while risks accumulate.
Udaibir Das is a Visiting Professor at the National Council of Applied Economic Research, Senior Non-Resident Adviser at the Bank of England, Senior Adviser of the International Forum for Sovereign Wealth Funds, and Distinguished Fellow at the Observer Research Foundation America. Views are personal.
India must integrate coastal ecosystems into its climate strategy. Its maritime geography is not merely a conduit for commerce; it is an ecological asset of strategic significance.
What if the solution to India’s net-zero ambition isn’t just on land but beneath the waves? The ‘blue economy’ is India’s overlooked trillion-dollar lever where environmental sustainability, economic growth, and strategic maritime power intersect. With a coastline stretching over 11,098.81 km and an Exclusive Economic Zone of 2.3 million sq km, India holds vast, untapped marine wealth. Yet, the blue economy continues to remain peripheral to economic planning, climate policy, and industrial strategy.
The Union budget 2024-25 marked a welcome departure with the launch of Blue Economy 2.0 aimed at building climate-resilient coastal livelihoods through aquaculture, mariculture, and sustainable marine tourism. However, one vital component within this ecosystem continues to receive inadequate attention: blue carbon. Representing the carbon sequestered by marine-vegetated ecosystems such as mangroves, tidal marshes, and seagrasses, blue carbon constitutes a high-impact, nature-based solution to climate change.
India’s mangrove cover, at 4,991.68 sq km, plays a pivotal role in carbon sequestration, biodiversity protection, and coastal buffering. Despite their capacity to store up to four times more carbon per hectare than terrestrial tropical forests, blue carbon ecosystems are neither fully integrated into India’s climate accounting under the Paris Agreement nor into its carbon market frameworks. Worse, these ecosystems are facing threats due to extreme pollution, rising sea levels, coastal erosion, and extreme weather events. An estimated 75-199 million tonnes of plastic waste now pollute the oceans, with over 33 billion pounds added annually, alongside chemical runoff and untreated sewage. This pollution severely degrades marine biodiversity and diminishes the ocean’s capacity to sequester carbon. Notably, the die-off of microscopic algae like phytoplankton, responsible for absorbing 30-40% of global CO₂ emissions, undermines one of the most effective natural carbon sinks.
Recent fiscal interventions signal intent. The Union budget 2025-26 earmarked Rs 25,000 crore for a Maritime Development Fund, targeting investments in shipbuilding, port electrification, logistics, and marine infrastructure. This includes Rs 6,100 crore to modernise public shipyards and Rs 2,850 crore to skill India’s youth in maritime technologies, laying the groundwork for a green maritime industrial base capable of producing low-emission vessels and sustainable port ecosystems. Concurrently, the fisheries sector has received a substantial boost. The Pradhan Mantri Matsya Sampada Yojana saw a 64% rise in allocation. These funds will scale up infrastructure for fish harbours, cold chains, and processing units, aiming to reduce post-harvest losses, raise export readiness, and transition towards carbon-neutral fisheries.
What remains missing is a direct fiscal and policy impetus for restoring and conserving blue carbon ecosystems. Hearteningly, Tamil Nadu has articulated a pathway for coastal prosperity, focusing on sustainable shipbuilding, seafood processing, eco-tourism, and mangrove restoration.
To unlock the full potential of blue carbon, India must integrate coastal ecosystems into its formal climate strategy. This includes recognising their carbon sequestration capacity in updated Nationally Determined Contributions, incorporating them into voluntary carbon markets and climate finance mechanisms, and prioritising their restoration. Dedicated funding for blue carbon conservation, improved scientific monitoring, and state-level incentives for coastal ecosystem management are essential.
India’s maritime geography is not merely a conduit for commerce; it is an ecological and economic asset of strategic significance.
Sanjib Pohit is a Professor and Sovini Mondal is a Research Associate at the National Council of Applied Economic Research. Views are personal.