Drought and growth 

Barely a month into 2018, the Government is preparing to allocate Rs. 5.5 billion for drought relief after the Northeast Monsoon failed to bring sufficient rain. Though it is still too early to predict this year’s weather fortunes, prudence dictates that preparations need to be made to minimise a potential economic fallout. 

At the start of 2017, growth was projected around 4.5% but in its last updated the Central Bank acknowledged growth would be slightly below 4%, largely due to weather impact that resulted in agriculture recording negative growth and the spillover being felt in the goods processing industry. Overall it was estimated that about 15% of Sri Lanka’s GDP was hit by the floods and severe droughts. 

This year the Central Bank has projected about 5% to 5.5% growth and it is critical that agriculture returns to the growth path for this to be achieved. Global rating agencies and local institutions including the Central Bank have warned that drought-related costs would add to Sri Lanka’s fiscal challenge including high debt repayment. All this means the Government must find sustainable policies to deal with the economic fallout.

Ratings agencies believe the lower agricultural output would weigh heavily on GDP growth, reducing exports, household income and consumption in affected areas. 

The effects of droughts are certainly not new to Sri Lanka, having been through several in recent years. However, this has not changed the Government’s traditionally reactive efforts to offset the negative effects of water scarcity. Despite the frequency of these droughts, no concerted effort has yet been made to formulate and adopt national drought policies that are timely, well-coordinated and sustainable.

It is imperative that an effective monitoring and early warning system delivers timely information to decision-makers. Effective impact assessment procedures, proactive risk management measures, preparedness plans aimed at increasing the coping capacity and effective emergency response programs directed at reducing the impact of drought are all needed in order to ensure that Sri Lanka doesn’t keep making the same mistakes each time a crisis situation arises.

Change has been extremely slow, largely because knowledge of climate change and its impact has been limited amongst the villages that are worst-affected. This has meant that despite the Government’s attempts to change the start of the major paddy seasons and bring them forward by several weeks, the reception at the grassroots level has been sporadic. Even with drought-related taskforces being among the best-funded public bodies, it is difficult to feel a noticeable change in how we have handled these situations. Given the nature of global warming, it is evident that drought and flood-related measures will have to be made a permanent part of policymaking with a strong link to environmental conservation, research and technology.

The Government will also have to create functional relationships with the private sector, communities and research institutions. The private sector can be utilised to help provide farmers with crop insurance, for instance. Furthermore, emphasis must be put on research and improving agricultural technology to counter the ill-effects of droughts; technology such as drought-resistant crops.

The Government must adopt policies that engender cooperation and coordination at all levels of Government in order to increase its capacity to cope with extended periods of water scarcity in the event of a drought. Creating drought-resilient societies should be the main objective. 

Given the already precarious position Sri Lanka finds itself in, it can ill afford to be reactive in these situations any longer. The Government must focus its efforts on empowerment, prevention and awareness with a strong system governed by well-thought-out policy in place for crisis situations, in order to minimise the damage.  Similarly, those affected need to stop accepting mere handouts from the Government once tragedy strikes and demand a more permanent solution.