Newsletter No 3 September 2010

Assessing global costs for climate change adaptation


Dr. Philip Ward

flood_space_9_10Even if global emissions of anthropogenic greenhouse gases were stabilised today, human-induced climate change will continue for many centuries. The most recent estimates of the Intergovernmental Panel on Climate Change (IPCC), as stated in the Fourth Assessment Report (AR4), project a likely range of temperature increase of between 1.1 and 6.4°C by the end of the 21st century. Therefore, in addition to mitigation, it is essential to develop adequate adaptation measures to moderate the impacts and realise the opportunities associated with climate change. However, on a global scale, sectoral and cross-sectoral studies of the economic aspects of climate change and adaptation are very limited, and those that do exist tend to be skewed towards certain sectors, and give a large range of estimates (from $4 to $109 billion p.a.). Hence, the World Bank recently carried out the Economics of Climate Change Study (EACC) - funded by the governments of the Netherlands, United Kingdom, and Switzerland - one of the aims of which was to estimate the costs of adapting to climate change in developing countries. The study concludes that the annual costs between 2010 and 2050 of adapting to an approximately 2°C warmer world by 2050 is in the range of $75 billion to $100 billion.The final report was launched on 3rd August 2010 in Bonn.

As part of this project, IVM researchers assessed the global costs of climate change adaptation in developing countries in the industrial and municipal water supply sector and for riverine flood protection, using the results of two global climate models for the A2 emissions scenario of the IPCC. The best estimates of the adaptation costs in developing countries to 2050 are: $9.9–$10.9 billion p.a in the industrial and municipal water supply sector; and $3.5–$5.9 billion p.a. for riverine flood protection. The combined annual costs of adaptation in developing countries for water supply and riverine flood protection are therefore between $13.3–$16.9 billion p.a. These costs are much higher than those estimated for high-income countries ($5.2–$7.0 billion p.a.). While there are large geographical differences between the cost estimates derived using the two different climate models, both suggest that the overall costs will be greatest in the Sub-Saharan Africa region. The global cost estimates are small in relation to total world Gross Domestic Product (GPD), at about 0.03–0.04 percent.
As part of the research, baseline investments costs were also estimated, i.e. development investments that would have to be made by 2050 without considering the impacts of climate change. The estimated annual baseline costs are significantly higher than climate change adaptation costs (approximately $115 billion p.a.), and are substantially greater for developing countries than for non-developing countries.
These results supports the notion that the negative impacts of climate change in the water resources sector will generally be greater in developing countries than in high-income countries, and that the costs of adaptation will be greatest in Sub-Saharan Africa. They also underline the importance of mainstreaming climate change adaptation into general development practices, since the adaptation costs in the climate change scenarios are small compared to the baseline costs. Moreover, the costs are relatively small in relation to world GDP, even those associated with adapting to the baseline level.

Contact information: Dr. Philip Ward 

References:

The full water sector report of IVM can be found on: http://www.ivm.vu.nl/en/publications/Working-papers/2010/index.asp
Philip J. Ward, Kenneth M. Strzepek,  Pieter Pauw,  Luke M. Brander, Jeroen C.J.H. Aerts, Costs of adaptation related to industrial and municipal water supply and riverine flood protection. The Economics of Adaptation to Climate Change Aggregate track, IVM Institute for Environmental Studies, 2010.

The full report of the EACC study can be found on: http://beta.worldbank.org/content/economics-adaptation-climate-change-study-homepage