The costs of adaptation to climate change in developing countries will be in the order of US$75-100 billion per year for the period 2010 to 2050 according to preliminary findings in a new global study from The World Bank.
The Economics of Adaptation to Climate Change (EACC) study, funded by the governments of the Netherlands, Switzerland, and the United Kingdom, is said to be the most in-depth analysis of the economics of adaptation to climate change to date and uses a new methodology for assessing these costs.
The new approach involves comparing a future world without climate change with a future world with climate change. The difference between these two worlds entails a series of actions to adapt to the new world conditions. The costs of these additional actions are the costs of adapting to climate change.
In the draft consultation document released Wednesday, a key part of the overall analysis involved estimating adaptation costs for major economic sectors under two alternative future climate scenarios: “wet” and a “dry”. Under the relatively dryer scenario the adaptation cost is estimated at US$75 billion per year, while under the scenario that assumes a future wetter climate it is US$100 billion.
“Roughly the costs of adapting to a 2 degrees Celsius warmer world are of the same order of magnitude as current Overseas Development Assistance” said Katherine Sierra, World Bank Vice President for Sustainable Development. “Faced with the prospect of huge additional infrastructure costs, as well as drought, disease and dramatic reductions in agricultural productivity, developing countries need to be prepared for the potential consequences of unchecked climate change. In this respect, access to necessary financing will be critical.”
The report finds that the highest costs will be borne by the East Asia
and Pacific Region, followed closely by Latin America and the
Caribbean, and Sub-Saharan Africa. The drier scenario requires lower
adaptation costs in total in all regions, except South Asia.
“The EACC study provides a range of estimates for a world in which decision makers have perfect foresight,” says Sergio Margulis. “In the real world where decision makers hedge against a range of outcomes, the actual expenditures are potentially higher than this.”
The report stresses that development strategies must maximize flexibility and incorporate knowledge about climate change as it is gained. It also finds that adaptation costs decline as a percentage of GDP over time, suggesting that countries become less vulnerable to climate change as their economies grow.
“Economic growth is the most powerful form of adaptation,” said Warren Evans, Director of the World Bank’s Environment Department. “However, it cannot be ‘business as usual’. Adaptation minimizes the impacts of climate change, but it does not address its causes. There is no substitute for mitigation to reduce catastrophic risks,” he said.
In the study, adaptation costs for all developing countries are estimated for the major economic sectors using country-level data sets that have global coverage, including partial assessment of costs of adaptation for ecosystem services. Cost implications of changes in the frequency of extreme weather events are also considered.
The report can be downloaded at the link below.
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