Pay now, or pay more later… global climate adaptation price tag climbs, says new report


The financial costs of supporting the global population in a climate-disrupted world were significantly underestimated in a series of 2007 background papers for the United Nations Framework Convention on Climate Change (UNFCCC) and other key reports, according to an independent critique headed by Martin Parry, the eminent scientist who headed the 2007 IPCC assessment report on climate change impacts, vulnerability, and adaptation.  The amount of money developed countries are willing to put on the table to help less developed, and typically more vulnerable, nations cope with and attempt to “adapt” to climate change impacts is one of the main factors that could make or break the upcoming international climate negotiations in Copenhagen.  It’s time to assess the true costs and to be realistic about the consequences of inaction. 

post by Anne Polansky

This week, the first of three new reports on the expected costs of “adaptation” was released:  Assessing the costs of adaptation to climate change: A review of the UNFCCC and other recent estimates (IIED page, and full report in 2 MB pdf).  The International Institute for Education and Development (IIED), together with the Grantham Institute for Climate Change at the Imperial College of London, assembled a team of authors led by Martin Parry to examine a set of background papers and other key reports used to estimate the costs of adaptation for the UNFCCC.  We summarize the findings here, and underscore the report’s suggestions for further research.  The World Bank and McKinsey & Company are expected to release similar reports sometime between now and the climate treaty negotiations in Copenhagen in December.  (Also see yesterday’s CSW post.) 


The word “adaptation” is used widely in the context of climate change to mean “adjustment in natural or human systems in response to actual or expected climatic stimuli or their effects, which moderates harm or exploits beneficial opportunities,” according to the UNFCCC.  But, just what adaptation means in practical terms and how much it will cost, and who will bear those costs, is still quite up in the air.  In fact, whether or not certain human populations can even truly “adapt” to certain climate conditions is a legitimate question; some impacts may be too prohibitively expensive to adjust or adapt to, and for some potential impacts the means for adaptation simply haven’t been invented yet.  “Adaptation” is presented as one of three elements:  the other two are the costs of mitigation (reducing GHG emissions and the extent of climate change), and the costs of the residual impacts that can neither be mitigated nor adapted to. 

Several articles in the UNFCCC (the Convention) spell out terms for countries need to adapt to climate change; for example, Article 4.4 stipulates that developed countries are required to assist developing countries in meeting costs of adaptation to the adverse effects of climate change.  Knowing these costs will be important going forward. 

The report is also timely, as heads of state and ministers from over 150 countries are attending the Third World Climate Conference hosted by the World Meteorological Organization opening in Geneva today.  WMO Secretary-General Michel Jarraud says countries must have the tools to adapt to a changing climate; the attendees will draft an action plan to better manage climate-related risks that will include means for improving access to user-friendly climate predictions and information. (See VOA article.)

The purpose of the IEED/Grantham report was not to develop a full set of new costs estimates for all of the various climate change impacts, but rather to point out the uncertainties in the set of reports now being used by the UNFCCC to help set policy under the convention.  The reports scrutinized include:

1.  A set of background papers commissioned by the UNFCCC, looking at climate impacts and adaptation strategies for the year 2030 (see Section 1, page 18)

2.  Stern, N. (2006).  Stern Review: Economics of Climate Change. Cambridge University Press, Cambridge.

3.  World Bank (2006). Investment Framework for Clean Energy and Development. World Bank, Washington DC.

4.  Oxfam (2007). Adapting to Climate Change. What is Needed in Poor Countries and Who Should Pay? Oxfam Briefing Paper 104.
5.  UNDP (2007). Human Development Report 2007/08. Palgrave McMillan, New York.

The set of background papers for the UNFCCC get the highest marks for accuracy—the Secretariat of the Framework Convention commissioned six sector studies to better understand adaptation costs both globally and in developing countries. The estimates were made for the year 2030, for six sectors:  1) Agriculture, forestry and fisheries, 2)  Water supply, 3)  Human health, 4)  Coastal zones, 5) Infrastructure, and 6) Ecosystems.  UNFCCC (2007) concluded that total adaptation costs by 2030 could amount to $49–171 B annually, of which $27–66 billion would accrue in developing countries.  The largest cost item is new infrastructure investment, accounting for three-quarters of total costs if upper bound estimates are used. 

According to IIED/Grantham, despite the fact that the methodologies used in the papers (2 through 5) above were the same, adopted from the World Bank, the global adaptation cost estimates for adapting to median climate change over the next 20 years range from $4 billion a year to well over $100 billion.  This wide range reflects the poor state of knowledge, too few studies, and the sheer difficulty of defining adaptation.  It also concludes that all of the above reports underestimate the true expected costs, by a factor of 2-3 for those sectors studied. 

According to the report summary, the main reasons for under-estimation are that:

(i) some sectors have not been included in an assessment of cost (e.g. ecosystems, energy, manufacturing, retailing, and tourism);

(ii) some of those sectors which have been included have been only partially covered; and

(iii) the additional costs of adaptation have sometimes been calculated as ‘climate mark-ups’ against low levels of assumed investment. In some parts of the world low levels of investment have led to a current adaptation deficit, and this deficit will need to be made good by full funding of development, without which the funding for adaptation will be insufficient.

Each of seven chapters of the IIED/Grantham report addresses a specific sector, pointing out the deficiencies in current cost estimate methodologies and approaches:  Agriculture, Forestry and Fisheries; Water; Human Health; Coasts and Low-Lying Settlements; Infrastructure; Natural Ecosystems; and Costs and Benefits of Adaptation. 

One important point made is that most impacts, and thus adaptation costs, are projected to increase non-linearly with climate change—avoiding some impacts will be inexpensive but avoiding others may be prohibitively expensive.  It will also likely be the case that adapting to the first 10% of any damage will be disproportionately cheaper than adapting to the remaining 90%. 

We are paying special attention to the section, Recommendations for future studies:

It is important that robust studies of adaptation cost are, in future, based upon case studies that cover a wide range of places and sectors, and support top-down analyses of the kind evaluated
here. The World Bank and McKinsey will be shortly reporting on this (World Bank, 2009; McKinsey, 2009). The time period and expected climate changes need specifying (as they were in the UNFCCC study), and results for multiple timeframes would be useful. Non-climate trends need careful portrayal, especially the future levels of non-climate investment. Costs of adapting to varying amounts of impact should be analysed, thus providing a choice range for preparedness to pay; and there needs to be some analysis of the residual impact that adaptation is not likely to avoid, and the resulting damage costs that we need to anticipate.

The authors also strongly suggest a combination of “bottom up” and “top down” analyses, relying heavily on case studies, and being comprehensive in sectors addressed.

We will be looking for the World Bank and McKinsey reports, and comparing these cost estimates to real money being put on the table by the developed nations as Copenhagen rapidly approaches. 

News coverage of the report:

BBC:  Climate protection ‘to cost more’
New York Times:  A High Cost to Deal With Climate Shift, and The Cost of Adapting to Climate Change

A related article released in May 2008 in Scientific American—The Ethics of Climate Change: Pay Now or Pay More Later?—by Philosophy Professor and author John Broome  is very much worth the read. 

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