Enormous costs of adaptation to climate change

However good the agreement that may be reached at Copenhagen in December is on reducing carbon emissions, the world is going to have to adapt to the consequences of climate change that are already feeding through the natural system. A new study will discomfort a lot of people by showing strong grounds to think the costs of adaptation will be several times higher than previously estimated.

A billion here, a billion there, and pretty soon…

Assessing the costs of adaptation to climate change by eleven co-authors sets out the grounds for thinking that the hitherto generally accepted estimates by the secretariat of the UN Framework Convention on Climate Change, basing themselves on work by the World Bank, are much too low. This is an independent study sponsored by the International Institute for Environment and Development and the Grantham Institute for Climate Change at Imperial College, London. Without government resources, the authors have rightly refrained from attempting their own total estimates; indeed, one conclusion to draw from this report is that a proper, comprehensive study is badly needed.

The key things wrong with previous estimates are

  • They were incomplete – they missed out sectors such as energy, manufacturing, retailing – and some sectors that were included were only partially covered.
  • The methodology for costing adaptation to the physical infrastructure was deficient because it implicitly assumed that, absent the effects of climate change, infrastructure had received adequate investment and then calculated a climate “mark up”. This meant that adaptation was more expensive if investment was high, cheaper if it was low. So in every country where investment in the infrastructure is dramatically poor, adaptation seemed remarkably cheap. Correcting the development deficit in the calculations adds 3-400 billion dollars annually by 2030 to the overall estimated costs of adaptation.
  • The cost of residual damage was left out, which implicitly assumes that adaptation is wholly effective in preventing any damage from occurring, suggesting an impossible perfection.

So far as I understand it, it is costs of infrastructure adaptation that have the biggest impact on the estimates (and these were also the greatest area of uncertainty in the original bank studies and UNFCCC figures).

The politics of adaptation finance

I touched on some of the politics of this in an earlier post (16 June). In broad terms:

  1. First, to seal the deal in Copenhagen in December this year, the middle- and low-income countries of the world want money on the table for adaptation. That is a wholly justifiable and necessary position and this study says that the amounts that we should be thinking about are three or more times greater than we had previously been discussing.
  2. Second, however, a lot of eyes are on America and there the willingness to fund international adaptation is extremely low. The plan in the Waxman-Markey bill is to fund adaptation through a levy on trading in carbon emission rights. A world that decided to spend on adaptation proportionately with the most ambitious interpretation of how much money the US will spend on international adaptation if the Waxman-Markey bill becomes law is a world that would be spending less than two per cent of what this study indicates may be needed.
  3. The eventual law is likely to be weaker than Waxman-Markey in many respects and if the Obama administration is getting a hammering over health reform the President won’t have any political capital left over to invest in getting a decent climate change law enacted.
  4. Not all of adaptation needs to be or will be funded by government spending but private investment will not make up the shortfall if governments fall so far behind what is needed.

One possible conclusion is that we might have to brace ourselves for not turning our lonely eyes to President Obama on this. One election has not re-made the country’s politics in their entirety. But where, then, is the necessary leadership to be found?

A different possibility arises if the Obama administration can move beyond the confines of Waxman-Markey in negotiating (primarily with China) in the run-up to Copenhagen – in other words, if it can undertake to access budget resources in addition to the planned levy on carbon trading.

The IIED study helps show the enormous dimensions of the problem; the dimensions of the international response are not anywhere near adequate. Yet.

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