At the December Adaptation Community Meeting, more than 60 people convened for a lively discussion on calculating the economic cost of climate change. Governance and Evaluation Advisor Doug Baker of the USAID-funded Climate Change Adaptation, Thought Leadership and Assessment project led the event, which provided an overview of key elements of climate change economic analysis, described several studies on the subject, and summarized specific findings from an ATLAS assessment of the future economic costs of climate change in Indonesia.
In his presentation, titled “Calculating the costs of not adapting to climate change
,” Mr. Baker outlined the type of data needed for calculating costs, and summarized the characteristics of several studies completed by others. He explained the limitations of these studies, highlighting the need to focus on market goods and services for which economic values can be quantified. He also stressed the high level of uncertainty inherent in climate dynamics and market behavior. But even with these caveats, studies provide important insights about potential economic losses in the absence of adaptation to climate change. Studies indicate these adverse trends will be especially strong in Africa and Asia, that in general agriculture will have the largest losses due to lower yields and that losses to sea level rise will continue to increase.
Mr. Baker raised a fundamental challenge about the cost-benefit analysis that is a critical aspect of making a judgment about the economic costs of climate change – the element of time. In order to avoid costs later, one has to start paying adaptation costs now to get future benefits in the form of avoiding a future economic state one hopes not to see. This element of abstraction – investing now to ward off a hypothetical future – can make it challenging for policymakers to weigh the costs and benefits of action.
The purpose of ATLAS’s Indonesia assessment
was to help USAID/Indonesia
and Indonesian policymakers envision how the future could look in the absence of adaptation efforts. The assessment, which relied on existing data, focused on aspects of agriculture, health, and long-term sea level rise to provide actionable information to policymakers and donors on climate change adaptation programming and climate resilient development. It calculated the monetary value of losses that can be anticipated in the year 2050 due to decreased output, direct expenditures, illness, and foregone income from properties that will flood as the sea level rises. Mr. Baker summarized findings from the study, which are also available on Climatelinks (see links below).
The group discussion ranged from observations on the limitations of the methodology used - one participant questioned the problems inherent in valuing lands and lives (in the form of lost income) more in urban areas versus rural areas - to suggestions for how best to motivate policymakers to see the need for adaptation. One attendee encouraged the audience to start moving beyond more studies into adaptation action, with Mr. Baker offering the qualified concurrence that the route for action is more evident in some sectors, such as health. Another participant pointed out the difference between more general studies such as the IPCC reports and the Indonesia study – which demonstrate that action is needed – and more specific reports that are designed to drive specific decisions. For the latter, it was suggested that hearing from policymakers and experts themselves on where they are willing to act first, where they are authorized to take action, and what information they need, is a key part of making research on adaptation responses and costs actionable and practical.
To learn more…
- A policy brief presents the main findings for policy makers.
- A technical report presents the methodology behind the calculations.
- A spreadsheet where most of the calculations were made (those done in a GIS were imported to the spreadsheet), and which should be used in conjunction with the technical report.
- ATLAS project fact sheet
Watch recordings of past Adaptation Community Meetings here.