How realistic are current estimates of adaptation costs for climate change? Will low investment levels in some regions require full funding of climate change development? This report analyses the United Nations Framework Convention on Climate Change (UNFCCC) and argues that its climate change adaptation costs are substantially under-estimated. It recommends more detailed assessments of residual damage that might occur if adaptation funding is inadequate and calls for analyses of country- and sector-specific adaptation costs.
Several recent studies have reported adaptation costs for climate change, including for developing countries. They have similar-sized estimates and have been influential in discussions on this issue. However, the studies have a number of deficiencies which need to be addressed more systematically in the future.
The UNFCCC commissioned six studies which provide estimates of the cost of climate change adaptation for the year 2030. The studies estimated the costs of extra capital investment and additional global research for agriculture, forestry and fisheries and additional water demands. They also estimated prevention costs for diseases such as malnutrition, malaria and diarrhoea, and costs for residual damage in coastal zones, infrastructure and ecosystems. The report concluded that total funding need for adaptation by 2030 could amount to $49-171 billion per annum globally, of which $27-66 billion would accrue in developing countries. By far the largest cost item is infrastructure investment, estimated at three-quarters of total costs.
The UNFCCC report has probably under-estimated the total cost of adaptation, however. It does not sufficiently address the magnitude of impacts that could occur within the next few decades or the scale of damage if adaptation is not fully successful.
- It does not discuss impacts on the mining and manufacturing, energy, retailing and tourism sectors.
- Ecosystem costs were left out of the final cost estimate and coastal protection costs are under-estimated. Health costs do not include interventions in high-income countries.
- 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.
- Since inadequate adaptation will probably require increased development assistance, the link between development and adaptation costs requires further exploration.
- More information is needed about how much we are willing to pay for adaptation to avoid certain damage and how much residual damage might be expected.
- It may be cheaper to apply ‘soft’ adaptations, such as measures to use water more efficiently, instead of relying exclusively on structural mechanisms, such as expansion of water supply systems.
- While adaptation costs for 2030 are a good start, the report does not consider how these costs may change over time.
It is important that future studies of adaptation costs combine ‘bottom-up’ local case studies with ‘top-down’ integration and cover a wide range of places and sectors. Analysis is also needed to inform preparation for escalating costs beyond 2030.
- Future studies should specify time periods and expected climate changes (as in the UNFCCC study)
- Results for multiple timeframes would be useful
- Non-climate trends need to be considered, especially future levels of non-climate investment
- The magnitude of impacts that could occur within the next few decades need to be refined to provide a choice range for preparedness to pay
- Analysis is needed of residual impact that adaptation is not likely to avoid and of the likely costs of resulting damage.
