Global warming comes with a big price tag for every country in the world. But how exactly do we set that price tag and predict the economic impact of climate change? Not acting on climate change has a costbut defining the costs of climate inaction is very difficult, involving complex permutations and myriad computer models. A European Union (EU)-funded research project has been able to give a clearer answer, and at the same time offer an even stronger argument for concerted action to address the problem.
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The project, ClimateCost, provides a comprehensive and consistent economic analysis of climate change, which includes the costs and benefits of adaptation. Although some research has been carried out into climate change policy, ClimateCost fills many of the gaps in the data, while linking it directly to EU and global policy needs.
The project, which began in January 2009 and was completed by September 2011, was backed by a €3.5 million EU grant. It was overseen by the Stockholm Environment Institute's Oxford office and gathered researchers from 22 institutes in 13 countries.
"Given that climate change is happening, and that additional changes will occur even under the most ambitious mitigation policies, there will be a need for adaptation," says Paul Watkiss, the project's research director. "This requires some analysis of the costs of these measures. We wanted to show what climate change might cost us in Europe and elsewhere and inform the policy debate on the costs and benefits of adaptation."
The study took climate model projections and looked at the impact in Europe, such as the number of additional people flooded from sea level rise, or the additional heat-related deaths from high temperatures. It covered both market and non-market sectors like health, ecosystems, energy, agriculture and infrastructure.
It then assessed these in monetary terms. The analysis included a baseline scenario and compared this to a mitigation scenario which stabilises global temperature change at about 2°C above pre-industrial levels to show the differences for Europe as a whole, and for individual member states. For each scenario, the project assessed three future time slices: 20112040, 2041-2070 and 2071-2100.
Under a no global policy action scenario, the study revealed huge costs in billions of Euros or GDP percentages. It also found strong geographical differences across regions: for example, higher risks of storm surges were projected for the North Sea countries, whereas additional cooling demand impacts were projected for Mediterranean countries.
With a mitigation scenario, these costs were much lower, and would have other benefits, like improving air quality and thus better health. Mitigation was also likely to avoid the climate 'tipping points' or catastrophic events such as irreversible collapse of the Greenland ice sheets and resulting sea level rise, the loss or reversal of the Gulf Stream, or the collapse of the Amazon rainforest.
Tom Downing, the project coordinator and president of the Oxford-based Global Climate Adaptation Partnership (GCAP), says the comparison of costs and benefits can be an invaluable justification for policy action. "The research provides an input to policy makers to help inform the debate on these issues," he says. "It therefore has relevance for the continued debate on greenhouse gas mitigation policy in Europe and the roadmap to a competitive low carbon economy by 2050, as well as the emerging discussion on adaptation to address residual effects."
But more broadly, Downing says the research can put climate change policy so often seen as abstract and distant in more human terms. "By expressing climate change in economic terms, we aim to communicate the overall scale of the effects in common metrics that people readily understand," he says.