Climate change exacts a high price

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Costs of adapting to a warming world could be much greater than expected.

The costs of coping with flooding are among those not yet pinned down. Credit: Punchstock

The global cost of adapting to climate change has been grossly underestimated, according to a study published this week.

Although it doesn't provide concrete new estimates, the report suggests that the total cost of adapting to climate change could be at least 2–3 times more than the previous estimate from the United Nations Framework Convention on Climate Change (UNFCCC). That figure, published in 2007, suggested that the annual cost from 2030 would be between US$49 billion and$171 billion.

The main difference, the study says, is that the UN number did not account for climate change's effects on key sectors such as energy, manufacturing, tourism and natural ecosystems.

"The UNFCCC's estimations were made in a few weeks and weren't independently reviewed," says the study's lead author, Martin Parry, a visiting research fellow at the Grantham Institute for Climate Change at Imperial College London and a former co-chair of a working group of the Intergovernmental Panel on Climate Change.

Negotiators will be converging on Copenhagen in December to forge a new international climate deal to take over from the Kyoto Protocol when it expires in 2012. The question of how to finance adaptation will be at the heart of the discussions. "There will be negotiations about how much will be needed, how to raise it and how to spend it," says Saleemul Huq, a climate expert at the International Institute for Environment and Development (IIED), who was not involved in the study.

Parry says that negotiators should be wary of using the earlier numbers. "There are dangers in having apparently low estimates for the cost of adaptation, which would make adaptation seem like a cheap alternative to mitigation," he says. "Sceptics could argue we should just walk into the future adapting as we go."

Starting point

The UNFCCC numbers were initially intended to come from a literature review of other economic studies, says Sudhir Sharma, manager of financial cooperation and capacity building at the UNFCCC secretariat in Bonn, Germany. But the team working on the estimates soon realized that there were massive gaps in the information needed. The cost of adapting to climate change requires knowledge about what effects climate change will have, what the options are for responding to those changes, and how much those options will cost, he says.

Sharma argues his group's estimates weren't intended to be the final word, but rather a ball-park figure to get the negotiations rolling. "We clearly indicated that this was not an exhaustive study," he says. "Our objective was to kick-start the process of putting numbers on the cost of adaptation so that other groups could pick up the baton and refine them."

The latest study, published by the IIED and the Grantham Institute, has picked up that baton. It suggests that the UNFCCC estimate of $11 billion per year for adapting to changes in water supply overlooks the expenses of floods and of transporting water from areas of plenty to areas to that need it. In health, the UNFCCC figure of$5 billion per year considered changes only in malaria, diarrhoea and malnutrition in developing nations and excluded the health burden of climate change in developed nations. The new report also points out that the UNFCCC estimates excluded the costs of protecting ecosystems and the services they provide; on its own this sector could cost well over \$350 billion per year, says Parry.

But although the report says previous estimates for adaptation are too low, it doesn't provide numbers, he admits. "We didn't try to come up with new numbers — we pointed out the gaps," he says.

In the months before Copenhagen, other organizations will be piecing together some of these costs. In mid-September, the Economics of Climate Adaptation Working Group, a consortium of researchers, consultants and economists from around the world, will release a report on the costs of adaptation through case studies in China, Mali, Florida, Guyana, India, Samoa, Tanzania and the United Kingdom, according to New York-based McKinsey & Company, one of the consulting firms involved. And on 29 September, the World Bank is expected to launch its own study on the economics of adapting to climate change, using case studies from throughout the developing world.

But a price tag on adaptation will not be realized in the near future, says Huq. "If in Copenhagen we can agree that we need a few tens of billions of dollars to provide countries with sufficient means to start evaluating and working on what's needed now, then over time the longer-term costs will become more clear," he says. "Copenhagen will not be the last word."

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Nayar, A. Climate change exacts a high price. Nature (2009) doi:10.1038/news.2009.871