A report from the Economics of Climate Adaptation Working Group released today indicates that climate risks could cost nations up to 19% of their GDP by 2030, with developing countries most vulnerable. The report concludes, however, that cost effective adaptation measures already exist that can prevent between 40 and 68 percent of the expected economic loss with even higher levels of prevention possible in highly target geographies.
The report, titled "Shaping Climate-Resilient Development", offers a comprehensive and replicable methodology to determine the risks that climate change imposes on economies. It provides a set of tools for decision makers to adopt a tailored approach for estimating these costs based on local climate conditions, and for building more resilient economies. These tools do not include estimates or measures for emissions reduction, which would need to be examined separately.
By determining a location's total climate risk - calculated by combining existing climate risks, climate change and the value of future economic development - and using a cost-benefit analysis to create a list of location specific measures to adapt to the identified risk, the Working Group was able to evaluate current and potential costs of climate change and how to prevent them. The methodology was tested in localities within eight different countries (China, United States, Guyana, Mali, United Kingdom, Samoa, India, and Tanzania), which together represent a wide range of climate hazards, economic impacts, and development stages.
The working group estimated expected economic loss for the eight different case study regions leveraging natural catastrophe risk modeling techniques assuming current GDP growth estimates, under three different climate change scenarios - today's climate (assuming that there is no additional impact from climate change); moderate climate change (based on the average forecast of climate change for the particular hazard in the location studied); and high climate change (based on the outer range of the climate change considered possible by 2030). The methodology is applicable in any setting where society must consider risk. For example, in Florida the report estimates an annual expected loss of $33 billion from hurricanes - more than 10 percent of GDP - under a high climate change scenario.
Overall findings from the eight case studies showed that easily identifiable and cost effective measures - such as improved drainage, sea barriers, and improved building regulations, among many others - could reduce potential economic losses from climate change for all regions. In fact, most could deliver economic benefits that far outweigh their costs - with adaptation measures that on average cost less than 50 percent of the economic loss avoided.