Economics of Climate Change Adaptation in Northeast Asia

Michael I. Westphal Lead Consultant Beijing, 19 July 2011

Previous Global Studies

Adaptation costs neglected until recently World Bank (2006): $9 - $41 billion/yr -> costs of climate proofing ODA and concessional finance, FDI, gross domestic investment, based on proportion of investments climate-sensitive. Related - Stern (2007): $4 - $37 billion/yr UNFCC (2007): $28 $67 billion/ yr for adaptation in developing world by 2030. Planned and private adaptation; sectoral. World Bank Economics of Adaptation to Climate Change (EACC) (2010): By 2050, $75 - $100 billion/ yr in developing world

World Bank EACC

Sector-specific: Agriculture, Forestry, Fisheries; Water Supply; Human Health; Coastal Zones; Infrastructure; Extreme events Timeframe: 2010 2050 Two GCMs. Global wet (NCAR) and dry (CSIRO); SRES A2 Discount rate - 0% and constant 2005 prices Only public sector (planned) adaptation Included Only hard actions (as opposed to soft policy, instiutional changes) No catastrophic climate change scenarios (e.g. Greenland/Antarctic ice sheet collapse)

What is Adaptation?
Adaptation deficit deficit with regard to current variability Development deficit e.g. deficits with regard to providing education, health, housing, other services Include adaptation deficit in calculations? In EACC, only costs to cope with future climate change are included. Measures undertaken without climate change are excluded.

Adaptation Actions?
Infrastructure design standards, climate proofing maintenance Coastal zones river and sea dikes, beach nourishment, port upgrades Water supply and flood reservoir storage, flood protection, demand-side conservation Agriculture research, roads, irrigation expansion and efficiency Fisheries buy backs, transferable quotas, marine protected areas, fish farming (NOTE: adaptation = losses here) Health prevention and treatment of disease Extreme events female education

Results: Annual Costs of Adaptation by Sectors (2010-2050, US$ billion)

SECTOR Agriculture, Forestry, Fisheries Water Supply Human Health Coastal Zones Infrastructure Extreme events Total
2005 Constant Prices, 0% Discounting Source: World Bank Analysis

Climate Scenario DRY 7.3 18.8 1.6 29.6 13.7 6.5 77.6 WET 7.6 13.7 2.0 30.1 29.5 6.7 89.7

Annual Costs of Adaptation by Regions, 2010-2050, US$ Billion

Climate Scenario DRY WET East Asia 19.6 25 Europe Latin C. Asia America 5.7 9.5 16.9 21.5 Middle South East Asia N. Africa 3 15.6 3 12.7 Africa SubSaharan 16.9 18.1 Total

77.6 89.7

2005 Constant Prices, 0% Discounting Source: World Bank Analysis

Annual Costs of Adaptation: by Region, 2010 2050, US $Billions

Wet Scenario 89.7
2005 constant prices, 0% discounting

Dry Scenario 77.6

East Asia and Pacific, EAP Europe and Central Asia, ECA Latin America and Caribbean, LAC Middle East and North Africa, MNA South Asia, SSA Sub-Saharan Africa, SSA

Source: World Bank Analysis

In perspective
$75 100 billion is 0.2% of the projected GDP of all developing countries At the same time equivalent to as much as 80% of total current disbursement of ODA

Our Study
Extension of EACC Country-specific estimates at sub-national scale (except for Mongolia) Sectors: coastal, infrastructure/water, agriculture (tentative) More climate scenarios: 17 GCMs, A2 Timeframe costs to 2050, but inertia of infrastructure More attention to extreme events (flooding, typhoons)

Coastal
Robert Nicholls, University of Southampton DIVA model Options: dikes, beach nourishment, port upgrades Sea-level rise: IPCC 4AR, Ramstorf 2007 Investments from 2012 - 2050

Infrastructure/ Water
Gordon Hughes, University of Edinburgh; Paul Chinowsky, University of Colorado; Ken Strzepek, MIT Infrastructure: all major classes - energy, transport (roads), water and social/health (e.g. housing, hospitals and schools) Both Delta-P costs (i.e. costs due to climateproofing) and Delta-Q costs (i.e. climate-induced changes in infrastructure demand). Climate-proofing infrastructure -> damage functions of constructing, operating, maintaining due to climate

Infrastructure/ Water
Flooding included damage functions (esp. building lifespan, roads) and costs of maintaining current level of flood protection (historical relationship between floods and exposure and damage CIESIN, Columbia) Typhoons costs of maintaining current level of protection (based on relationship between SST and typhoon frequency, magnitude, damage)

Infrastructure/ Water
Water projections of water supply (based on runoff projections) and urban/agricultural water demand at the catchment-level (and provincial) level Economics if water demand exceeds water supply (esp. related to China): water pricing, demand-side conservation measures (e.g. ag water use efficiency)

Agriculture (Tentative)
Michael Obersteiner, International Institute of Applied Systems Analysis (Tentative) GEPIC model project yield changes for 2010s, 2020s, 2030s, 2040s for major crops , e.g. maize, rice, wheat and soybeans. Livestock yield change (Mongolia) ILRI model Economic impact modeling using GLOBIM - income change Adaptation options, e.g. trade, crop and livestock system reallocation, adoption of irrigation, fertilization, crop switching and changes in harvesting dates, etc. Construction of adaptation cost curves (B/C vs. yield/income loss averted)