GLOBAL: The price tag for adapting to climate change

Photo: Tung X. Ngo/IRIN

Countries need to work out the costs of adapting to climate change realistically

JOHANNESBURG, 30 March 2009 (IRIN) - Countries staring into a gloomy future of low food production, less water, higher storm surges, longer dry periods and other expensive consequences of climate change have been told they can adapt at a cost ranging from several hundred billion dollars to over a trillion dollars.

The UN Framework Convention on Climate Change (UNFCCC) has stepped in to help overwhelmed developing countries calculate the cost of implementing measures not only to mitigate their greenhouse gas emissions but also to adapt to climate change.

"This is a reality check - we are trying to assist countries go about it in a realistic and practical way," said Yolando Velasco, head of UNFCCC's financial cooperation unit.

The assistance is being provided by way of the National Economic and Environmental Development Study (NEEDS) in nine pilot countries: Costa Rica, Egypt, Ghana, Indonesia, Lebanon, Mali, Nigeria, Pakistan and the Philippines.

"Actually, when we announced the study only nine countries came forward – the offer was open to everyone," Velasco said.

How it works

The study estimates the cost of implementing climate change mitigation and adaptation measures in the country; then national consultants, with the engagement of the ministries of finance and planning, identify policy and finance instruments available to support the identified measures.

This is a reality check - we are trying to assist countries go about it in a realistic and practical way

"Countries implementing the NEEDS project may develop their own national financial strategies and frameworks to coordinate resources accessed nationally and from the financial mechanism of the convention [UNFCCC], and other bilateral and multilateral sources," said Velasco.

With the financing priorities worked out, the countries stand a better chance of accessing funds from the Convention, including the Adaptation Fund set up under UNFCCC auspices.

The Fund is expected to raise money from a levy of about two percent on credits generated by the Clean Development Mechanism (CDM), set up under the Kyoto Protocol, the global agreement to reduce greenhouse gas emissions.

UNFCCC hopes to present the NEEDS study findings at the UN climate change summit in Copenhagen in December 2009, which will look at a new global agreement to come into effect after the first phase of the Kyoto Protocol ends in 2012.

The need

Photo: OECD

OECD's book is the first to take a critical look at all the major studies on the costs of adapting to climate change

The UNFCCC has come up with a price tag of between US$ 49 billion and $171 billion per year globally for adaptation by 2030, based on investment and financial flows in five sectors: agriculture, forestry and fisheries, water supply, human health, coastal zones, and infrastructure.

"The UNFCCC assessment is perhaps the most rigorous one out there, as it breaks down the costs sectorally and examines the impact in detail," said Shardul Agrawala, principal economist at the Organisation for Economic Co-operation and Development (OECD) and the lead author of a new book that takes a critical look at all the studies on adaptation costs.

Most global studies, "while relevant for the international discussion on adaptation and its financing, face serious limitations,” he said.

"In most cases, the estimates do not have a direct attribution to specific adaptation activities, nor are the benefits of adaptation investments articulated, and many just stack upon the assumptions made in preceding studies and the results are consequently not truly independent."

The book, which Agrawala co-wrote with Samuel Fankhauser, principal economist at the European Bank for Reconstruction and Development, also examined the costs of adapting to climate change drawn up by the Least Developed Countries, with specific projects listed as part of the National Adaptation Programmes of Action (NAPA) under the UNFCCC.

The cost of implementing all the projects identified by 22 countries, which had submitted their NAPA by the end of 2007, was about US$472 million, but Agrawala noted that the mandate had been limited to identifying priority projects.

NEEDS was a "sensible way to go about integrating adaptation at a higher strategic level examining all the sectors in the national planning process,” he said. “In some sectors it might just need a change in existing policy or regulations."

Photo: IISD

UNFCC Executive Secretary Yvo de Boer at the opening of the UN meeting in Bonn, Germany, the first in a series of three-session meetings aimed at producing a draft document to succeed the Kyoto Protocol

Call for adaptation funds

Negotiations to draw up a new climate change treaty got under way this week at a UN meeting in Bonn, Germany, the first in a series of three-session meetings aimed at producing a draft document to succeed the Kyoto Protocol.

The Earth Negotiations Bulletin of the International Institute for Sustainable Development reported that Bangladesh had called for a mechanism to enable prompt financial support to respond to localized extreme events, and had highlighted the proposal for an international air travel levy to raise additional funding for adaptation.

Agrawala said funds might be hard to come by in the current economic environment, but it did open a "window of opportunity" because many countries were investing in infrastructure as part of their economic stimulus packages.

"They could use the opportunity to factor in the long-term climate risk while making these investments,” he said. “It is time to think strategically."

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