Climate Change Risks Could Cost Developing Countries Up to 19% of GDP by 2030
Report says action on climate adaptation may significantly reduce losses and
increase economic sustainability.
NEW YORK, Sept. 14 /PRNewswire-USNewswire/ — 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.
In Maharashtra in India, researchers evaluated the loss associated with
drought, which amounts to 30 percent of the state’s food and grain production
– even without climate change. This loss would severely impact the 15 million
small and marginal farmers. By 2030, a significant drought could lead to a
countrywide agricultural loss of more than $7 billion, and impact the income
of ten percent of the population. With droughts historically occurring every
25 years, extreme climate change could change that to once every eight years.
The case study determined a number of measures that could protect crop
production and farmers’ incomes in Maharashtra including expanded drip and
sprinkler irrigation, drainage construction, improved soil techniques, and
crop engineering. In fact, Maharashtra can eliminate much of its expected
drought loss by 2030 through low-cost measures with benefits that often exceed
their cost.
