Economics of Climate Change: Costs and Benefits of Adaptation Measures for Climate Change
Background and Goals
Until now, no systematic cost-benefit analysis has been undertaken for climate change adaptation measures in Germany. This study helps to fill this knowledge gap and provide insights about remaining risks and informational needs. The project developed an assessment framework that goes beyond basic cost-benefit analyses and applied this to 28 different adaptation measures. The study showed that the methodology was applicable in practice and also expanded and consolidated the empirical basis for the economic assessment of adaptation measures. The results give an impression of how useful economic analysis for the assessment, prioritization, and selection of adaptation measures can be.
During the first phase of the project the current state of knowledge is gathered, processed and unified. The second phase deals with the closing of knowledge gaps and the development of the information base. The focus is on developing a methodology that allows a standardized evaluation of adaptation measures. Thus criteria for comparing different adaptation measures will be developed and the (economic) information base, especially on costs and benefits of adaptation measures will be standardized.
The results of the project are a literature review and a final report in which 28 concrete adaptation measures have been analyzed.
Content time
toResearch area/region
Country
- Germany
Steps in the process of adaptation to climate change
Step 1: Understand and describe climate change
Approach and results
No climate scenario has been developed (the emissions scenarios and climate change from 4th AR, IPCC 2007 have been used)
Parameter (climate signals)
- River flooding
- Heat waves
- Altered rainfall patterns
- Higher average temperatures
- Sea level rise und storm surges
- Low water
- Extreme precipitation (incl. hail, snow)
- Storm
- Dry periods
Time horizon
- medium term = to 2050
Step 2a: Identify and assess risks - climate effects and impact
Approach and results
The expected impacts of climate change are listed separately in the final report depending on the field of action of the specific adaptation measure.
Step 2b: Identify and assess risks - Vulnerability, risks and chances
Urgency and priorization of adaptation needs
For each of the analyzed adaptation measures the relevance and temporal urgency have been assessed. This clearly demonstrated that caused by their special relevance, their temporal characteristics and no-regrets characters, some measures are rather recommend for an early implementation, such as renaturation measures, soil conserving management, heat warning system, or the civil protection measures.
Step 3: Develop and compare measures
Measures and/or strategies
In order to find suitable adaptation measures for the assessment, the adaptation measures gained from the literature study were examined for their suitability for further analysis in a first step. The main problem is that there are no satisfying data for the majority of possible adaptation measures in Germany until now (missing workable valuation methods or fragmentary data). In order to make a meaningful assessment nevertheless, the limitation was therefore done using selected criteria.
The following adaptation measures have been analyzed in the different fields of action:
- Transport:
new road surfaces;
adaptation of the rail infrastructure to wider temperature ranges and heat;
weather services in the transport sector; - Spatial Planning:
keeping free of fresh air corridors as an instrument of regional planning;
green roofs;
preventive planning for protection against floods and comparison with technical adaption options; - Financial Sector:
development of new insurance products respectively integration of new risks;
cooperation solutions between state and insurance industry; - Water Supply, Water Management, Coastal and Marine Protection:
coastal protection by dyke increasing and beach nourishment;
avoiding wastewater discharges to water by additional rain spillway basins;
adapting the discharge quality of treatment plants to the reduced water conditions of water bodies; - Building:
avoid heat-related health risks by adapting the housing sector;
protecting buildings from increased storms, heavy rain and wind; - Industry:
information for companies to adapt to climate change;
avoid heat-related productivity losses by air conditioning; - Health:
heat alert system;
cooling of hospitals; - Soil:
Soil-friendly conservation farming methods; - Biological Diversity:
design and management of nature reserves and their interlinking;
restoration of floodplains; - Agriculture:
adapting the irrigation of agricultural land;
use of appropriate plant varieties; - Energy:
design of power distribution network for extreme weather events;
cooling of thermal power plants; - Tourism:
maintenance current tourism offers by preparing the slopes;
diversification of the offers to enable summer tourism or all the year round; - Civil Protection:
education and training of civil protection organizations (civil protection exercises);
revision of emergency plans.
Time horizon
- 2011–2040 (near future)
- 2036–2065
- 2071–2100 (far future)
Conflicts / synergies / sustainability
For each of the considered adaptation measure, the interactions will be assessed and analysed to what extent the measures involved may have a beneficial or adverse influence on each other. The effects between adaptation measures will be evaluated and aggregated by a matrix. By considering such synergies and links but also overlaps and conflicts, measures bundle can be identified which are mutually dependent or act on different areas of activity simultaneously.
Step 4: Plan and implement measures
Costs of the measures
As a first step the costs and benefits of selected adaptation measures are detected at the individual measure level. The emphasis is on measures of the public respectively the private-public sector. Since costs and benefits often take place at different times, the timing of costs and benefits and the issue of discounting need to be considered.
The cost analysis is based on an investment appraisal. The economic costs of the action will be estimated quantitatively and qualitatively: one-time investment costs, running costs and transaction costs. In addition, other cost components are taken into account:
- Other economically relevant consequences of a measure, e.g. negative effects on competitiveness and innovation.
- Quantitative and qualitative assessment of external costs for the measure, e.g. negative impact on the groundwater resources by agricultural irrigation, reduced well-being in air-conditioned spaces, reduced view caused by protective structures, etc.
In a second step the cost and benefit considerations will be standardised, in order to compare key criteria. The comparison will show either the total cost and the overall benefit (as a net present value for the whole life- and effective duration of a measure), or the derived average cost per year of the life- and effective duration of a measure (annuities).
Participants
Funding / Financing
German Environment Agency (UBA)
Project management
Ecologic Institute, Berlin
Cooperation/Partners
INFRAS, Zürich; ISI – Fraunhofer Institute for Systems and Innovation Research, Karlsruhe
Contact
Ecologic Institut gemeinnützige GmbH
Pfalzburger Straße 43/44
10717 Berlin
