Poor Nations' Climate Adaptation Could Cost $100 Billion a Year

The draft consultation document was released at ongoing United Nations climate negotiations in Bangkok that are shaping a post-Kyoto Protocol greenhouse gas agreement to take effect at the end of 2012.

"The costs of adapting to a 2 degree Celsius warmer world are of the same order of magnitude as current Overseas Development Assistance," said Katherine Sierra, World Bank vice president for sustainable development.

Food aid is distributed during a drought in Zimbabwe by Aktion Deutschland Hilft, 2007 (Photo courtesy World Vision)

"Faced with the prospect of huge additional infrastructure costs, as well as drought, disease and dramatic reductions in agricultural productivity, developing countries need to be prepared for the potential consequences of unchecked climate change," Sierra said. "In this respect, access to necessary financing will be critical."

The study, "Economics of Adaptation to Climate Change," funded by the governments of the Netherlands, Switzerland, and the United Kingdom, is

President Barack Obama and the leaders of the other large industrialized countries have pledged to help the least developed countries adapt to climate change.

At the UN Climate Summit in New York in September, Obama pledged to help provide the financial and technical assistance needed to help the poorest and most vulnerable of developing nations "leap-frog dirty energy technologies and reduce dangerous emissions."

"What we are seeking, after all, is not simply an agreement to limit greenhouse gas emissions," said Obama. "We seek an agreement that will allow all nations to grow and raise living standards without endangering the planet."

This is the first report to develop a workable definition of adaptation costs that can set the stage for common understanding of what adaptation actually entails, what role development plays, and what policy changes are needed to facilitate adaptation.

Suggesting that countries become less vulnerable to climate change as their economies grow, the study finds that adaptation costs decline as a percentage of GDP over time.

"Economic growth is the most powerful form of adaptation," said Warren Evans, director of the World Bank’s Environment Department. "However, it cannot be business as usual. Adaptation minimizes the impacts of climate change, but it does not address its causes. There is no substitute for mitigation to reduce catastrophic risks."

In the study, adaptation costs for all developing countries are estimated for the major economic sectors using country-level data sets that have global coverage, including partial assessment of costs of adaptation for ecosystem services.

Cost implications of changes in the frequency of extreme weather events are also considered.

The study uses a new methodology for assessing these adaptation costs, comparing a future world without climate change and a future world with climate change.

The difference between these two worlds entails a series of actions to adapt to the new world conditions. The costs of these additional actions are the costs of adapting to climate change.

Rural families in Bangladesh are vulnerable to increased flooding and sea level rise, especially during the monsoon season. (Photo by Natasha Scripture courtesy World Food Programme)

A key part of the overall analysis involved estimating adaptation costs for major economic sectors under two alternative future climate scenarios, a wet scenario and a dry one.

Under the dryer scenario, the adaptation cost is estimated at US$75 billion per year, while under the scenario that assumes a wetter future climate it is US$100 billion. The drier scenario requires lower adaptation costs in all regions except South Asia.

The highest costs of adaptation will be borne by the East Asia and Pacific Region, the World Bank reports, followed by Latin America and the Caribbean, and Sub-Saharan Africa.

"The World Bank study makes plain that taking action in favor of adaptation now can result in future savings and reduce unacceptable risks," said Dutch Minister for Development Cooperation Bert Koenders.

"At this point," Koenders said, "the costs this will entail can still be borne by the international community, to judge by the GDPs of rich countries, but for poor countries they are unacceptably high."

"More than ever, mitigation, adaptation and development cooperation are needed to make the poor less vulnerable to climate change," he said. "International public financial support for adaptation in the poorest developing countries should be new and additional, so as not to jeopardize the Millennium Development Goals."

The eight Millennium Development Goals to be achieved by 2015 were adopted by all nations during the UN Millennium Summit in September 2000. They are: eradication of extreme hunger and poverty, universal primary education, gender equality, reduce child mortality, improve maternal health, combat disease, ensure environmental sustainability, and create a global partnership for development.

The impacts of climate change in developing countries will make many of these goals more difficult to achieve as droughts and extreme weather events, floods and sea level rise take their toll.

"The Economics of Adaptation to Climate Change study provides a range of estimates for a world in which decision makers have perfect foresight," says Sergio Margulis, lead environmental economist with the World Bank. "In the real world where decision makers hedge against a range of outcomes, the actual expenditures are potentially higher than this."

The report stresses that development strategies must maximize flexibility and incorporate knowledge about climate change as it is gained and emphasizes that many questions remain, and that further work is essential.

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