Costing the total impacts

We now turn to consider all the impacts of anthropogenic climate change, attempts that have been made to express their cost in monetary terms and the validity of the methods employed. The IPCC 1995 Report contained a review of four cost studies71 of the impacts of climate change in a world where the atmospheric carbon dioxide concentration had doubled from its pre-industrial level,72 the most detailed studies being carried out for the United States. For those impacts against which some value of damage can be placed, estimates fell in the range of 1.0% to 1.5% of the US GDP in 1990. For other countries in the developed world, estimates of the cost of impacts in terms of percentage of GDP were similar. For the developing world, estimates of annual cost were typically around 5% of GDP (with a range of from 2% to 9% of GDP). These studies provided the first indication of the scale of the problem in economic terms. However, as the authors of these economic studies explain, their estimates were crude, were based on very broad assumptions, were mostly calculated in terms of the impact on today's economies rather than future ones and should not be considered as precise values.

Modelling the monetary impacts of climate change requires quantitative analysis connecting environmental, economic and social issues. The main tool for such studies is the Integrated Assessment Model (IAM) (see box in Chapter 9 on page 280) which includes all the elements illustrated in Figure 1.5. The Stern Review73 has reviewed recent work employing such models pointing out the elements that need to be included in making cost estimates, in particular adaptation (which provides large potential for damage reduction but the cost of adaptation must be added), damage from extreme events (omitted in most studies to date) and non-market impacts (e.g. mortality from diseases, heat and cold stress, etc. omitted in many studies).

Adaptation is especially important in the agricultural sector.74 In that sector, under changes in global average temperature of less than about 3 °C, when adaptation is taken into account, estimates of global aggregate economic impact cost vary from the slightly negative (i.e. slightly beneficial) to the moderately positive depending on underlying assumptions (see also Section 'Impact on agriculture and food supply', pages 196-202). However, these studies have largely ignored the increasing influence of climate extremes and as yet inadequately considered important factors such as water availability - largely because of the lack of detailed information regarding these.

Further, the aggregate hides large regional differences. Beneficial effects are expected predominantly at mid to high latitudes in the developed world especially where increased temperatures may bring longer growing seasons. Strongly negative effects are expected for populations at lower latitudes where any increase in average temperature or in dryness brings lower crop yields, where there is less capacity to adapt (e.g. because of lack of infrastructure, capital or education) or where there are poorer connections to regional and global

Only the rectangular support pillars that once held up the Highway 90 bridge spanning Biloxi Bay remained standing after Hurricane Katrina battered the Mississippi shoreline. The image shows widespread destruction along the shoreline, with only white foundations where buildings and homes once stood in some places. The Ikonos satellite captured this image on 2 September 2005, four days after Katrina came ashore.

Only the rectangular support pillars that once held up the Highway 90 bridge spanning Biloxi Bay remained standing after Hurricane Katrina battered the Mississippi shoreline. The image shows widespread destruction along the shoreline, with only white foundations where buildings and homes once stood in some places. The Ikonos satellite captured this image on 2 September 2005, four days after Katrina came ashore.

trading systems. Overall, climate change will tend to tip agriculture production in favour of rich and well-fed regions at the expense of poorer and less well-fed regions.

For global average temperature increases of 2-3 °C from pre-industrial levels (i.e. up to a situation of doubled carbon dioxide concentration) which are expected to occur by early in the second half of the twenty-first century, the Stern Review has reviewed recent estimates and concluded that the cost of climate change could be equivalent to a loss of 0 to 3% in global GDP from what could have been achieved in a world without climate change.76 The Stern Review goes on to point out that poor countries will suffer higher costs. Further, as

A US Coast Guardsman searches for survivors in New Orleans in the aftermath of Hurricane Katrina.

we saw in the last section I consider that the Stern Review has underestimated the likely cost of extreme events perhaps by a factor of two. Taking these into account would result in estimates of, say 1% to 4% loss of global GDP in developed countries and much greater loss of 5% or even 10% or more in many developing countries.

Two important factors have been omitted from the figures just cited. The first is that impacts cannot be quantified in terms of monetary cost alone. For instance, the loss of life (see Question 7), human amenity, natural amenity or the loss of species cannot be easily expressed in money terms. This can be illustrated by focusing on those who are likely to be particularly disadvantaged by global warming. Most of them will be in the developing world at around the subsistence level. They will find their land is no longer able to sustain them because it has been lost either to sea level rise or to extended drought. They will therefore wish to migrate and will become environmental refugees. It has been estimated that, under a business-as-usual scenario, the total number of persons displaced by the impacts of global warming could total of the order of 150 million by the year 2050 (or about 3 million per year on average) - about

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