Climate change adaptation could cost up to US$500 billion per year by 2050
Adaptation to the consequences of climate change could cost as much as US$500 billion per year worldwide by 2050, according to a new report released by the United Nations Environment Program (UNEP). The document, entitled “Adaptation Finance Gap Report”, has been prepared by experts from 15 different organisations, and builds on a previous report published by UNEP in 2014.
The main message of the report is clear: failing to significantly reduce greenhouse gases emissions by the half of this century would dramatically increase the costs of adapting to the changes in climatic patterns around the world.
Previous figures released in a 2010 World Bank study suggested that climate change adaptation could cost between US$70 and US$100 billion per year for the 2010-2050 period. The new estimates published by UNEP are four to five times higher, indicating that those costs could range from US$140 billion to US$300 billion by 2030, and between US$280 billion and US$500 billion by 2050.
“It is vital that governments understand the costs involved in adapting to climate change,” declared Ibrahim Thiaw, Deputy Executive Director of the United Nations Environment Programme. “This report serves as a powerful reminder that climate change will continue to have serious economic costs,” he added.
Where do we stand?
As indicated by its name, the report also assesses what is known as the “adaptation finance gap” – the difference between what climate change adaptation will cost developing countries and the amount of financial resources made available to them to help them bear these costs.
The Paris Agreement, which was adopted last September in the French capital, sets a global goal regarding adaptation, which calls for enhancing adaptive capacity, strengthening resilience and reducing vulnerability to climate change.
The agreement also saw developed countries committing to support developing countries financially in their efforts related to climate change mitigation and adaptation. On that matter, the decision text adopted in Paris reaffirms the commitment to jointly provide US$100 billion annually by 2020 for mitigation and adaptation, and mandates countries to set a new more ambitious collective quantified goal prior to 2025.
Developing countries could thus expect, assuming that financial resources are evenly distributed between mitigation and adaptation, to receive US$50 billion annually by 2020 from developed countries to support their adaptation efforts, note the UNEP report.
At the moment however, while the costs of adaptation are estimated at between US$ 56 billion and 73US$ billion, total international public finance flowing to developing countries – which includes ODA and non-ODA finance, originating from developed and developing countries – only amounts to US$22.5 billion, indicates the document. Developing countries thus already face a significant adaptation finance gap today.
Moreover, since adaptation costs are expected to grow to US$140-300 billion per year by 2030 and US$280-500 billion per year by 2050, this finance gap could increase dramatically if new additional funding is not mobilised from public and private sources.
“The adaptation finance gap is large, and likely to grow substantially over the coming decades, unless significant progress is made to secure new, additional and innovative financing for adaptation”, said Ibrahim Thiaw.
Bridging the gap
Tackling this potentially increasing gap will thus be crucial to address future adaptation needs, states the Adaptation Finance Gap Report. In particular, the document stresses that actions on two separate fronts will be needed: (a) a first set measures aimed at reducing adaptation needs, and thus the costs of adaptation, and (b) another one for increasing the level of finance provided to support adaptation efforts.
Since adaptation costs are heavily dependent on emissions, mitigation has an essential role to play. By limiting the adverse effects of climate change, serious mitigation efforts would significantly reduce adaptation needs and the costs entailed in responding to them.
Nonetheless, the report also notes that even if effective emission reduction efforts are put in place, it is very likely that adaptation costs will sharply increase over time, making it necessary to scale up adaptation finance rather quickly.
As the report note, the UNFCCC process will be pivotal in that endeavour. UNEP also insists on the importance to bring all types of finance into play, including contributions from the private sector.
“A more systematic and explicit approach is required to both understand the extent to which private sector financing complements public sector budgets, and the ways in which private sector engagement can be bolstered,” states the report.
One of the ideas mentioned to materialize this objective lies in the establishment of legislation and policy framework which encourage private sector investment in adaptation efforts. Other experiences in mitigation and other environmental areas can be drawn upon in that purpose.