Counting the cost of climate change

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Published: Dec 19, 2007 Last modified: Apr 13, 2011

The future economic costs of climate change — known as the costs of inaction — will be significant in Europe, says a new European Environment Agency (EEA) report, released today.

The report, Climate change: the cost of inaction and the cost of adaptation, looks at the economic costs of climate change (impacts) at a European level. These costs are increasingly shaping the climate policy debate but the report highlights the fact that methodological issues and uncertainties remain in cost estimation.

Based on a review of existing information, the report also analyses the economic costs of climate change at a sector level in Europe, considering natural ecosystems, coastal zones, agriculture, energy, tourism, human health, water availability and the built environment.

Whilst detailed information is still limited, the report reveals that projected changes in climate are expected to have wide ranging impacts and economic effects. The overall net economic effects are still largely uncertain, however, there is a strong distributional pattern, with more adverse effects in the Mediterranean and south-eastern Europe.

The study also concludes that adaptation has an extremely important role in reducing these economic costs. However, a review of EEA member countries shows that whilst almost all countries are making progress in terms of recognizing the importance of adaptation, only a handful are progressing an economic perspective. It is crucial that countries begin to exchange information, share experience and learn lessons from each other, the report says.

A major element of the report is a review of the main methodological issues in estimating the costs of inaction and the costs of adaptation. The study shows that the evidence and understanding of the costs of inaction are still incomplete. Different assumptions and choices in the methodology lead to a very wide range of estimates. A number of challenges and research needs are identified which should be addressed in order to improve our understanding of the economic costs of climate change.

Ultimately, the report calls for improved information on climate change impacts and adaptation strategies, and recommends greater information sharing among EEA member countries.