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The Full Costs of Climate Change

There is increasing interest in the economics of climate change to:

  • Provide important information on the costs of inaction (the economic effects of climate change);
  • Assess the costs and benefits of adaptation;
  • Inform the policy debate on long-term targets and mitigation policies.

Although relatively detailed and comprehensive research has been carried out in these areas, there are many gaps in the assessment of the full costs of climate change.

Using detailed disaggregated, bottom-up approaches, and top-down aggregated analysis, this project aimed to advance the knowledge across all of the three areas above.

The objectives of ClimateCost were to advance knowledge across the areas outlined above, by:

  • Identifying and developing consistent climate and socio-economic scenarios, including for mitigation.
  • Quantifying the effects of climate change in Europe, in physical terms and economic costs (for coastal zones, health, ecosystems, energy, agriculture and infrastructure), and identifying the costs and benefits of adaptation.
  • Assessing the impacts and economic costs of major catastrophic and socially contingent events.
  • Updating the costs of mitigation, including (induced) technological change, non-CO2 GHG and sinks, and recent abatement technologies.
  • Quantifying and monetising the ancillary air-quality co-benefits of mitigation in Europe, China and India.
  • Developing a number of existing global level economic Integrated Assessment Models (IAMs).
  • Providing policy relevant output, including analysis of policy scenarios.

The project aimed to advance multi-disciplinary research, developing integrated bottom-up and top-down analysis, and directly engaging policy makers to provide policy relevant outputs.

The ClimateCost study was producing an existing set of climate and socio-economic scenarios and climate model outputs for Europe, as well undertaking new climate model runs.

These were input into bottom-up sectoral impact assessment models, to assess the impacts and economic costs of climate change and the costs and benefits of adaptation, at a sector level across the EU and at Member State level.

In the study major climate discontinuities (tipping elements) have been reviewed and analysis of the impact and economic costs of major sea level rise have been undertaken.

A set of mitigation models (POLES, GEM-E3, PACE), and quantify the ancillary air quality benefits (including monetary benefits) of mitigation have been updated and applied. In addition  a number of models that assess the costs and benefits of climate change policy, including computerised general equilibrium models and integrated assessment models (including PAGE, FUND, WITCH) have been updated and applied.

Finally, all of this information have been brought together to provide policy relevant results.

The ClimateCost project results are summarised below.

·         The study analysed climate model projections for Europe, for a business as usual and mitigation scenario. The analysis is summarised in Policy Briefing Note 1.  This provided key information on the distributional patterns of climate change across Europe and analysis of climate model uncertainty.

·         The study undertook a harmonised analysis of the impacts and economic costs of climate change in Europe, undertaking sector impact assessment for a business as usual and mitigation scenario.  This included analysis of: coastal zones, river floods, energy, agriculture and health.  For coastal zones and river floods, adaptation costs and benefits were also assessed. The sectoral results are reported in a series of Policy Briefing Notes.

·         The project undertook updates to a suite of European and global mitigation models, updating the POLES, PACE and GEM-E3 models. This included new technological detail in the POLES model and the improved modelling of the agriculture sector.  The updated models were used in the European Commission (DG CLIMA) Communication on the Roadmap for moving to a competitive low carbon economy in 2050.

·         The study assessed the air quality benefits of mitigation scenarios for Europe (and China and India), assessing the health, ecosystems and economic benefits of mitigation scenarios.  This revealed very large co-benefits from mitigation policies in Europe, even by 2050.  The results are summarised in Policy Briefing Note 6.

·         The project progressed an analysis of the economic costs and socially contingent impacts of major tipping elements (tipping points), including analysis of the impacts and economic costs of extreme sea level rise scenarios for Europe and the world. These are summarised in Policy Briefing Note 7.

·         A number of Computable General Equilibrium and Economic Integrated Assessments Models were updated and run as part of the study, including the ICES-WITCH, GEM-E3, PAGE and FUND models. The work included a major update of the PAGE model (PAGE09). These models were used in a series of policy analysis runs, and published in a number of working papers and academic journals.

Stockholm Environment Institute, Oxford GB
European Commission – JRC ES
Danish Meteorological Institute DK
Potsdam Institute for Climate Impact Research DE
University of Southampton GB
Fondazione Eni Enrico Mattei IT
International Institute for Applied Systems Analysis AT
Metroeconomica GB
Institute of Communication and Computer Systems GR
Katholieke Universiteit Leuven- Center of Economic Studies BE
AEA Technology plc GB
Universidad Politécnica de Madrid ES
Paul Watkiss Associates GB
Economic and Social Research Institute EI
London School of Hygiene & Tropical Medicine UK
Zentrum für Europäische Wirtschaftsforschung DE
University of the Aegean GR
University of East Anglia GB
Charles University Environment Center CZ
Université de Grenoble-2 FR
The Energy and Resources Institute IN
Energy Research Institute (ERI) CN