Alistair Hunt

Physical and economic consequences of climate change in Europe

Quantitative estimates of the economic damages of climate change usually are based on aggregate relationships linking average temperature change to loss in gross domestic product (GDP). However, there is a clear need for further detail in the regional and sectoral dimensions of impact assessments to design and prioritize adaptation strategies. New developments in regional climate modeling and physical-impact modeling in Europe allow a better exploration of those dimensions. This article quantifies the potential consequences of climate change in Europe in four market impact categories (agriculture, river floods, coastal areas, and tourism) and one nonmarket impact (human health). The methodology integrates a set of coherent, high-resolution climate change projections and physical models into an economic modeling framework. We find that if the climate of the 2080s were to occur today, the annual loss in household welfare in the European Union (EU) resulting from the four market impacts would range between 0.2–1%. If the welfare loss is assumed to be constant over time, climate change may halve the EUs annual welfare growth. Scenarios with warmer temperatures and a higher rise in sea level result in more severe economic damage. However, the results show that there are large variations across European regions. Southern Europe, the British Isles, and Central Europe North appear most sensitive to climate change. Northern Europe, on the other hand, is the only region with net economic benefits, driven mainly by the positive effects on agriculture. Coastal systems, agriculture, and river flooding are the most important of the four market impacts assessed.

Transaction costs of the Kyoto Mechanisms

Transaction costs will reduce the attractiveness of the Kyoto Mechanisms compared to domestic abatement options. Especially the project-based mechanisms Clean Development Mechanism (CDM) and Joint Implementation (JI) are likely to entail considerable costs of baseline development, verification and certification. The Activities Implemented Jointly (AIJ) pilot phase and the Prototype Carbon Fund (PCF) programme give indications about the level of these costs. Under current estimates of world market prices for greenhouse gas emission permits, projects with annual emission reductions of less than 50,000 t CO 2 equivalent are unlikely to be viable; for micro projects transaction costs can reach several hundred € per t CO 2 equivalent. Thus, the Marrakech Accord rule to have special rules for small scale CDM projects makes sense, even if the thresholds chosen advantage certain project types; projects below 1000 t CO 2 equivalent per year should get further exemptions. An alternative solution with no risk for the environmental credibility of the projects would be to subsidise baseline setting and charge lower, subsidised fees for small projects for the different steps of the CDM/second track JI project cycle.

Willingness to Pay to Reduce Mortality Risks: Evidence from a Three-Country Contingent Valuation Study

Valuing a change in the risk of death is a key input into the calculation of the benefits of environmental policies that save lives. Typically such risks are monetized using the Value of a Statistical Life (VSL). Because the majority of the lives saved by environmental policies are those of older persons, there has been much recent debate about whether the VSL should be lower for the elderly to reflect their fewer remaining life years. We conducted a contingent valuation survey in the UK, Italy and France designed to answer this question. The survey was administered in these three countries following a standardized protocol. Persons of age 40 and older were asked questions about their willingness to pay for a specified risk reduction. We use their responses to these questions to estimate the willingness to pay (WTP) for such a risk reduction and VSL. Our results suggest that the VSL ranges between Euro 1.052 and Euro 2.258 million. The VSL is not significantly lower for older persons, but is higher for persons who have been admitted to the hospital or emergency room for cardiovascular and respiratory problems. These results suggest that there is no evidence supporting that VSL should be adjusted to reflect the age of the beneficiaries of environmental policy. They are also partly inconsistent with the QALY-based practice of imputing lower values for persons with a compromised health status. We also find that income is positively and significantly associated with WTP. The income elasticities of the WTP increase gradually with income levels and are typically between 0.15 and 0.5 for current income levels in EU countries. We use the responses to the WTP questions to estimate the value of an extension in remaining life expectancy. We find that the value of a months extension in life expectancy increases with age and with serious cardiovascular and respiratory illnesses experienced by the respondent. The value of a loss of one years life expectancy is between Euro 55,000 and Euro 142,000.

Climate change impacts in Europe. Final report of the PESETA research project

The PESETA research project integrates a set of high-resolution climate change projections and physical models into an economic modelling framework to quantify the impacts of climate change on vulnerable aspects of Europe. Four market impact categories are considered (agriculture, river floods, coastal systems, and tourism) and one non-market category (human health). Considering the market impacts, without public adaptation and if the climate of the 2080s occurred today, the EU annual welfare loss would be in the range of 0.2% to 1%, depending on the climate scenario. However, there is large variation across different climate futures, EU regions and impact categories. Scenarios with warmer temperatures and higher sea level rise result in more severe economic damage for the EU. Southern Europe, the British Isles and Central Europe North appear to be the most sensitive regions to climate change. Northern Europe is the only region with net economic benefits, mainly driven by the positive effects in agriculture. Concerning the contribution to the overall effects, coastal systems, agriculture and river flooding are the most important ones.

The use of new economic decision support tools for adaptation assessment: A review of methods and applications, towards guidance on applicability

There is a growing focus on the economics of adaptation as policy moves from theory to practice. However, the techniques commonly used in economic appraisal have limitations in coping with climate change uncertainty. While decision making under uncertainty has gained prominence, economic appraisal of adaptation still uses approaches such as deterministic cost-benefit analysis. Against this background, this paper provides a critical review and assessment of existing economic decision support tools (cost-benefit analysis and cost-effectiveness analysis) an uncertainty framework (iterative risk management) and alternative tools that more fully incorporate uncertainty (real options analysis, robust decision making and portfolio analysis). The paper summarises each method, provides examples, and assesses their strengths and weaknesses for adaptation. The tools are then compared to identify key differences, and to identify when these approaches might be appropriate for specific applications in adaptation decision making.

Projection of economic impacts of climate change in sectors of Europe based on bottom up analysis: human health

This paper scopes a number of the health impacts of climate change in Europe (EU-27) quantitatively, using physical and monetary metrics. Temperature-related mortality effects, salmonellosis and coastal flooding-induced mental health impacts resulting from climate change are isolated from the effects of socio-economic change for the 2011–2040 and 2071–2100 time periods. The temperature-induced mortality effects of climate change include both positive and negative effects, for winter (cold) and summer (heat) effects, respectively, and have welfare costs (and benefits) of up to 100 billion Euro annually by the later time-period, though these are unevenly distributed across countries. The role of uncertainty in quantifying these effects is explored through sensitivity analysis on key parameters. This investigates climate model output, climate scenario, impact function, the existence and extent of acclimatisation, and the choice of physical and monetary metrics. While all of these lead to major differences in reported results, acclimatisation is particularly important in determining the size of the health impacts, and could influence the scale and form of public adaptation at the EU and national level. The welfare costs for salmonellosis from climate change are estimated at potentially several hundred million Euro annually by the period 2071–2100. Finally, a scoping assessment of the health costs of climate change from coastal flooding, focusing on mental health problems such as depression, are estimated at up to 1.5 billion Euro annually by the period 2071–2100.

Willingness to pay for mortality risk reduction associated with air pollution in São Paulo

Contents: 1. Introduction; 2. Background and Previous Work; 3. The Survey; 4. Results; 5. Conclusion. Epidemiological studies report significant association between air pol- lution and cardiovascular and respiratory mortality. Governmental inter- vention is required to implement policies aiming to increase air quality, and cost-benefit analysis can be useful to evaluate such policies. Reducti- ons in risks of death are arguably the most important benefit underlying air-quality policies, and therefore need to be valued in money terms. This paper presents a contingent valuation study conducted in Sao Paulo to es- timate the populations willingness to pay (WTP) to reduce their risk of death and the correspondent value of a statistical life (VSL). Results ranged between US

Impacts of climate change in human health in Europe. PESETA-Human health study

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Values and cost-benefit analysis: economic efficiency criteria in adaptation

6.1 million. Estudos epidemiologicos associam a poluicao atmosferica a mortes por doencas respiratorias e cardiovasculares. Nesse contexto, politicas governamentais que melhorem a qualidade do ar sao necessarias e a analise de custo-beneficio dessas politicas impoe que se estime, em termos monetarios, o mais importante beneficio associado a essas politicas: a reducao do risco de morte da populacao. Este trabalho apresenta um estudo de avaliacao contingente realizado em Sao Paulo que estima a disposicao a pa- gar (DAP) da populacao para reduzir seu risco de morte e o valor de uma vida estatistica (VVE). Os resultados variam entre US

Conservation of grassland butterflies in Finland under a changing climate

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