Miljøprojekt, 1122 – Metodemæssige problemstillinger i forbindelse med samfundsøkonomiske vurderinger af klimatilpasningstiltag

Metodemæssige problemstillinger i forbindelse med samfundsøkonomiske vurderinger af klimatilpasningstiltag

Summary and conclusions

Background
Objective
Conclusions and contents

Background

The Danish government has taken steps to initiate investigations into adaptation of society to the climate of the future. The investigations are addressing the fact that the UN's Intergovernmental Panel on Climate Change considers that anthropogenic global climate change is already taking place and the consequences of this will occur, no matter what initiatives are implemented in the short term to limit emissions of greenhouse gases etc. Therefore there is an increasing need to:

chart the likely physical consequences of climate change in Denmark,
analyse the social consequences (negative and positive) which can be expected as a result of reactions by consumers and producers to the physical consequences of climate change, and finally
assess what initiatives will be appropriate to mitigate the negative consequences and remove barriers to the positive consequences respectively.

These activities all take part of the investigation work. The assessments are based on three different scenarios, each of which represents a possible course for climate change, and each of which gives rise to different consequences for society. Scenarios will therefore also exhibit different needs to implement adaptation initiatives, or in other words, the same adaptation initiative will not necessarily be equally advantageous in all three scenarios. In order to illustrate these advantages, as part of the investigation work the initiatives will be subject to socio-economic assessment.

Objective

The objective of this project is to illustrate the methodological problems involved in completing socio-economic assessments of climate adaptation initiatives. The aim is to clarify the assessment problems, to ensure uniform and consistent assessment of initiatives, and to outline the information base necessary to make sure that the assessments can be completed meaningfully.

Conclusions and contents

When making socio-economic assessments of projects with an environmental subject matter, interest often concentrates on whether environmental impacts can be valued, and if so how, as well as what discount rate should be applied in the calculations. Therefore, these problems are clearly also present in climate adaptation initiatives, but they only become relevant once the specific economic assessments which actually have to be completed have been identified. Before reaching this far, a large number of assumptions for calculations must be thought through and set, and the likely consequences of both climate change and adaptation initiatives must be described and analysed in a way that makes them suitable to form a basis for an economic assessment.

Before specific economic calculations can be performed, ideally the following should be carried out within each climate scenario.

Establish a long-term socio-economic base scenario for Denmark.
Describe the direct physical consequences of climate change in relation to this base scenario.
Describe the automatic or spontaneous adaptation by consumers and producers to these consequences.
On the basis of the results of this spontaneous adaptation, consider, describe and suggest a number of planned adaptation initiatives.
Describe the consequences of implementing the suggested adaptation initiatives.

These tasks represent great professional challenges and they are also entirely necessary as the basis for implementing appropriate, uniform, consistent and meaningful economic assessments of climate adaptation initiatives. The descriptions and analyses also have an independent value in relation to the objective of the investigation work.

Ideally, actual socio-economic assessment of the suggested adaptation initiatives should not be embarked upon until after the tasks above have been completed satisfactorily. In this report it has been assumed that these socio-economic assessments are carried out as cost-benefit analyses, although in a number of cases it may be a good idea to supplement these with other methods. In connection with these assessments, the problems regarding valuation of environmental benefits, discounting, and bottom-up vs. top-down approaches to the analyses become relevant, but the way in which these problems should be tackled in the context of climate adaptation will not differ significantly from assessments of other types of environmental projects.

The conclusions above are reflected in the contents and structure of the report. Chapter 1 describes the basic climate scenarios, it discusses the relationship between climate consequences and adaptation, and it establishes a basic reference system for use in economic assessment of climate adaptation initiatives. Chapter 2 reviews a number of important problems to be addressed in connection with the actual organisation of the economic assessments and in setting the assumptions for these. Chapter 3 briefly reviews a number of assessment methods which can be used in assessing climate adaptation initiatives. Focus is on cost-benefit analyses, but budget-economic analyses and multi-criteria methods as well as deliberate approaches are also mentioned. Chapter 4 deals with methods of valuation in cost-benefit analyses, and there are examples and discussion in relation to the climate adaptation problems. Discounting in climate adaptation is very briefly reviewed in chapter 5. Discounting problems in general are examined in more depth in annex B. Uncertainty is naturally a central theme in connection with the climate problem, and this is tackled separately in chapter 6. Finally, annex A is a review of how a number of concepts in relation to climate change and consequences have been used in the report.