The Anatomy of A Silent Crisis The Anatomy of A Silent Crisis

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18 Forum 2009: Climate Change – The Anatomy of a Silent Crisis “ In our globalizing world, the agenda is set by economics. It is therefore essential that the macroeconomic policy-making, as also the practices of government and multilateral lending and credit institutions and export credit agencies, must continue to take the environmental dimension into account.” Klaus Töpfer — Executive Director, United Nations Environment Programme (1998-2006) Overall economic impact of climate change Current economic losses due to climate change are significant — estimated at more than a hundred billion US Dollars annually Based on an update of the model by the report team used in the Stern review, 44 the economic costs and benefits of climate change add up to an economic loss of about $125 billion today, which is a mean value. In 2006, Nicholas Stern published a report, which estimated the long term economic costs of climate change, but also shows values for today. This report’s estimate is based on this model, 45 but includes an update of critical assumptions, which are further explained in “Notes on report methodology” in the appendix. The initiation of adaptation—steps to reduce the effects of climate change has been delayed until 2010 amid criticism that the Stern model assumed too early investment in adaptation in developing countries. Furthermore, Nicholas Stern has acknowledged that the model does not fully capture the effect of weather-related disasters. 44 This is supported by Professor Ross Garnaut’s 2008 report, commissioned by the Australian government, on the impacts of weather-related climate change effects in Australia. 46 Therefore, additional losses from natural disasters caused by climate change have been included in the model. 47 The new results obtained are higher than in the original Stern model and in line with Stern’s recent recognition that the Stern review underestimated the degree of damages and the risks of climate change. 48 For equity purposes and based on expert recommendations, the weight on poorer countries have been increased in this report to correct for income differentials, i.e. similar incomes across countries is assumed. To put these economic losses into perspective, $125 billion — the mean value of the calculation — is higher than the individual GDPs of 73 percent of the world’s countries, 49 the same as the total annual Official Development Assistance (the amount of humanitarian and development aid that flows from industrialized countries into developing nations), which was at about $120 billion in 2008 50 and higher than Afro-Asian trade which is expected to reach $100 billion in 2010. 51 These losses are also more than four times higher than the average estimated annual adaptation funding gap for developing nations. 36,52 The losses include asset values
The human impact of climate change – Already serious today 19 destroyed by weather-related disasters and sea level rise, lost income due to reduced productivity, and the costs of reduced health or injury. Figure 4 below shows the economic losses compared to other economic outcomes. Figure 4 — Comparing economic losses with other important economic outcomes *2008 **2009 Source: OECD. (2008): “Development Aid at its highest level ever in 2008.” ;Felix, A, IPP media. (2008): “Experts predicts Afro-Asian trade to exceed USD 100 billion by 2010. “; CIA World Factbook, 2008; European Commission. (2008): “Financial Programming and Budget”; Stern Review; Dalberg analysis The $125 billion losses are estimated using a global model which is based on ranges of projected losses from a comprehensive base of research. Property losses from weather-related disasters and economic losses due to reductions in agricultural yield constitute a significant part of these losses, but, it is difficult to separate out each input from the model. However, estimates from experts on property losses due to weather-related disasters and cereal production losses provide an idea of the magnitude of these two areas. According to Munich Re the average economic losses due to weather-related disasters amounted to around $115 billion per year between 2004 and 2008. A 40 percent climate change attribution would give losses of $46 billion. It is estimated that climate change could impact global cereal production by 50 million tons in 2020. 30 50 million tons translate into roughly $10 billion losses for cereal farmers. 53 For example, climate change is projected to cost corn growers in the United States alone over $1.4 billion annually in the near future, and has already cost corn growers globally $1.2 billion since 1981. 54 If losses in all other agricultural sectors like fruits, vegetables, livestock (cattle, chickens, dairy etc) and cash crops like cotton and tobacco were taken into account, this would more than double this figure. 55
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Climate change is here. It has a hu
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