Shaping Climate Resilient Development - A Framework for Decision-Making
This report is based on the initial findings of a study by the Economics of Climate Adaptation Working Group (ECA), a partnership between the Global Environment Facility, McKinsey & Company, Swiss Re, the Rockefeller Foundation, ClimateWorks Foundation, the European Commission, and Standard Chartered Bank. Focusing specifically on the economic aspects of adaptation, the report outlines a fact-based risk management approach to use to understand the impact of climate on their economies – and identify actions to minimize that impact at the lowest cost to society.
The report outlines a step-by-step, evidence-based approach that a decision-maker anywhere can use to understand the economics of climate adaptation in their region. The approach has been applied and tested through on-the-ground test cases conducted in a variety of climate-sensitive regions and cities, in both the developed and developing worlds.
From eight case studies world-wide, ECA found that poor adaptation to current climate already destroys considerable economic value – in the locations studied between 1 and 12 percent of the GDP annually. They also found that economies are potentially more adaptable than some would expect. In the locations studied, between 40 and nearly 100 percent of the projected losses by 2030 – under high climate change scenarios – can be averted through cost-effective adaptation measures that are already known and tested.
The Working Group has developed this quantitative decision-making framework built around two sets of tools for decision-makers:
- Tools to quantify a location’s “total climate risk” which includes: an assessment of the expected annual loss to the location’s economy from existing climate patterns; a projection of the extent to which future economic growth will put greater value at risk; and an assessment of the incremental loss that could occur over a twenty-year period under a range of climate change scenarios.
- The framework uses cost-benefit discipline to evaluate a selection of feasible and applicable measures to adapt to the expected risk – spanning infrastructural, technological, behavioral and financial solutions.
One of the case studies is conducted in South Florida, focusing on hurricane risk - the hazard that poses the greatest danger to the region over the next twenty years. Although Florida as a whole is at risk from hurricanes, Broward, Miami-Dade and Palm Beach Counties at the state’s southern tip are particularly susceptible - having been hit by the greatest number of hurricanes, these counties also represent some of the largest population and economic centers in the State.
The case study investigated the climate- related hazards the area faces, assessed the potential damages of these hazards, and identified and evaluated potential measures to alleviate these losses. The study considered a range of infrastructural, technological, behavioral, and risk transfer measures, and identified several that should play a core part of a strategy to manage the region’s hurricane risk including: beach nourishment, new home improvement, vegetation management, barriers to water intrusion, and top layer risk.
Appendix 1 summarizes each of the eight test cases used to develop this climate-resilient framework.
Publication Date: September 2009
- Economics of Climate Adaptation Working Group
- Palm Beach County, Florida
- Best practice
- Planning guides