1

Assessing the Benefits of Mitigation & Adaptation:

Recent results from the OECD

Jan Corfee-Morlot, UCL & OECDj.morlot@ucl.ac.uk

Shardul Agrawala, OECD

shardul.agrawala@oecd.org

Dennis Tirpak, OECD

dennis.tirpak@oecd.org

2

Related Products

Mitigation, Avoided Impacts & Economic Benefits:

OECD 2004 The Benefits of Climate Change Policies, Paris

Global Environmental Change, Special Issue, 2004, Vol 14

Adaptation & Development Co-operation:OECD, 2005, Bridge over Troubled Waters,

Paris

3

Contributors & Financial SupportBenefits AuthorsMac Callaway, Jake Jacoby, Eberhard Jochem, Roger Jones, Michael Hanemann,Sam Hitz & Joel Smith, Rik Leemans & Bas Eickhout, Robert Nicholls & Jason Lowe, John Schellnhuber & Rachel Warren, Steve Schneider, Richard Tol, Tom Wigley, Gary YoheDevelopment/CC AuthorsAhsan Ahmed, Walter Baethgen, Declan Conway, Mohamed El-Rey, Marten van Aalst, James Risbey

Government Sponsors & Experts (Benefits):

● Canada: Lynda Danquah

● Germany: Petra Mahrenholz

● UK: Michele Pitinni & Mutjaba Rahman

● US: Jane LeggettOther experts Benefits): ● Martin Parry, Farhana

Yamin, Merylyn McKenzie-Hedger, Philippe Ambrosie…

4

OECD role in policymaking

● Facilitate exchange between research and policy communities

● Structure policy dialogue based on “shared” analysis

● Publications reviewed by policymakers and government experts

● Committee structure serves networking function to build trust, policy capacity and knowledge

● Not a research institute nor a policymaking organisation

5

1. Global Trade-offs (more adaptation => less mitigation?)– Thresholds and guardrails - how to avoid “dangerous” anthropogenic

climate change?

– Optimal portfolio of responses- CBA frameworks

– Cost-effectiveness for a given set of mitigation objectives

2. National/Local Synergies & Trade-offs in Development Context– Intimate set of interactions with development choices and investments

(developing countries)

– Some strategies contribute to both mitigation and adaptation (eg: zero tillage agriculture; coastal mangroves)

– Other strategies may be needed for adaptation but exacerbate mitigation challenge

Mitigation and Adaptation Benefits:

two different ways of thinking about these

6

Outline

1. Framing climate policy debate2. Global benefits of climate policy, early

results:• Global impacts & mitigation• Framework for future work - global/regional

3. Development and climate change in local context:

• Nepal case

4. Next steps on benefits

7

1. Framing the issues: policy discourse

• Increased sense of urgency -- driven by science and rise in public concern

• Break down in international process (e.g. US withdrawl from Kyoto) makes negotiations more complex

• Adaptation & mitigation - international/national• Kyoto in place - attention to post-2012 commitments• How much and when to mitigate globally? Why?• Who needs to participate? When? How?• How does the development-climate policy nexus fit in?

8

Framing: Benefits of Climate Policy

Two Observations (from TAR):● An over-emphasis on costs of mitigation at

different levels of GHG concentration ● Policy emphasis in the impact community

has been on adaptationTwo Questions:Have we lost sight of mitigation policy

benefits? Do we understand them sufficiently to

promote further mitigation?

9

• “comprehensive, quantitative estimates of the benefits of stabilization … do not yet exist”

….yet Article 2 requires policymakers to link knowledge about impacts to mitigatiion policy…

• The TAR commented on impact implications of different stabilisation decisions - a start on “benefits”

Framing the policy questions

10

2. Benefits of Climate PolicyStarting point: direct, avoided impact benefits matter in the

global mitigation policy debateOverall objective: improve information on benefits for

climate policymakersSpecific aim: develop a framework for considering

mitigation benefits and research agendaFocus:● What incremental benefits at increasingly aggressive levels of

mitigation (or lower levels of climate change)? ● How to assess & communicate these benefits? ● How do benefits of mitigation interact with adaptation? ● What is the nature of the risks of climate change and how well do

analytical tools and data represent these risks?

11

Key challenges: distribution over space & time

Long termNear term

Global

Local

Regional

Adaptation costs and benefits

Mitigation costs and

ancillary benefits

Mitigation benefits -

avoided climate impacts : uneven distribution, not always where mitigation occurs

12

2. Early results, 2004

● Patterns of change in the global impacts literature (Hitz & Smith)

● Sector issues: ecosystems (Leemans & Eickhout) and sea-level rise (Nicholls & Lowe)

● Risk frameworks and climate policy assessment (Jones, Schneider & Lane, Wigley)

● Framework benefits assessment & on-going work (Jacoby)

13

Hitz & Smith, e.g. Agriculture(from Hitz and Smith 2004)

Percent Change in Number of People at Risk of Hunger

0

10

20

30

40

50

60

0 0.5 1 1.5 2 2.5 3

°C

Per

cent

cha

nge

in n

umbe

r of

peo

ple

at r

isk

HadCM2

HadCM3

2020s443 ppmv CO2

2020s441 ppmv CO2

2050s527 ppmv CO2

2050s565 ppmv CO2

2080s642 ppmv CO2

2080s731 ppmv CO2

250 million people at risk of hunger in reference scenario.

Parry et al., 1999

-10

0

10

20

30

40

50

0 1 2 3 4 5

% c

hang

e in

num

ber

of p

eopl

e

Level 2 Farm AdaptationLevel 1 Farm AdaptationLow Temp. No Farm Adaptation

GISS

GFDL

UKMO641 million people at risk in 2060 Reference Scenario

GFDL

GISS

UKMO

Adaptation Level 1:Shifts in planting date (+/- 1 month)Additional application of irrigation water to crops already under irrigationChanges in crop variety to currently available varieties

Adaptation Level 2:Large shifts in planting date (>1month)Increased fertilizer applicationInstallation of irrigation systemsDevelopment of new crop varieties

Rosenzweig et al., 1995

● Adaptation lowers impacts

● All agricultural studies show increasing damages beyond 3-4° C

● Global studies only

● Use original impact metrics

● Plot impacts against GMT increase

14

Agriculture and Forestry - Market Impacts(Hitz & Smith, 2004)

At global level, some studies show positive impacts at low levels of climate change, turning to negative and increasing damages at higher levels of climate change

● These findings generally do not take into account :– changes in extreme events – interactions with other “sectors” e.g. water

availability and infrastructure investment

● Baseline, adaptation assumptions vary as do GCM/climate drivers

15

Ecosystems - Non-Market Impacts Leemans and Eickhout, 2004

● Look at area shifts by ecosystem, biodiversity and ability to adapt for 1, 2 and 3ºC GMT increase by 2100

● Show negative impacts at low levels of climate change– Look across multiple indicators to show negative biodiversity

and dispersion impacts along side of positive net ecosystem productivity

● Rate of T change a key driver

● Some ecosystem types (e.g. forests) more vulnerable than others (e.g. grasslands) given long-time frames needed for adaptation

● Wooded tundra particularly vulnerable in 21st century, replaced by boreal forests at low levels of change

● Need more studies of this type

16

Coastal Zone Impacts

● Nicholls and Lowe examine coastal zone impacts with different mitigation strategies

● Long-term commitment to sea level rise due to thermal lags in the ocean

● Benefits of mitigation will appear in next century and beyond

● CZ impacts will be delayed rather than avoided through mitigation

● Mitigation provides more time for planned adaptation

17

Aggregate global damage estimates need more work

-11

-10

-9

-8

-7

-6

-5

-4

-3

-2

-1

0

1

2

3

0 1 2 3 4 5 6

Global Mean Temperature (°C)

Per

cent

of W

orld

GD

P)))

Mendelsohn, output

Nordhaus, output

Nordhaus, population

Tol, output

Tol, equity

Tol et al. 2000 (reproduced in TAR - Ch. 19; data from Mendelsohn and Schlesinger, 1997; Nordhaus and Boyer, 2000; Tol, 2000)

• No agreement about the sign of change up to 2-3 C.

• Compares apples & oranges (i.e. range of aggregation & valuation approaches, views about development baselines)

18

Global physical impacts literature is inconsistent and partial: weak basis for

integrated assessment

● Sector impacts can be plotted as function of GMTI -– although must be extrapolated from diverse literature, climate

scenarios and socio-economic baselines

● There are often no common metrics for change or harm, especially in non-market sectors

● Shape of damage functions & level of confidence vary by sector● Limited number of studies in any one sector● Even key issues often receive little or no attention in sector impact

modelling, e.g. in agriculture:– With & without adaptation, CO2 fertilisation

19

Shape of the damage curve and confidence varies by sector

Source: based on Hitz and Smith 2004

1 2 3 4 5 6

0

Damages

(-)

(+)

Benefits

• Agriculture (M/L)

• Terrestrial ecosystem productivity (M)

• Forestry (L)

• Coastal (H)

• Health (M/L)

• Marine ecosystems (L)

• Biodiversity (M/H)

• Water

• Energy

• Aggregate costs

?0

1 2 3 4 5 6

T ∆

0

1 2 3 4 5 6

T ∆ T ∆

ParabolicIncreasing

adverse Unknown

Indicative shapes of damage curves

20

Economic damage cost literature and integrated assessment:

limited by the physical impacts literature

● Aggregation methods and value judgements drive outcomes– Discounting over time– Aggregation across regions (e.g.equity or output weighting)

– Aggregation across sectors (e.g. substitution and valuation of irreversibility or not)

● Valuation studies in non-market sectors are limited in scope – empirical basis for analysis is lacking, questions about transfer

methods

● Including missing issues , such as abrupt change, influence recommendations from policy analyses– E.g. Nordhaus & Boyer 2000, Keller et al. 2000, Mastrandrea &

Schneider 2001, & others…

21

Early “Policy-Relevant” Conclusions

● Ambiguity whether there are aggregate benefits of mitigating to low levels of climate change for market sectors, where distribution across regions is uneven and therefore aggregation is determinant

● Coastal zone benefits are in the form of delayed impacts, as mitigation will slow but not avoid SLR

● Ecosystems & biodiversity show benefits even when mitigating at low levels of climate change, results are sensitive to rate of change

● Global damages clearly emerge in all sectors & begin to increase at moderate levels of climate change

● Lots of caveats:– extrapolation from limited impacts literature under varying

assumptions; no treatment of surprises; no treatment of irreversibilities; no global studies in some areas, etc..

22

Dealing with Uncertainty and Risk

● An essential part of our proposed framework● Assess and communicate uncertainties with

impact metrics● Use probabilistic tools where appropriate● Thresholds as a tool for risk management● Sector/system thresholds may be relevant at

the regional level: – e.g. draw on existing institutions & practices

• flood and coastal zone management; ecosystem preservation practices; etc.

See papers: Jones; Jacoby; and Schneider

23

2. Framework for the Assessment of Benefits (Jacoby 2004)

Benefits are incommensurableCoverage: partial not comprehensive – aim to

improve information compared to todayFocus:● systems and sectors sensitive to climate

change and responsive to climate policy● Risk assessment – management emphasis● Portfolio of nested indicators

– 1: A common measure (or set of measures) of climate change– 2: Regional indicators climate change impacts (physical and

monetary)– 3: Regional valuation

24

Starting point: The two-way relationship between development and climate change

Overall objective: To provide guidance on how to mainstream responses to climate change within development planning and assistance

Focus : On links between climate change, natural resource management and economic development in developing countries

Case Studies: Country case studies in Bangladesh, Egypt, Fiji, Nepal, Tanzania, Uruguay, and Vietnam

3. Linking Climate Change and Development:Bridge Over Troubled Waters

25

Nepal Case Study

High Himalayas show a temperature increase of 0.1 C/decade – almost twice the 20th century global average

26

National Climate Scenarios (2030, 2050, 2100)

Temperature change (°C) mean (standard deviation)

Precipitation change (%)mean (standard deviation)

Year Annual DJF1 JJA2 Annual DJF JJABaseline average 1433 mm 73 mm 894 mm2030 1.2

(0.27)1.3

(0.40)1.1

(0.20)5.0 (3.85) 0.8 (9.95) 9.1 (7.11)

2050 1.7 (0.39)

1.8 (0.58)

1.6 (0.29)

7.3 (5.56) 1.2 (14.37)

13.1 (10.28)

2100 3.0 (0.67)

3.2 (1.00)

2.9 (0.51)

12.6 (9.67)

2.1 (25.02)

22.9 (17.89)

� Based on MAGICC/SCENGEN analysis of 17 (post 1995) GCMs

� Comparison across GCM results reveals robust projections of continued temperature increase. Winter precipitation is uncertain, but monsoon precipitation shows a significant increase

27

Adaptation, Mitigation and Development: Synergies & Conflicts in Nepal

● 95% of Nepal’s electricity generation is from hydropower

● Climate change critically threatens Nepal’s hydropower – through GLOFs, reduced low flow dependability, increased sediment

loading

● Adaptation is critical to Nepal’s maintenance of hydro capacity and also relevant to mitigation. Without hydropower other more polluting options may be considered, including coal.

● Nepal is also an electricity exporter to Northern India. Northern India’s energy mix could also be affected if Nepal’s hydro-potential were to suffer.

28

Synergies & Conflicts in Nepal (2)

● Specific adaptation responses are at times mutually conflicting, and have both synergies and conflicts with mitigation, and national development priorities– One adaptation to Glacial Lake Floods is micro-hydro

(diversified risk), which has synergies with rural development.

– Adaptation to reduced low flow dependability requires Storage Hydro, which may exacerbate GLOF risks, and also be in conflict with environmental priorities.

● Adaptations have a cost and require information and institutional capacity to coordinate amongst donors and agencies

● Effective adaptation takes time and resources - no free lunch

29

Determinants of Impacts & Damage Costs Are Often Embedded in Development Baselines

Benefits of

Emissions Reductions

Carbon Emissions

More Sensitivity to Rate of Change

More Activity in Sector More Adaptation

More Technological Change

Other Important Factors:Climate sensitivity, wet or dryclimate scenarios

Source: Adapted from Weyant, 2003

More wealth, Lower vulnerability

30

4. “Benefits” Phase II Work

Aim: Improve information on benefits of mitigation and adaptation for policymakers

● 6-7 July 2006, G.Yohe to chairFocus:

● Selected sectors: mitigation and adaptation in a risk framework

● Survey sector impact metrics, modelling tools for global & regional assessment of physical and economic benefits

● 2 commissioned papers : – agriculture (Rosenweig et al)– sea-level rise (Nicholls et al)

● Call for national and regional analyses, through OECD government experts

31

Metrics for Assessing Economic Beneftis of Climate Change Policies

(Nicholls et al in press)

Approach to identifying SLR impact metrics● Literature review● Expert meeting● Survey/Questionnaire

– 65 returns from 10 countries– 10 different disciplines (financial to cultural

heritage)

32

Concluding Thoughts

● Organise impact information to also inform mitigation policy assessment (not just adaptation)

● Build regional understanding of impacts to consider thresholds for vulnerability & to develop basis for valuation of impacts

● Strengthen sector/regional assessments to improve understanding of adaptation potential/cost, impacts and damages in different regions, with and without mitigation

● Quantify and account for non-market risks (e.g. ecosystem) :– common metric(s)

– standard methods to assess “goods” and “bads”

● Improve empirical basis for understanding risks, including through deliberative processes with different “audiences””