The Economics of Adaptation to Climate Change - An Integrated Assessment Framework

Current estimates of the cost of climate change in developing countries and of the needed adaptation measures are in very short supply. This is largely because the economics of adaptation to climate change is a new research area and no agreed methodology to assess adaptation costs has yet emerged. In addition, computations are made more complicated by data limitation in vulnerable countries. At the same time, an understanding of the full array of adaptation options is crucial to prioritize the most effective adaptation strategies. Better estimates of the overall budget implications of implementing ”climate resilient development” are needed to both enable developing countries to implement their national strategies and plans and to inform discussions concerning possible international assistance. The objective of this paper is therefore twofold. On the one hand, it develops technical knowledge and methodologies to assist developing countries cost, prioritize and sequence robust adaptation strategies into their development plans and budgets. On the other hand, it intends to estimate the global cost of adaptation to all developing countries in order to inform the international community’s efforts on the additional resources needed to allow developing countries adapt to climate change. As these twin objectives are somewhat at odds with each other, we adopt two different strategies in terms of methodology: a bottom-up approach at the country level and a top-down approach at the international level. The former is applied to six country case studies, in order to groundtruth on local databases and on work by national experts, as well as on discussions with local stakeholders. The latter relies on global datasets and combines inter-sectoral linkages within regions together with bilateral linkages among regions.