1. EEA-JRC-WHO 2008 Report on Impacts of Climate Change in Europe
III. Advisory Group Meeting
Economic Consequences of Climate Change Impacts
23 April 2008
Etem Karakaya, PhD
Project Manager Climate Change and Energy
European Environment Agency

2. Structural Changes Original Indicators
New Decision to prepare it as a seperate chapter (CHP. 6)
-Expanded with new sectors
6.1 Introduction
6.2 Direct losses from weather disasters
6.3 Normalised losses from river flood disasters
6.4. Energy
6.5. Coastal Areas
6.6. Agriculture and Forestry
6.7. Tourism and recreation
6.8.Health
6.9. Public water supply and drinking water management
6.10. Nature and Biodiversity
6.11. The Costs of Climate Change for Society

3. Market effects (e.g. estimates captured through markets such as energy and agriculture);
- Non-market effects (e.g. estimates for health and ecosystems);
- A sub-category of non-market effects - termed socially contingent effects – defined as large scale dynamics related to human values and equity that are very poorly represented in cost values, e.g. from regional conflict, famine, poverty.

4. 6.2. Weather Related Natural Disasters
•In Europe, about 90% of all catastrophic events since 1980 are directly or indirectly attributable to weather and climate extremes
•Economic losses resulting from weather and climate related events have increased significantly during the last 25 years. Five out of the seven years with the largest weather related economic losses in this period have occurred since 1999.
•The average number of annual disastrous weather and climate related events in Europe increased by about 65 % over the period compared with the 1980s decade.
•Climate change projections show an increasing likelihood of extreme weather events. Thus, a future increase in damage costs of these events is likely.

5. 6.2. Weather Related Natural Disasters
Natural disasters in Europe* 1980 – 2007 Number of events
*EEA defined countries

6. 6.2. Weather Related Natural Disasters
Weather disasters in Europe*
Overall and insured losses (in bn Euro)
*EEA defined countries
© 2008 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE
As at March 2008
Trend overall losses
Overall losses (2007 values)
Insured losses (2007 values)
Trend insured losses
Euro bn

7. 6.3. Normalised Losses from river flood disasters
Economic losses as consequence of extreme flood events have been dramatic in recent years.
Flooding disasters in Germany, Czech Republic, Austria, Poland, Italy, UK and France during the 1990s and 2000s contributed to a significant increase of economic losses in Europe. Central’s Europe losses in 2002 were of EUR 17.4 billion. This amount is more than the GDP of Bulgaria in that year. Recently, in summer 2007 the cost of the floods in UK was of about EUR 4.3 billion.
Although there is scientific evidence of an ongoing intensification of the water cycle there is no homogeneous trend in extreme river flows in Europe. Analyses of long-term records of flood looses indicate that societal and economic factors clearly play an important role in the observed upward loss trends.
Failing to adjust for economic factors yields flood losses that are not comparable over time and an ever-growing upward trend as result of increasing exposure and values in catastrophe regions.

8. 6.4. Energy Sector: HDD, CDD
Source: Information from Alcamo et al, IPCC AR4
HDD and CDD (cooling degree days) are parameters that can be derived from results of global climate models. The forecast trends in Europe suggest further reductions in heating degree days, and further increases in cooling degree days, due to mean average temperature increases over future years. For cooling, there may be additional peaks associated with heat-waves.
For Europe, the overall changes in energy and economic costs (at a net level) are predicted to be modest in the short-medium term, due to the aggregated effects of decrease winter heating demand vs. increased summer cooling demand. However, strong distributional patterns are expected across Europe – with rising cooling (electricity) demand in summer in Southern Europe, compared to reduced heating (energy) demand in winter in Northern Europe (Alcamo et al, 2007) – summarised in the figure below. This translates in likely net benefit to Northern Europe because of the high current space heating levels, but net negative impacts for Southern Europe.

9. 6.4. ENERGY: Hydropower
• The projected change in river runoff due to climate change will result in an increase of hydropower production by about 5 % and more in northern Europe and a decrease of about 25 % or more in the south (medium confidence).
• Climate change could have a negative impact on the thermal power production as most studies show that summer droughts will be more severe, limiting the availability of cooling water in terms of amount and adequacy of the temperature and power plant efficiency (high confidence).
• Dam safety may be affected under changed climatic conditions with more frequent extreme flows and possibly natural hazards (medium confidence).

10. 6.4. ENERGY: Hydropower
Projected changes in hydropower production potential in Europe

11. 6.5. Coastal Areas
People flooded (thousands/year) across Europe (coastal areas)
People flooded (thousands/year) across Europe (coastal areas)
Top Baseline. Bottom. for the IPCC SRES A2 scenario, 2080s (ECHAM4), without adaptation (Richards and Nicholls et al, 2007 from PESETA)

12. 6.6. Agriculture and Forestry
The hot summer of 2003 in Europe is estimated to have led to $15 billion in economic losses to farming, livestock and forestry from the combined effects of drought, heat stress and fire. In the future, extreme events as a consequence of climate change are expected to increase
• Climate-related increases in crop yields are expected mainly in northern Europe, but with reductions in the Mediterranean and the south-west Balkans. These show that south and west Europe could experience a decrease of yields of 10% or more, though there is an equivalent improvement of yields in Nordic countries
• There are likely to be future changes in forest growth – and so economic consequences - with climate change, though projections of future net changes in Europe are uncertain. There are also observed changes in forest fires, and these lead to economic costs through losses and through the costs of fire fighting. Forest fires are likely to increase under a warmer climate, with increased economic costs

13. 6.6. Agriculture and Forestry
Simulated crop yield changes by 2080s relative to
the period

14. 6.7.Tourism and Recreation
Mountain tourism and coastal tourism are the tourism segments that are most vulnerable to climate change in Europe, with potentially large economic consequences.
• The Mediterranean region is the world’s most popular holiday region and the Tourism Comfort Index (TCI) demonstrates that the mean observed climate of the region is extremely suitable for tourism.
• TCI projections show that the Mediterranean will decline in suitability during the key summer months, however there will be an increase in suitability during the shoulder (Spring and Autumn).
• Tourism is one of the most important industries within the EU and regionally the dominant one. Changes in a destination’s suitability for tourism as a result of climate change are likely to produce shifts in the major flows of tourism within the EU.
• Economic implications critically depend on the types of adaptation chosen by tourists, a factor we know little about.

15. 6.8. Health
Climate change is likely to affect human health, either directly related to the physiological effects of heat and cold, or indirectly, for example, through the increased transmission of food-borne / vector-borne pathogens, or through the flooding. These changes will have economic consequences, e.g. through medical costs, lost time at work, and additional spending to avoid pain and suffering
• Adaptation measures such as surveillance and outbreak control already exist, and these build on well-establish public health approaches (high confidence). Most adaptation measures appear to be low cost, though further work is needed to assess the full cost of adaptation.

16. 6.9. Public water supply and drinking water management
• Economic consequences of climate change impacts will be particularly pronounced for those areas where increases in water stress are projected. The percentage area under high water stress in Europe is likely to increase from 19% today to 35% by the 2070s, and the additional number of people affected by the 2070s is expected to be between 16 millions and 44 millions.
• Evaluation studies of economic consequences of increasing water stress are now emerging. They indicate that adaptation costs are generally significantly lower than the economic losses incurred otherwise.

17. 6.10. Nature and Biodiversity
• While methods for valuation of ecosystems are improving, it is as yet not possible to cover the full range of ecosystem productivity, goods and services, and the economic benefits to users and non-users.

18. 6.11. The Costs of Climate Change for Society
• The total projected economic losses of the impacts of climate change are difficult to assess, and the literature shows a very wide range of results. Due to the many uncertainties involved, there is not one single “true” value that can be reported by science to policy makers.
• Macro-economic and micro/sectoral economic assessments rely on different methodologies for different levels of analysis and purposes. They provide complementary estimates to better inform policy makers.

19. Requests from JRC-IPTS
PESETA Project
- Economic costs of people flooded across Europe (coastal areas) for the baseline and the SRES scenarios. We currently have the maps for the number of people flooded but would like to include the related costs.
- Economic costs of crop yields changes by 2080s relative to for SRES scenarios. Here again, we have the maps for the crop yield changes but would like to include the related economic costs.
- Economic costs resulting from future changes in tourism patterns. We currently have the simulated conditions for summer tourism in Europe but are missing the economic valuation.
- Economic costs resulting from changing patterns in heating and cooling demand.

20. Conclusions
Needs shortening
Avoid repetition
More economics focus