COACCH / CO-designing the Assessment of Climate CHange costs

There is growing recognition that international trade can transmit climate risks across borders, requiring new forms of and approaches to adaptation. This advanced review synthesizes knowledge on how, by whom and where adaptation actions can be taken in the agriculture and industrial sectors to reduce these transboundary climate risks (TCRs). We find a material difference in the literature on TCRs in agriculture as compared with industrial sectors. Operational and market risks, in particular reductions in food availability, dominate in agriculture, while supply chain and trade‐related risks are highlighted for industry. While the origin of the risk (source) is the primary target of adaptation to agricultural TCRs, the general governance structure, such as UNFCCC and WTO deliberations, are important targets in both sectors. Adaptation at the country of destination and along the trade network is of minor importance in both sectors. Regarding the type of adaptation option, agriculture heavily relies on trade policy, agricultural adaptation, and adaptation planning and coordination, while in industry knowledge creation, research and development, and risk management are seen as essential. Governments and the international community are identified as key actors, complemented by businesses and research as critical players in industry. Some measures, such as protectionist trade policies and irrigation, are controversial as they shift risks across countries and sectors, rather than reduce them. While more research is needed, this review shows that a critical mass of evidence on adaptation to TCRs is beginning to emerge, particularly underscoring the importance of international coordination mechanisms. This article is categorized under: Vulnerability and Adaptation to Climate Change > Institutions for Adaptation Vulnerability and Adaptation to Climate Change > Multilevel and Transnational Climate Change Governance

Although effects on labour is one of the most tangible and attributable climate impact, our quantification of these effects is insufficient and based on weak methodologies. Partly, this gap is due to the inability to resolve different impact channels, such as changes in time allocation (labour supply) and slowdown of work (labour productivity). Explicitly resolving those in a multi-model inter-comparison framework can help to improve estimates of the effects of climate change on labour effectiveness. We found differentiated empirical regional and sectoral ERF's for labour supply. Current climate conditions already negatively affect labour effectiveness, particularly in tropical countries. Future climate change will reduce global total labour in the low-exposure sectors by 18 percentage points (range −48·8 to 5·3) under a scenario of 3·0°C warming (24·8 percentage points in the high-exposure sectors). The reductions will be 25·9 percentage points (–48·8 to 2·7) in Africa, 18·6 percentage points (–33·6 to 5·3) in Asia, and 10·4 percentage points (–35·0 to 2·6) in the Americas in the low-exposure sectors. These regional effects are projected to be substantially higher for labour outdoors in full sunlight compared with indoors (or outdoors in the shade) with the average reductions in total labour projected to be 32·8 percentage points (–66·3 to 1·6) in Africa, 25·0 percentage points (–66·3 to 7·0) in Asia, and 16·7 percentage points (–45·5 to 4·4) in the Americas.

River floods pose a significant threat to road transport infrastructure in Europe. This study presents a high-resolution object-based continental-scale assessment of direct flood risk of the European road network for the present climate, using high-resolution exposure data from OpenStreetMap. A new set of road-specific damage functions is developed. The expected annual direct damage from large river floods to road infrastructure in Europe is EUR 230 million per year. Compared to grid-based approaches, the object-based approach is more precise and provides more action perspective for road owners because it calculates damage directly for individual road segments while accounting for segment-specific attributes. This enables the identification of European hotspots, such as roads in the Alps and along the Sava River. A first comparison to a reference case shows that the new object-based method computes realistic damage estimates, paving the way for targeted risk reduction strategies.

Flood insurance coverage can enhance financial resilience of households to changing flood risk caused by climate change. However, income inequalities imply that not all households can afford flood insurance. The uptake of flood insurance in voluntary markets may decline when flood risk increases as a result of climate change. This increase in flood risk may cause substantially higher risk-based insurance premiums, reduce the willingness to purchase flood insurance, and worsen problems with the unaffordability of coverage for low-income households. A socioeconomic tipping-point can occur when the functioning of a formal flood insurance system is hampered by diminishing demand for coverage. In this study, we examine whether such a tipping-point can occur in Europe for current flood insurance systems under different trends in future flood risk caused by climate and socioeconomic change. This analysis gives insights into regional inequalities concerning the ability to continue to use flood insurance as an instrument to adapt to changing flood risk. For this study, we adapt the "Dynamic Integrated Flood and Insurance" (DIFI) model by integrating new flood risk simulations in the model that enable examining impacts from various scenarios of climate and socioeconomic change on flood insurance premiums and consumer demand. Our results show rising unaffordability and declining demand for flood insurance across scenarios towards 2080. Under a high climate change scenario, simulations show the occurrence of a socioeconomic tipping-point in several regions, where insurance uptake almost disappears. A tipping-point and related inequalities in the ability to use flood insurance as an adaptation instrument can be mitigated by introducing reforms of flood insurance arrangements.

Equity (or, its counterpart, inequity) plays a fundamental role in the evaluation of social welfare in different dimensions. In this paper, we revisit the concept of inequity – in the sense of unequal distributions – across individuals, time, and states of the world using a unified framework that generalizes the standard expected discounted utilitarianism approach. We propose a general measure of welfare as equity equivalents and a corresponding inequity index. We show that allowing for different attitudes toward inequity across different dimensions covers a scope of possible inequity preferences with different interpretations. We then prove that the order of aggregation across the different dimensions matters for welfare evaluations. Finally, we show that many of the welfare‐theoretical approaches recently developed in the literature can be interpreted as special cases of this general framework.

Tipping points have become a key concept in research on climate change, indicating points of abrupt transition in biophysical systems as well as transformative changes in adaptation and mitigation strategies. However, the potential existence of tipping points in socio-economic systems has remained underexplored, whereas they might be highly policy relevant. This paper describes characteristics of climate change induced socio-economic tipping points (SETPs) to guide future research on SETPS to inform climate policy. We review existing literature to create a tipping point typology and to derive the following SETP definition: a climate change induced, abrupt change of a socio-economic system, into a new, fundamentally different state. Through stakeholder consultation, we identify 22 candidate SETP examples with policy relevance for Europe. Three of these are described in higher detail to identify their tipping point characteristics (stable states, mechanisms and abrupt change): the collapse of winter sports tourism, farmland abandonment and sea level rise-induced migration. We find that stakeholder perceptions play an important role in describing SETPs. The role of climate drivers is difficult to isolate from other drivers because of complex interplays with socio-economic factors. In some cases, the rate of change rather than the magnitude of change causes a tipping point. The clearest SETPs are found on small system scales. On a national to continental scale, SETPs are less obvious because they are difficult to separate from their associated economic substitution effects and policy response. Some proposed adaptation measures are so transformative that their implementations can be considered an SETP in terms of 'response to climate change'. Future research can focus on identification and impact analysis of tipping points using stylized models, on the exceedance of stakeholder-defined critical thresholds in the RCP/SSP space and on the macro-economic impacts of new system states.

Extreme weather resilience has been defined as being based on three pillars: resistance (the ability to lower impacts), recovery (the ability to bounce back), and adaptive capacity (the ability to learn and improve). These resilience pillars are important both before and after the occurrence of extreme weather events. Extreme weather insurance can influence these pillars of resilience depending on how particular insurance mechanisms are structured. We explore how the lessons learnt from the current best insurance practices can improve resilience to extreme weather events. We employ an extensive inventory of private property and agricultural crop insurance mechanisms to conduct a multi-criteria analysis of insurance market outcomes. We draw conclusions regarding the patterns in the best practice from six European countries to increase resilience. We suggest that requirements to buy a bundle extreme weather event insurance with general insurance packages are strengthened and supported with structures to financing losses through public-private partnerships. Moreover, support for low income households through income vouchers could be provided. Similarly, for the agricultural sector we propose moving towards comprehensive crop yield insurance linked to general agricultural subsidies. In both cases a nationally representative body can coordinate the various stakeholders into acting in concert.

A good understanding of climate change damages is vital to design effective adaptation policies and measures. Using a dataset of probabilistic sea-level rise and other of flood damages and protection cost curves for the 600 largest European coastal cities we generate stochastic damage curves and their distributions with and without adaptation. We apply the Generalized Extreme Value distribution to characterize the distributions and calculate two risk measures: the Value at Risk and the Expected Shortfall, which contribute to understanding the magnitude and probability of high-end sea-level rise represented by the upper tail of the distribution. This allows the costs of sea-level rise to be estimated (that is, in addition to other costs related to coastal extreme events) and supports decision-makers in integrating the high uncertainty related to future projections. This knowledge is necessary for an adequate risk management that does not underestimate risk. Furthermore, it allows city planners to tailor their risk tolerance. A great number of cities in Europe are currently undertaking adaptation plans or have already done so. Making these findings available should therefore be of great priority value to inform these processes.

Stochastic agro-economic model GLOBIOM is used to demonstrate how best to design and evaluate the CAP’s financial and structural measures, both individually and jointly, in the face of inherent uncertainty and risk. The model accounts for plausible shocks simultaneously and derives measures that are robust against all shock scenarios; it can thus help avoid the irreversibility and sunk costs that occur in unexpected scenarios.To allow adequate agricultural production, we show that the distribution of CAP funds needs to account for exposure to risks, security targets, and the synergies between policy measures, including production, trade, storage, and irrigation technologies.