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The Economics of Adapting to Climate Change in Africa: Linking experience, ensembles and entitlement

An African-specific perspective on the economics of adaptation, linking climate risk management, disaster risk reduction, adaptive management in resource use and pro-poor development planning.
Multiple Authors
Different pathways in the landscape of adaptation actors, strategies and measures

People in Africa have a long tradition of adapting to climatic threats, to disasters and to changing resources. This experience–linking climate risk management, disaster risk reduction, adaptive management in resource use, and pro-poor development planning–is the foundation of adapting to future climate change. It also provides an African-specific perspective on the economics of adaptation.

Adaptation to climate is not an optional extra, something we add to development, resource management and environmental sustainability. Climate change will overwhelm current efforts, unless greenhouse gas are stabilized. The cost of adaptation in Africa has been placed between nearly $1 billion and over $50 billion per year, depending on many assumptions. Available funding globally is about $3 billion, although very little of this has been spent (See Figure 1). Accelerating climate resilient development in Africa remains our main priority.

Figure 1: Nine funds for adaptation have been established (shown in order of being announced). Pledged budgets (the green bars) total over 3 million (the cumulative, red line); total expenditures (gold bars) and the cumulative investment (purple line). The Climate Funds Update website is keeps a tally of the latest pledged and available funds.

Adaptation Economics: Five illustrative storylines

Storyline I: What do we know about the cost of climate change adaptation? The range of estimates is broadly from nearly a billion dollars now to over 50 billion dollars as climate change becomes more serious, by 2030 or so. Those are estimates in today’s dollars, per year.

We know so little about the climates of 2050 and beyond, not to mention the state of resource use and socio-economic vulnerability decades into the future, that it is impossible to fully predict and quantify economic damages, much less adaptation costs. The cost of climate adaptation begins now, in preparing to deal with future resources and risks and cannot be easily subtracted from projected damages. In fact, a significant portion of the costs of adaptation will be incurred irrespective of potential benefits. And some benefits will not be quantifiable.

The range of estimates of present costs have lower benchmarks of $0.8 to 4.6 billion per year, with $1 billion per year being typical. These estimates assume relatively modest climate changes, and that much of the present risk should be addressed through development funding rather than the additional obligations of climate change. The rather limited experience of actual disbursements of existing climate adaptation funds (e.g., LCDF) reinforces the sense in which barriers to developing and implementing projects cannot be easily overcome.

The more speculative estimates for 2030 have upper ranges beginning around $7 billion per year, with some estimates above $25, and a few even above $50, billion per year. These estimates suggest greater climate change, larger investment flows into Africa, more complete coverage and full climate protection. With fewer constraints in current processes and including major protection, especially of infrastructure, costs on the order of $100 billion per year by 2050 are not implausible.

The nearly two orders of magnitudes in the range of estimates is unlikely to be reduced in the near future. The uncertainty stems from the wide range of scenarios of climate change, and the consequent impacts, wide range of methods for valuing climate impacts and adaptation, potential for shifts in resource systems and switching points between development pathways.

  • What matters? Adaptation science is in its infancy. You will see a lot of estimates of costs. A consensus on the cost of adaptation is not likely to be reached soon but there is sufficient evidence to take climate adaptation seriously.

Storyline II: Economic assessments of the cost of climate adaptation have different purposes. Urgent is the evidence for action: we should not wait until we know everything!

Irrespective of their accuracy, estimates of costs serve different purposes, such as resource mobilisation, comparing and prioritising adaptation actions, scaling up of effective adaptation technologies, etc. The numbers also pertain to different time frames: NAPAs are for the most urgent and immediate needs in selected countries, in contrast to estimates of annual requirements in 2030. Some estimates are based on actual adaptation actions while others are based on the value of current and planned investments. Climate adaptation comes in many forms–there is no one template that suits everyone. Nor is there an ideal sequencing. Very simply, the most common decision will be to design an effective adaptation project. Each step in a development pathway will require screening: Is it exposed to an adverse climate impact? Is it an opportunity to promote adaptation? These are the initial steps in mainstreaming.

Leaders have a mandate to ensure public safety, pro-poor economic growth and environmental sustainability. The overarching aim is to ensure climate adaptation puts development on a sustainable and resilient pathway. The next decade is critical in Africa, to take the opportunities to switch development pathways. Without doubt the art of politics is required to ‘put climate on the agenda’. Rather more controversial, is the political negotiations regarding global funding, not only for adaptation but development as well.

Most developing countries have made cost estimates through the NAPA processes. They provide a basis for urgent action, as well as fostering long term adaptation plans and financial requirements. It is not feasible, with the current knowledge on climate change, for developing countries to make accurate adaptation plans and cost projections for the next 50-90 years. The NAPA process should therefore be taken as an opportunity and starting point to build on regular adaptation planning and costing as experience and knowledge improve.

  • What matters? An ensemble of economic estimates points to the need to develop a long-term perspective. What you need to know to act today is not the same as what will be required for implementing solutions in ten years time: climate change changes everything. Build the capacity and evidence base for sustained action.

Storyline III: Reliable finance must lead to confidence in solutions and effective strategies.

A simple story from Ethiopia: farmers are used to risk, to drought and floods, good seasons and bad. What they desperately need is a reliable prediction of the responses: what they themselves can count on (e.g., micro-insurance), how food markets will be affected (e.g., timely imports, but not dumping cheap food) and support for the vulnerable (e.g., entitlements to cash-for-work).

Fantastical demands for adaptation finance may well be justified in ten years time. What is needed now is delivery on existing pledges. Access and transparency, governance and accountability. Fairness in meeting the initial needs everywhere without trying to ‘allocate’ adaptation funds using narrow criteria. The failure of the G8 to deliver on its aid pledges is far more important than reaching a consensus on whether the additional adaptation funding should be $1 or 5 billion by 2012.

Effective adaptation requires delivery to the vulnerable and largely involves learning by doing. Providing resources to enable this process consistently and predictably fosters learning , translated into improved action and building the confidence of beneficiaries and funders. But patchy funding is not cost effective. It breaks learning cycles, keeps beneficiaries at the same learning stage with each ad hoc financial injection. Improvements in the adaptive capacity among the vulnerable populations demonstrate the effectiveness of investments. Adaptation resources invested heavily in processes that do not reach vulnerable people will not generate the intended benefits. Even though the vulnerable people are often labeled as lacking capacity to run projects and enterprises on their own, part of the costs of adaptation should be to build this social and institutional capacity.

Lessons from community based natural resources management demonstrate that with consistent investment in building local capacity, even the poorest communities are able to rise to a level where they can manage their local enterprises.

  • What matters? Africa has the greatest gap between the cost of present climate risks and the ability to manage those risks. Insist on reliable finance, not least the development targets already agreed. Hold people accountable for delivery on their promises. Match building capacity with effective action.

Storyline IV: There are many existing entry points for adaptation. Build on these and scale up.

Effective adaptation will require a range of effort; no one strategy will work everywhere or for everyone. We use the term adaptation signatures to represent these ensembles: who does what, where, why; how do we work with key agents of change; what finance is required and available? The baseline is the underpinning of research, monitoring and assessment that identifies the most vulnerable regions, sectors and people. It is monitoring leading to action, demonstrating what works. This is a core principle of the Global Adaptation Network and its regional platform in Africa that UNEP is pioneering.

Sound resource management, deeply rooted in our experience in Africa, must be brought forward and scaled up. It sits on the baseline: more related to development than climate change. But if we are not successful now, we will lose the window of preparing for climate change. The Green Wall to combat desertification is an example of an adaptation action ready to go. The distinct climate elements of adaptive resource management include adjusting to current trends (for instance loss of snow melt in the water towers of the East African highlands), using seasonal climate outlooks and increasing the range of climate variability that vulnerable sectors and livelihoods can cope with. Add to that disaster risk reduction–already with well-developed plans waiting for funding and implementation.

Behind the current action is the human and institutional capacity to develop and implement sound strategies. Learning by doing, learning from the wealth of people extending their experience, testing innovative solutions. The African Climate Policy Centre and existing networks and platforms are a first step. Building a professional body of practitioners must be accelerated. The big decisions will come with protecting major infrastructure: the cost of relocating ports, rebuilding bridges after a disaster, expanding water resource systems. Climate protection should be based on sound judgment–the many pilot actions that demonstrate what works. Relocating services and people is also a planned strategy, although difficult to put in practice.

These pathways of adaptation are stylized: each locale will have its unique needs, experiences and approaches. Each has different roles for stakeholders: many involve national ministries, all require effective enabling conditions ‘on the ground’. The politics of adaptation funding must be met with the confidence of clear strategies that ensure successful outcomes: who can do what, when, where?

  • What matters? Build the information and institutional platforms for learning and action. Establish the broad stakeholder platform for a sustained effort. This is a long-term issue that won’t go away

Storyline V: National leadership and coordinated, strategic approaches must be sustained over the coming decade.

We have a window for laying the foundation of knowledge and capacity. By 2012 if this is not firmly in place we will be faced with increasingly hostile climate conditions and crises. Beyond the international negotiations three strategies are urgent in every country, and more so within Africa. We have much to learn. African networks of building capacity, coordinating assessments and building the information base for a sustained effort are at an incipient stage. There is need for everyone to be involved, no one network will encompass all of the issues, skills and conditions that will define our future.

Each country should develop a national framework. There is no single template, and indeed no required mandate from international organisations. We suggest the model of a National Adaptation Facility. This would include coordinated policy and strategy, essentially bringing together the economic, planning and environment ministries with those responsible for sectoral and regional implementation. Multi-stakeholder forums to build awareness and support strategies throughout the country are effective. A trust fund for pilot actions will enable the many actors at all scales test their solutions and learn from each other. Access, transparency and accountability are required of course, but measure the results by the outcomes. The shared information base–moving beyond data to knowledge and wisdom–is a major gap. While much information is available, it is not uncommon to find it sequestered in institutional silos. Visions of successful adaptation and leadership in effective action.

The evidence base on what works is weak, globally and more so in Africa. A major investment must be in the capacity of professionals and organisations in the practice of climate adaptation, in the assessment of economic costs and benefits, in the art of bridging science and policy. Regional support nodes for the new round of the Intergovernmental Panel on Climate Change would be one practical step forward. Implementing existing science plans in Africa would be helpful. Learning across agro-ecological zones is a well established framework.

Adaptation ‘Landscapes’ or “Signatures”

The economics of adaptation (and much else) depends on the decision context. Global integrated assessment models tend to produce ‘top down’ estimates based on idealized assumptions about future impacts, the proportion that could be reduced by adaptation and the costs associated with the most cost-effective actions. In contrast, actual adaptation actions will be implemented in a wide variety of contexts, by specific decision makers responding to multiple objectives. Our ‘Signatures’ approach is a way to describe those bottom up pathways of plausible adaptation strategies and actions.

The figure on the right is a simple graphic

suggesting some of the most relevant, but stylized, signatures. These were created as part of an assessment in Kenya, but look pretty generic so far!

Adaptation signatures describe different pathways in the landscape of adaptation actors, strategies and measures

The graphic implies a baseline of actions that are closely linked to development: the span of vulnerability assessment. These actions are justified now in most cases, with climate change an additional motivation, or a reason to accelerate efforts. ‘Above’ the baseline implies actions that largely only have benefits for future climate change.

The width of the graphic is the breadth of sectors or regions that should be included as a priority. Thus, vulnerability assessment should be comprehensive at some level, while not all locations or sectors warrant intensive disaster risk reduction at present. Similarly, the height of the graphic is related to the cost–the largest costs are going to be in sectoral protection, things like flood protection schemes.

Clearly, this is just a graphic! The actual span and costs need to be determined for each locale. The key message is that not all adaptation pathways are the same.

Here is a synopsis of each signature:

1) Vulnerability and Impacts Assessments- mapping of what’s vulnerable and monitoring the changing vulnerability baselines (what’s driving change) for ongoing costs. Shouldn’t be that expensive to do this BASELINE ANLAYSIS.

2) Trends (now, beginnings of additional climate change-related vulnerability)- Looking at current trends whose impacts are already being felt.

3) Seasonal climate outlooks/forecasts, climate variability- Look at what capacity exists or could exist (needs to be costed) to be costed to cope with current variability. What additional capacity do we need to cope with change sector by sector, place to place.

3a). 2-3 all fit within current natural resource management. So protecting soils and forests and other good natural resource management should be looked at as necessary adaptation types.

4) Disaster Risk Reduction- Can be quite expensive to address. Can mean lives and livelihoods are lost.

5) Institutional capacity (soft costs of adaptation)- To do what needs to be done now and link it to the changes of the future.

6) Pilot Actions- Need to be done to inform future investments in sectoral investments. We don’t know how many we need, but know they need to connect between resource management and climate protection. These are the prototypes that build up the institutional and technical capacity.

7) Sectoral protection- Very expensive adaptation options. How soon you need to do these? Depends on how vulnerable you are.

8) Migration- In some communities, sectors, economic activities, PLANNED movement is needed.

The next step in our analytical framework is to describe narratives of the general typology, and then estimate where they might be a priority, who would be involved as stakeholders, and costs over the next few decades. For instance, rainwater harvesting for rural domestic use and kitchen gardens would be a means to increase the range of coping strategies for current climate variations in the water sector. What would be adoption rates over the next decade (the pilot actions leading to full deployment) and how much would that pathway of development cost? Not easy to make these estimates, but the signature readily converts into an investment strategy.

Initial article developed by Jill Dyszynski, further material by —Tom Downing, 30 August 2009 (CEST)

Related links:

The economics of climate change in East Africa:

  • The economic impacts of climate change in Burundi
  • The economic impacts of climate change in Rwanda
  • The economic impacts of climate change in Kenya
  • The economic impacts of climate change in Tanzania

ClimateCost: The Full Costs of Climate Change

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