Costs and other socioeconomic aspects

The costs, benefits and other socio-economic consequences of climate variability and change for coastal and low-lying areas have been determined for many aspects, including heat stress and changes in plant and animal metabolism (see Chapter 4, Section 4.2 and Box 4.4), disease (see Chapter 8, Section 8.5),

Table 6.8. Key hotspots of societal vulnerability in coastal zones.

Controlling factors

Examples from this Chapter

Coastal areas where there are substantial barriers to adaptation (economic, institutional, environmental, technical, etc.)

Venice, Asian megadeltas, atolls and small islands, New Orleans

Coastal areas subject to multiple natural and human-induced stresses, such as subsidence or declining natural defences

Mississippi, Nile and Asian megadeltas, the Netherlands, Mediterranean, Maldives

Coastal areas already experiencing adverse effects of temperature rise

Coral reefs, Arctic coasts (USA, Canada, Russia), Antarctic peninsula

Coastal areas with significant flood-plain populations that are exposed to significant storm surge hazards

Bay of Bengal, Gulf of Mexico/Caribbean, Rio de la Plata/Parana delta, North Sea

Coastal areas where freshwater resources are likely to be reduced by climate change

W. Africa, W. Australia, atolls and small islands

Coastal areas with tourist-based economies where major adverse effects on tourism are likely

Caribbean, Mediterranean, Florida, Thailand, Maldives

Highly sensitive coastal systems where the scope for inland migration is limited

Many developed estuarine coasts, low small islands, Bangladesh

water supply (see Chapter 3, Section 3.5), and coastal forests, agriculture and aquaculture (see Chapter 5, Section 5.6). The following section focuses on evaluating the socio-economic consequences of sea-level rise, storm damage and coastal erosion.

6.5.1 Methods and tools for characterising socioeconomic consequences

Since the TAR there has been further progress in moving from classical cost-benefit analysis to assessments that integrate monetary, social and natural science criteria. For example, Hughes et al. (2005) report the emergence of a complex systems approach for sustaining and repairing marine ecosystems. This links ecological resilience to governance structures, economics and society. Such developments are in response to the growing recognition of the intricate linkages between physical coastal processes, the diverse coastal ecosystems, and resources at risk from climate change, the many ecological functions they serve and services they provide, and the variety of human amenities and activities that depend on them. Thus a more complete picture of climate change impacts emerges if assessments take into account the locally embedded realities and constraints that affect individual decision makers and community responses to climate change (Moser, 2000,2005). Increasingly, Integrated Assessment provides an analytical framework, and an interdisciplinary learning and engagement process for experts, decision makers and stakeholders (Turner, 2001). Evaluations of societal and other consequences combine impact-benefit/cost-effectiveness analytical methods with scenario analysis. For example, a recent analysis of managed realignment schemes (Coombes et al., 2004) took into account social, environmental and economic consequences when evaluating direct and indirect benefits.

Direct cost estimates are common across the climate change impact literature as they are relatively simple to conduct and easy to explain. Such estimates are also becoming increasingly elaborate. For example, several studies of sea-level rise considered land and wetland loss, population displacement and coastal protection via dike construction (e.g., Tol, 2007). Socioeconomic variables, such as income and population density, are important in estimating wetland value but are often omitted when making such estimations (Brander et al., 2003b). But direct cost estimates ignore such effects as changes in land use and food prices if land is lost. One way to estimate these additional effects is to use a computable general equilibrium (CGE) model to consider markets for all goods and services simultaneously, taking international trade and investment into account (e.g., Bosello et al., 2004). However, the major economic effects of climate change may well be associated with out-of-equilibrium phenomena (Moser, 2006). Also, few CGE models include adequate representations of physical processes and constraints.

Given the recent and anticipated increases in damages from extreme events, the insurance industry and others are making greater use of catastrophe models. These cover event generation (e.g., storm magnitude and frequency), hazard simulation (wind stresses and surge heights), damage modelling (extent of structural damage), and financial modelling (costs) (Muir-Wood et al., 2005). Stochastic modelling is used to generate thousands of simulated events and develop probabilistic approaches to quantifying the risks (Aliff, 2006; Chapter 2).

Methodologically, many challenges remain. Work to date has insufficiently crossed disciplinary boundaries (Visser, 2004). Although valuation techniques are continually being improved, and are now better linked to risk-based decision making, they remain imperfect, and in some instances controversial. This requires a transdisciplinary response from the social and natural sciences.

6.5.2 Socio-economic consequences under current climate conditions

Under current climate conditions, developing countries bear the main human burden of climate-related extreme events (Munich Re Group, 2004; CRED, 2005; UN Secretary General, 2006a). But it is equally evident that developed countries are not insulated from disastrous consequences (Boxes 6.4 and Chapter 7, Box 7.4). The societal costs of coastal disasters are typically quantified in terms of property losses and human deaths. For example, Figure 6.9 shows a significant threshold in real estate damage costs related to flood levels. Post-event impacts on coastal businesses, families and neighbourhoods, public and private social institutions, natural resources, and the environment generally go unrecognised in disaster cost accounting (Heinz Center, 2000; Baxter, 2005). Finding an accurate way to document these unreported or hidden costs is a challenging problem that has received increasing attention in recent years. For example, Heinz Center (2000) showed that family roles and responsibilities after a disastrous coastal storm undergo profound changes associated with household and employment disruption, economic hardship, poor living conditions, and the disruption of pubic services such as education and preventive health care. Indirect costs imposed by health problems (Section 6.4.2.4) result from damaged homes and utilities, extreme temperatures, contaminated food, polluted water, debris- and mud-borne bacteria, and mildew and mould. Within the family, relationships after a disastrous climate-related event can become so stressful that family desertion and divorce may increase. Hence, accounting for the full range of costs is difficult, though essential to the accurate assessment of climate-related coastal hazards.

Tropical cyclones have major economic, social and environmental consequences for coastal areas (Box 6.4). Up to 119 million people are on average exposed every year to tropical cyclone hazard (UNDP, 2004). Worldwide, from 1980 to 2000, a total of more than 250,000 deaths were associated with tropical cyclones, of which 60% occurred in Bangladesh (this is less than the 300,000 killed in Bangladesh in 1970 by a single cyclone). The death toll has been reduced in the past decade due largely to improvements in warnings and preparedness, wider public awareness and a stronger sense of community responsibility (ISDR, 2004). The most-exposed countries have densely populated coastal areas, often comprising deltas and megadeltas (China, India, the Philippines, Japan, Bangladesh) (UNDP, 2004). In Cairns (Australia), cyclone experience and education may have contributed synergistically to a change in risk perceptions and a reduction in the vulnerability of residents to tropical cyclone and storm surge hazards (Anderson-Berry, 2003). In Japan, the annual number of tropical cyclones and typhoons making landfall showed no significant trend from 1950 to 2004, but the number of port-related disasters decreased. This is attributed to increased protection against such disasters. However, annual average restoration expenditures over the period still amount to over US$250 million (Hay and Mimura, 2006).

Between 1980 and 2005, the United States sustained 67 weather-related disasters, each with an overall damage cost of at least US$1 billion. Coastal states in the south-east US experienced the greatest number of such disasters. The total costs including both insured and uninsured losses for the period, adjusted to 2002, were over US$500 billion (NOAA, 2007). There are differing views as to whether climatic factors have contributed to the increasing frequency of major weather-related disasters along the Atlantic and Gulf coasts of the USA (Pielke Jr et al., 2005; Pielke and Landsea, 1998). But the most recent reviews by Trenberth et al. (2007) and Meehl et al. (2007) support the view that storm intensity has increased and this will continue with global warming. Whichever view is correct, the damage costs associated with these events are undisputedly high, and will increase into the future.

Erosion of coasts (Section 6.4.1.1) is a costly problem under present climatic conditions. About 20% of the European Union's coastline suffered serious erosion impacts in 2004, with the area lost or seriously impacted estimated at 15 km2/yr. In 2001, annual expenditure on coastline protection in Europe was an estimated US$4 billion, up from US$3 billion in 1986 (Eurosion, 2004). The high rates of erosion experienced by beach communities on Delaware's Atlantic coast (USA) are already requiring publicly funded beach nourishment projects in order to sustain the area's attractiveness as a summer resort (Daniel, 2001). Along the east coast of the United States and Canada, sea-level rise over the last century has reduced the return period of extreme water levels, exacerbating the damage to fixed structures from modern storms compared to the same events a century ago (Zhang et al., 2000; Forbes et al., 2004a). These and other studies have raised major questions, including: (i) the feasibility, implications and acceptability of shoreline retreat; (ii) the appropriate type of shoreline protection (e.g., beach nourishment, hard protection or other typically expensive responses) in situations where rates of shoreline retreat are increasing; (iii) doubts as to the longer-term sustainability of such interventions; and (iv) whether insurance provided by the public and private sectors encourages people to build, and rebuild, in vulnerable areas.

Flood height (m)

Figure 6.9. Real estate damage costs related to flood levels for the Rio de la Plata, Argentina (Barros et al., 2006).

Flood height (m)

Figure 6.9. Real estate damage costs related to flood levels for the Rio de la Plata, Argentina (Barros et al., 2006).

6.5.3 Socio-economic consequences of climate change

Substantial progress has been made in evaluating the socioeconomic consequences of climate change, including changes in variability and extremes. In general, the results show that socio-economic costs will likely escalate as a result of climate change, as already shown for the broader impacts (Section 6.4). Most immediately, this will reflect increases in variability and extreme events and only in the longer term will costs (in the widest sense) be dominated by trends in average conditions, such as mean sea-level rise (van Aalst, 2006). The impacts of such changes in climate and sea level are overwhelmingly adverse. But benefits have also been identified, including reduced cold-water mortalities of many valuable fish and shellfish species (see Chapter 15, Section 15.4.3.2), opportunities for increased use of fishing vessels and coastal shipping facilities (see Chapter 15, Section 15.4.3.3), expansion of areas suitable for aquaculture (see Chapter 5, Section 5.4.6.1), reduced hull strengthening and icebreaking costs, and the opening of new ocean routes due to reduced sea ice. Countries with large land areas generally benefit from competitive advantage effects (Bosello et al., 2004).

In the absence of an improvement to protection, coastal flooding could grow tenfold or more by the 2080s, to affect more than 100 million people/yr, due to sea-level rise alone (Figure 6.8). Figure 6.10 shows the consequences and total costs of a rise in sea level for developing and developed countries, and globally. This analysis assumes protection is implemented based on benefit-cost analysis, so the impacts are more consistent with enhanced protection in Figure 6.8, and investment is required for the protection. The consequences of sea-level rise will be far greater for developing countries, and protection costs will be higher, relative to those for developed countries.

Such global assessments are complemented by numerous regional, national and more detailed studies. The number of people in Europe subject to coastal erosion or flood risk in 2020 may exceed 158,000, while half of Europe's coastal wetlands are expected to disappear as a result of sea-level rise (Eurosion, 2004). In Thailand, loss of land due to a sea-level rise of 50 cm and 100 cm could decrease national GDP by 0.36% and 0.69% (US$300 to 600 million) per year, respectively; due to location and other factors, the manufacturing sector in Bangkok could suffer the greatest damage, amounting to about 61% and 38% of the total damage, respectively (Ohno, 2001). The annual cost of protecting Singapore's coast is estimated to be between US$0.3 and 5.7 million by 2050 and between US$0.9 and 16.8 million by 2100 (Ng and Mendelsohn, 2005). In the cities of Alexandria, Rosetta and Port Said on the Nile delta coast of Egypt, a sea-level rise of 50 cm could result in over 2 million people abandoning their homes, the loss of 214,000 jobs and the loss of land valued at over US$35 billion (El-Raey, 1997).

Cause

Consequence

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